Skip to main content

"Lacklustre" economic reforms: Market liberals disillusioned, "cultural warriors" alone Modi's top supporters

By Our Representative
In a sharp critique of Prime Minister Narendra Modi’s economic policies, America’s powerful business newspaper, “Wall Street Journal” (WSJ), has said in an opinion piece that “free-market liberals” in India are fast “losing faith that Modi will deliver on his promise to launch India on a path of prosperity.”
Warning that “lacklustre reform record will likely have electoral consequences”, despite whatever “senior politicians” from Modi's BJP argue, WSJ says, if one takes way “market liberals” from his support, “the only opinion makers left supporting the BJP are a group of culture warriors championing ancient Hindu glory.”
Written by WSJ columnist Sadanand Dhume, who is attached with the conservative Washington-based think-tank American Enterprise Institute, the article says, just two years ago, “a small but influential cohort of market-friendly analysts and commentators were among his most ardent supporters”, which is not the case how.
WSJ says, “Today many of them have lost enthusiasm for Modi, who appears to lack both clarity and appetite for bold reforms. The prime minister's advisors may pooh-pooh this development. India's elections, they say, are won by appealing to the masses, not to intellectuals spouting Adam Smith and Friedrich Hayek.”
Insisting that “they are wrong”, WSJ says,  “Loathed by the cultural left, Modi cannot afford to alienate the economic right. Should Finance Minister Arun Jaitley deliver another lacklustre budget next month – his third dud in a row – it will not only hurt India's economy but also his boss's re-election prospects.”
Giving examples of “most influential market liberals” who have signaled their disappointment, theWSJ says, one of them is “former cabinet minister Arun Shourie, who successfully privatized state-owned firms during Prime Minister Atal Bihari Vajpayee's tenure from 1998-2004”.
If Shourie recently accused the Modi government of confusing managing the economy with “managing the headlines”, investment guru Jim Rogers, once an enthusiastic Modi backer, has accused him of having done little “to change the basic macroeconomic problems facing India”, the opinion piece says.
While the government may have rolled out “red carpet for investors”, WSJ says, “In terms of minimizing government, particularly in business, the slogans have little connection with reality.”
Among the examples WSJ offers on failure of Modi to go in for market reforms, WSJ says, the proposed goods and services tax “to stitch India into a common market won't be rolled out this April as planned”, and the government has been forced to beat a retreat “on a proposal to ease land-acquisition norms for industry”.
Further, WSJ says, the reform of labour laws – which currently discourage job growth by making it difficult to lay off workers during a downturn – has been left to state governments; and the UPA directive “compelling companies to channel some of their profits toward social objectives continues, which is being used by politicians to “encourage” businessmen to fund their favorite boondoggles.
Finally, WSJ regrets, “Instead of winding up the previous government's flagship programme — a rural job guarantee that wasted billions of dollars — Modi plans to increase its funding.”
Pointing out that the Modi administration displays “no philosophical clarity on the economy”, WSJ says, this is clear from the fact that he seems to believe that “he can stem the rot in state-owned companies by picking the right managers rather than privatizing the firms.”

Comments

STRUCTURAL REFORMS ?

Speaking at the Global Business Summit yesterday , Shri Arun Jaitley said :
" We will introduce Structural Reforms in the forthcoming Union Budget "
What is the current structure of Union Budget ?
# SOURCES of REVENUE
* Taxes ( Direct + Indirect )
* Borrowings ( Domestic + Foreign )
* Sale / Leasing of Assets ( PSUs + Natural National Resources )

# DEPLOYMENT of REVENUE
* Administrative Expenses ( Salaries / Pensions / Maintenance / Subsidies , etc )
* Interest ( + Principal Amount ) on borrowings
* Developmental Expenses ( Creation of new Assets / Infrastructure )
* Lending

Broadly speaking , this is the current structure
Most of the time , all that the successive Finance Ministers have done is to slightly " Increase / Decrease " the " Sources and / or Deployment " of the funds , here and there
Once in a while , some Finance Minister , even introduced altogether NEW source or a NEW way to spend the revenue !
But so far , no one has attempted to change the FUNDAMENTAL STRUCTURE !
I wonder whether Shri Jaitleyji's BUDGETARY REFORMS would incorporate the following Structural Changes for which , I have sent to him ( and to most of his cabinet colleagues ), dozens of emails ? :

* Total abolition of Personal Income Tax ( Revenue Loss of approx Rs 2.5 lakh*crores )
* Introduction of 2% Bank Transaction Tax - BTT ( Revenue Gain of Rs 15 lakh*crores )
* Decreasing Corporate tax slab-rates based on No of permanent employees ( to encourage job creation )
* Perpetual Amnesty Scheme ( no questions asked as to the source for CASH deposits in Jan Dhan Accounts , if
funds from these Accounts are invested in Govt approved INFRASTRUCTURE SPVs )
So far , Rs 30,000 Crores have been deposited in Jan Dhan Accounts . With introduction of this REFORM ,
that figure will rise a thousand times to Rs 30,000,000 Crores , within one year !
These investments will generate 10 million jobs each year and raise our GDP to 10 % in 2016-17 !
* Transferring 10% of GST ( ie 1.8 % out of 18 % ) to PPF accounts of the buyers ( increase Domestic Savings )
* Embedding of RFID chips in Currency Note ( read Kurzweilai.net ) to solve twin problems of BLACK MONEY and
CORRUPTION
* Introducing " Budgeting By Objectives " ( instead of Monetary Allocations, setting Physical Targets for Ministers )
* Quarterly Performance Review of " Targets vs Actual Achievements " to be published on Govt web sites
* Thru an Online Opinion Poll , involving citizens in framing of the Ministry-wise Physical Targets before the budget

After second World War , German Economy was in shambles
68 years later , Germans are still thanking their then finance minister , Ludwig Erhard , for the miracle ("Wirtschaftswunder," German for "economic miracle") he brought through his " Out of the Box " reforms to revive the German Economy
I hope Shri Jaitley displays similar courage on 29 Feb 2016 - even if he is not bothered being remembered or not !
-------------------------------------------------------------------------------------------------------------------------------
hemenparekh.in / blogs
31 Jan 2016

TRENDING

IMA vs Ramdev: Why what's good or bad for goose should be good or bad for gander

By Dr Amitav Banerjee, MD* Baba Ramdev and his associate Balkrishna faced the wrath of the Supreme Court for their propaganda about their Ayurvedic products and belittling mainstream medicine. Baba Ramdev had to apologize in court. His apology was not accepted and he may face the contempt of court with harsher punishment. The Supreme Court acted on a public interest litigation (PIL) moved by the Indian Medical Association (IMA).

Women innovators on simple, revolutionary alternate solutions for water problems

By Proshakha Maitra, Mansee Bal Bhargava* The detrimental effects of uncontrolled population rise and accelerated change in the global climate have posed tremendous pressure on the water and sanitation. This calls all stakeholders, from both developed and developing nations, to improve their resilience and to instigate sustainability. It is more crucial than ever to optimise the use of the resources we have on hand since the world population is projected to reach 9.7 billion by 2050.

Magnetic, stunning, Protima Bedi 'exposed' malice of sexual repression in society

By Harsh Thakor*  Protima Bedi was born to a baniya businessman and a Bengali mother as Protima Gupta in Delhi in 1949. Her father was a small-time trader, who was thrown out of his family for marrying a dark Bengali women. The theme of her early life was to rebel against traditional bondage. It was extraordinary how Protima underwent a metamorphosis from a conventional convent-educated girl into a freak. On October 12th was her 75th birthday; earlier this year, on August 18th it was her 25th death anniversary.

Alleged killing of another Bangladesh youth inside Indian territory: NHRC inquiry sought

By Kirity Roy* There was yet another incident of the killing of a Bangladeshi youth by the Border Security Force personnel attached with ‘Barthar’ BOP of ‘G’ Company of 75 BSF Battalion. In last five years several incidents of killings happened under this police station’s jurisdiction and the cases will get the award as “Not Guilty” as usual.

Modi model, Hindutva icon 'justified' alliance with Muslim League before Independence

By Shamsul Islam*  Our PM describes himself as ‘Hindu’ nationalist and member of RSS. He proudly shares the fact that he was groomed to be a political leader by one of the two fathers of the Hindutva politics, MS Golwalkar (the other being VD Savarkar) and given the task of establishing Hindutva polity in India after eradicating secularism.

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. 

Crusader for people’s causes, this Hollywood actor entered 'unexplored zones' in US

By Harsh Thakor*  Marlon Brando on April 3rd completes his birth centenary. He perished in 2004, on July 1, aged 80 years. Arguably in Hollywood Brando penetrated sensitivity and versatility at an unparalleled scale and discovered new horizons or explored path breaking zones in acting.

Nuclear power expansion: Is AEC's new, 'unrealistic' target fully backed by PMO?

By Shankar Sharma*  Another unrealistic and tall claim by Atomic Energy Commission (AEC) has been announced: India is eyeing 100 GW nuclear power by 2047, the AEC chairman  AK Mohanty   has said. A few years ago, the dream target for the Indian nuclear establishment was 275,000 MWe of nuclear power by 2050 (as per DAE document of 2008 "A Strategy for the Growth of Electricity in India”). Now this target of 100 GW nuclear power by 2047. And as at the end of February 2024, the actual nuclear power capacity was only 7,480 MWe, which formed only 1.7% of the total power capacity in the country. 

'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.

How huge crowd at Mukhtar Ansari funeral is comparable to BJP's 'people's court' talk

By Vidya Bhushan Rawat*  The massive crowd at the funeral of Mukhtar Ansari in Mohammadabad reflects the power and influence that his family wields in the area. One can't deny that he had enormous power in Ghazipur and Mau districts. But the crowd that came and chanted slogans in his favour does not exonerate him of his conviction by the court.  It is important that we understand this.