Friday, December 30, 2016

Modi has "revived" infamous 'raid raj' of India’s socialist heyday, "stalled" privatization, economic reforms

Sadanand Dhume
By Our Representative
A senior expert with the American Enterprise Institute (AEI) for Public Policy Research, a conservative think tank based in Washington, D.C., has sharply criticized Prime Minister Narendra Modi for his “muddled thinking on economics”, which he says has “undercut a sensible foreign policy.”
Sadanand Dhume , resident fellow with AEI, has said in his column in the top American business daily “Wall Street Journal” (WSJ) that when Modi came to power two-and-a-half years ago “much of the world expected a vigorous economic reformer who would struggle with the unfamiliar subject of foreign policy. ”
Especially taking strong exception to the way Modi's on economic policy, which “appears to be at war” with former NDA Prime Minister AB Vajpayee’s legacy, Dhume says, “Instead of recognizing his BJP predecessor’s central insight – that India had remained poor because the government choked economic activity – Modi has doubled down on bureaucracy in an impractical attempt to deliver economic development by fiat. ”
“Major privatization remains stalled. Nobody even talks about getting rid of state-owned white elephants such as Air India or the chronically inefficient telecom firm BSNL. Nor does the prime minister appear overly concerned about quashing the most productive segments of the economy”, complains the conservative think tank expert.
He warns, “The revival of the infamous 'raid raj' of India’s socialist heyday could keep investment depressed and employment flat while enriching sticky-fingered tax inspectors on a perennial hunt for black money.”
According to Dhume, “Though Modi’s government counts some of India’s finest economists, including such consistent advocates of sensible pro-growth ideas as Arvind Panagariya and Bibek Debroy, their fingerprints are barely visible on policy. When making decisions, the prime minister appears to trust stolid bureaucrats more than Western-educated economists. ”
While giving credit to Modi for “his surprisingly deft handling of complex strategic issues” in the initial years in power, the expert regrets, “But on economic policy he has damaged his international reputation by following a quixotic path detached from both history and the broad national consensus among experts on reforms. ”
The WSJ opinion coincides with Modi claiming to “India Today” that the banning of Rs 500 and Rs 1000 notes has forced all "black money out into the open", though admitting, “Our best economists remain confused in their calculations” on demonetization.
Dhume believes, Modi's “lack of concrete economic achievement will almost certainly undercut the prime minister’s goal of making India a more assertive player on the world stage”, admitting, “It will also likely stall Modi’s ambitious bid to transform his image from provincial strongman to global statesman on the path to modernizing Asia’s third largest economy.”
Calling Modi's September “surgical strike” on “alleged terrorist havens in Pakistan-controlled Kashmir” a “bold departure from a failed policy of fighting jihadism”, Dhume, however, says, this sharply contrasts with the “clumsy” decision six weeks later “to abruptly scrap 86% of India’s currency bills by value, in a country where more than 90% of transactions are in cash”, bringing “deep economic pain for uncertain gain. ”
Not without reason, the conservative think tank says, a Nomura index, which closely tracks Indian non-agricultural economic growth, “has dipped to its lowest level since 1996”, which is “in line with GDP growth this year of less than 6%, decidedly anemic for a country with India’s low level of per capita income.”

No comments: