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Country wants action-packed next two years

 

Bar imports, jettison PMP for fast track economy; come out of West’s clutches

How would an Indian like to see the country two years later? The question is rocking as prime minister Narendra Modi completed his first two critical years. There is achievement and it raised hopes for more. It is a crucial challenge.

India is keen on breaking from the past 70 years’ policy of PMP – poverty management programme. It was not people alone doing that at home front, but even at the national level governments have been doing just that. Deficit budgeting, tightening of belts, surviving on shoe-string revenues raising taxes and trumpeting about supposed growth were the normal for most governments.

These manifested in a vicious cycle. The US and Europe lured or forced governments since 1966, when Indira Gandhi was prime minister, to devalue rupee in a continuous manner. From almost at par with dollar it has slipped to almost Rs 68 to a dollar. India’s loss is West’s gain. A low-cost rupee has been susidising their economy for decades. If Indian rupee falls so do most other sub-continental economies be it Pakistan, Sri Lanka, Bangladesh or even Iran.

Many “new” economic policies were continuation of the old ones in glittering fresh packages.

People are reposing trust in Modi not for that. They see a spark. They want Modi to give a new dynamic vision – which in many ways he is trying to give. More than that people want him to usher in a brand new economy, which would not be a copy of Manmohanomics, Nehruvian socialism or the so-called Marxism-Leninism. All in Indian context merely did PMP – perpetuating poverty in garb of removing it – garibi hatao.

Modi nobody says is doing that but there are fears he may slip into it. The country is in a cycle of low productivity, little job growth, severe revenue crunch, rising prices, increasing wages and government seeing constricted functioning.

People want him to come out of it. The first two years raised hopes. The next two years need action to achieve these. Two years later he would have little time to convince that he wants to do but is unable to give the people the dreams they cherish. He has to gift them a new economic concept that would spur productivity, jobs, investment and make the country a shining star in a sinking globe.

Nobody would in 2018 buy the argument that global slowdown, which in all probability would continue, failed India. The country wants an independent economic policy – free from IMF-World Bank-WTO intervention – that would increase farm productivity, rural entrepreneurship, overall happiness and higher purchasing power.

For achieving real happiness countrymen want sidelining of global prescriptions, laws and rules, check free imports from China and other countries and create a hub of indigenous activity, innovation, manufacturing and production. They are presently not so bothered about exports. The UN ESCAP has said world export markets are to contract.

India so far has been largely exporting inexpensive goods or re-exporting gold and petroleum products. Even if India, all of a sudden, starts producing high quality goods, there is no buyer in the poverty-stricken western world or strife hit western Asia.

South-east Asia is too busy consuming its own products or that is being flooded from China. India may “Act & Look East” but they have little interest in looking at its closest western neighbour. Yes, they may need it to make and sell a car or other such goods but purchase not much from India. Be it Japan or Korea, they want to survive on the strength of India but give little in real terms except may be some soft loan to sell their metro or bullet train. It does not strengthen Indian economy though may create a façade of progress.

The country has repeatedly fallen into the trap. So when petroleum prices fall, India lives in uncertainty and keep the prices high starting a chain of inflation. Rupee further falls. Farm inputs become expensive. It does not help the farmer or rural worker. He remains poor.

India has to come out of the syndrome of imports. It should not bother about WTO rules. No international rule is above sovereign needs. If that means creating a curtain – bamboo or iron – for a short duration, the country must have it to create the domestic productive strength. Low-cost imports of trivial items from Shanghai or Seoul are ruining not only the economy but also entrepreneurship and indigenous manufacturing.

The party with a difference must bring in that different approach so that the concept of Deen Dayal Upadhyay or Mahatma Gandhi can take shape.

The lack of that is now hitting IT giants hard. The US move against outsourcing has virtually closed doors on India. Large farms like Wipro, Infosys or TCS are relying on external sub-contractors –meaning giving jobs to US nationals- for their survival.

The global firms created the bogey of “ease of business” and lure of investment through a weak rupee. It multiplies their profits several fold as they import their products and push them in Indian market.

To further increase profits, they are pressurizing government for goods and service tax (GST) that is bound to make products expensive with higher tax dozes.

They do not employ people as they set up automated factories.

There are some arguments that counter these views. But overall benefits to India have remained limited. The Modi government must come out of the GST trap, laid by the opposition and some large firms. It should remove income tax and free the highways of toll to spur activities.

Modi should give a rebuff to so-called anti-pollution lobbies which are hindering production on silly pretexts like diesel fuel or environment protection. The judicial persons must be told that all fuels are “polluting” and with Euro VI, vehicular pollution could not be an issue. So there cannot be a ban on any car or any other machine just to steal headlines.

The prime minister is bold enough to call the bluffs and steer the country ahead. He must change the tack and bestow the country with vibrant economic path.

He has brilliant economists in his party, other related organizations and grass-root practitioners who can suggest him dynamic models. He has to bring them to the fore to mark the necessary change by 2018.

 

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