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

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Don't agree on domestic subsidies, ensure food security at WTO meet: Farmer leaders

Counterview Desk  The Indian Coordination Committee of Farmers Movements (ICCFM), a top network of farmers’ organizations in India, in a letter to Piyush Goyal, Minister of Commerce and Industry, has asked him to “safeguard food security and sovereignty, even as ensuring peasants' rights" at the 13th Ministerial Conference of the World Trade Organization (WTO MC 13), to take place from 26 to 29 February 2024 in Abu Dhabi.

Students, lawyers, professors detained in Delhi for demonstrating in support of farmers

By Our Representative  About 25 protestors, belonging to the civil rights network, Campaign Against State Repression (CASR), a coalition of over 40 organisations, were detained at Jantar Mantar for holding a demonstration in support of the farmers' stir on Friday. Those detained included students, lawyers and professors, including Prof Nandita Narain and Prof N Sachin. 

Sharp 61-85% fall in Tech startup funding in India's top 'business-friendly' States

By Rajiv Shah Funding in Tech startups in top business-friendly Indian states has witnessed a major fall, a data intelligence platform for private market research has said in a series of reports it has released this month. Analysing Tech startup data of Telangana, Maharashtra, Delhi NCR, Gujarat, Tamil Nadu, Karnataka and Kerala, Tracxn Technologies Ltd , the Bengaluru-based research firm, finds that except for Kerala, funding witnessed a fall of anywhere between 61% and 85%.

Solar energy funding dips 9% in 2023; 2024 'kicks off' with US$1 billion investment

By Lakshmitha Raj*  Solar energy tech companies have already secured slightly over US$1 billion in funding in 2024 (till Feb 7, 2024) after total funding into Solar Energy companies in India fell 9% to US$1.55B in 2023 from US$1.7B in 2022. A total of 39 $100M+ rounds have been closed till date, with Delhi leading the city-wise funding, followed by Gurugram and Mumbai.

Maize, bajra, jute, banana cultivation banned off West Bengal border: Plea to NHRC

Counterview Desk  West Bengal-based human rights defender Kirity Roy, who is secretary, Banglar Manabadhikar Suraksha Manch, and is national convenor of the Programme Against Custodial Torture & Impunity, in a representation to the chairman, National Human Rights Commission, second within few days, has bought to light one more case of trespassing and destruction of a fertile banana plantation by BSF personnel along the Indo-Bangladesh border, stating, despite a written complaint to the police has taken "no initiative".

India second best place to invest, next to UAE, yet there is 'lacks support' for IT services

By Sreevas Sahasranamam, Aileen Ionescu-Somers*  The United Arab Emirates (UAE) is the best place in the world to start a new business, according to the latest annual Global Entrepreneurship Monitor (GEM) survey. The Arab nation is number one for the third year in a row thanks to a big push by the government into cutting-edge technology in its efforts to diversify away from oil.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

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".

Mahanadi delta: Aggressive construction in flood plains, reduced fish stock, pollution

By Sudhansu R Das  Frequent natural calamities, unemployment, low farmers’ income, increase in crime rate and lack of quality human resources to strike a balance between growth and environment etc. continue to haunt the state. The state should delve into the root causes of poverty, unemployment and natural calamities.