Skip to main content

Be ruthless, end "archaic" labour laws, allow firms to buy land, cut subsidies to poor: "Economist" to Modi

By Our Representative
Influential right-wing British journal, “The Economist”, which opposed Narendra Modi as India’s Prime Minister calling him divisive (click HERE), in its new commentary has "offered" certain neo-liberal recipes to the new government in India to take over under Modi for "repairing" the world’s third largest economy. Titled “Kick-starting India: India’s new government must get the economy working again. Here’s how”, the journal (May 17) has said that “investors are excited” with Modi in power, wanting him to take some tough measures. The steps me must take include abolition of “archaic labour laws”, and take steps to ensure that “contracts to let firms buy land” are strictly obeyed.
Insisting that “India’s new rulers must be more strategic and ruthless”, "The “conomist” wants end to the regime of subsidies that the Government of India provides in the name of helping the poor. This, it says, is necessary to break the “a destabilising cycle of stagflation”, underlining, “High public borrowing has fuelled inflation, which stands at 9%. The new government must cut wasteful spending on subsidies of food and fuel.”
At the same time, the journal wants the new government to widen the tax net. It says, “The main reason why India has not run a budget surplus since independence in 1947 is that its tax base is puny. So the government must bring more of the economy into the tax net in order to repair the public finances.”
The reason for being “ruthless”, according to "The Economist” is, “A decade ago India’s economy was winning new-found respect as a riot of energy and enterprise, but its performance in recent years has been dismal. Now foreign bosses roll their eyes when you mention India, as they did in the 1980s. Growth has fallen to 5%, half the level at the peak of the 2004-08 boom. Inflation and public borrowing are too high. The rupee slumped in 2013. Private firms are fed up with red tape and graft and have cut investment from a peak of 17% of GDP to 9%.”
It points out, “On some measures the country is going backwards in time. Households have been shifting savings away from banks into the ancient refuge of gold. In a country that should be industrialising, the contribution to GDP from industry has been declining while manufacturing jobs have stagnated.” It adds, “The last government dithered and was preoccupied with bolstering India’s welfare state”, something that must be done away with.
The “Economist” also wants the Modi government to “tackle India’s rotten banks”, saying, “Bad debts have soared as the economy has slowed and infrastructure projects have got snared by red tape. Banks have chosen to ‘extend and pretend’ loans to zombie firms. The cost of cleaning up banks’ balance sheets could be as high as 4% of GDP—slightly larger, in relative terms, than Wall Street’s bail out.”
“But until the banks are fit enough to finance a new cycle of investment, no recovery will happen. Deeper financial reform is vital, too. Banks are forced to buy government bonds, giving politicians a blank cheque to borrow. Limiting that would help end the habit of reckless public deficits”, "The Economist” underlines.
Pointing towards following East Asian economies in creating “decent jobs”, "The Economist” wants that the new government do it the way these countries have “prospered by employing unskilled farmworkers in factories”, adding, “India should be doing that right now. Over 10m people a year will enter the workforce for the next decade. Labour costs are rising in China, leading firms to shift production elsewhere. Japanese companies are scrambling to diversify away from China as military tensions crackle. The rupee has fallen by a third against the yuan since 2010, making India’s workers more competitive”, the journal elucidates.
“The Economist” says, “So far India has blown it. For firms wanting to invest, access to the ingredients of production—energy, labour and land—is uncertain and expensive. The taxation of foreign companies is a lottery. As a result, firms such as Li & Fung, which sources textiles and toys for America’s supermarkets, say that factories are shifting to Bangladesh, South-East Asia and Africa, not India.”
“India can go in one of two directions. It can watch its position in the world decline as its infrastructure lags further behind and its army of underemployed people grows. Or it can stabilise its finances and build a productive private sector that creates the jobs its young people need and turns it into a serious global power. The choice is the new government’s”, the journal concludes.

Comments

TRENDING

Nobel laureates join international figures, seek release of Bhima Koregaon accused activists

Nobel laureates Olga Tokarczuk,  Wole Soyinka Counterview Desk  As many as 57 top international personalities, including Nobel laureates, academics, human rights defenders, lawyers cultural personalities, and members of Parliament of European countries, have urged the Prime Minister and the Chief Justice of India to ensure immediate release of human rights defenders in India “into safe conditions”.

Buddhist shrines massively destroyed by Brahmanical rulers in "pre-Islamic" era: Historian DN Jha's survey

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Russia, China to call the shots in Middle East, as Muslim nations turn into house of cards

By Haider Abbas* Only a naive would buy that the ‘situation of ceasefire’ between the State of Israel and Hamas would continue, as if the foiled attempt to demolish Al Aqsa this time, is not be repeated, if not in any near future then in sometime to come. Israel already has spurned the ‘ceasefire’ by storming Al Aqsa after the Friday prayers on May 21.

Collapse of healthcare system? Why 90% of Covid patients treated at home survived

By Bobby Ramakant, Sandeep Pandey* Well known Hindustani classical singer Padma Vibhu shan Channulal Mishra, chosen as one of the proposers of Narendra Modi in Lok Sabha elections, lost his wife and elder daughter to Covid in private hospitals in Varanasi. Younger daughter has accused Medwin Hospital of charging Rs 1.5 lakh for treatement of her sister and not being able to explain the cause of death. Pandit Channulal Mishra has asked for a probe into his daughter’s death from the Chief Minister. The family has also asked for the CCTV footage of the ward where deceased daughter was admitted for a week.

Hunger, lack of food security behind India's 'slip' in UN's sustainable development rank

By Dr Gian Singh*  According to a report released by the United Nations on June 6, 2021, India's ranking of achieving Sustainable Development based on the 17 Social Development Goals (SDGs) set by the 193 countries in the 2003 agenda, which was 115th last year, has slipped to 117th position this year. India ranks not only the lowest among the BRICS countries -- Brazil, the Russian Federation, India, China, and South Africa but also below the four South Asian countries -- Bhutan, Sri Lanka, Nepal, and Bangladesh.

Modi-led regime 'contributed' 60% to rise of global poverty, yet Hindutva is intact

By Bhabani Shankar Nayak* In recent years, the Hindutva politics has caused long term damage to India and Indians. The so called 56-inch macho PM, the propaganda master manufactures and survives all political crisis including the current mismanagement of the Coronavirus pandemic in India. In spite of deaths and destitutions, the social, cultural, economic and religious base of Hindutva is intact.

Rooted in mistrust? Covid-19’s march into rural India is a very different ball game

By Sudhir Katiyar* As the Covid-19 virus penetrates rural India, the rural communities are responding very differently from their urban counterparts who rushed to the hospitals. The rural communities are avoiding the public health facilities and any mention of the disease. The note argues that this supposedly irrational response is based on a deep-seated mistrust of the state by the rural communities. It can not be resolved with routine Information, Education and Communication (IEC) measures suggested in the Government of India SOP for tackling Covid-19 in rural areas.

Courageous, in-depth attempt to confirm common spiritual values of Christ, Buddha

By RB Sreekumar, IPS*  All religions, both theistic and atheistic designed conceptual and practical architecture, for holistic and comprehensive elevation and enlightenment of humanity. PK Vijayan, in his novel “Nirvana of Jesus Christ” (Notion Press, 2020) through creative imagination portrayed personality evolution of the two progenitors of God-centric and sagaciously logical major religions – Jesus Christ of Christianity and Gautama Buddha of Buddhism.

Why hasn't Govt of India responded to US critique of freedom of religion under Modi?

By Fr Cedric Prakash SJ* About two weeks ago, on May 12, 2021, the US Secretary of State Antony J Blinken released in Washington the ‘2020 International Religious Freedom Report.’ This official annual report of the US Government details the status of religious freedom in nearly 200 foreign countries and territories and describes US actions to support religious freedom worldwide. Mandated by the International Religious Freedom Act of 1998, this report highlights the fact that ‘religious freedom is both a core American value and a universal human right’.