Dear PM Modi, First Do ONE, Then Another Nine To Fix The Economy
These ten options are critical to pull India’s economy out of its current funk.
Video Editor: Varun Sharma
Video Producer: Sonal Gupta
Cameraperson: Mukul Bhandari
India’s economy can be described by a four-letter word today. Oh c’mon, it’s not what you are thinking … even the sarkari (government-owned) State Bank of India says that GDP growth could fall to around 4 percent when the July-September number is revealed.
So let’s answer a small quiz. I will throw ten options at you. All of these are critical actions required to pull India’s economy out of its current funk. At the end, I will ask you one final question. Here goes.
Restart the flow of credit, which has shrunk to inhuman levels. Its growth is down to 2.7 percent for industry, the lowest in 12 months. And credit growth to services has plummeted to 7.3 percent, the lowest in 24 months. NBFC disbursements are down by a gut-wrenching 36 percent.
Stop celebrating the growth in nominal FDI, from $ 42 billion to $ 62 billion over the 2009-19 decade. As a share of the GDP, it’s fallen from 3.4 percent to 2.3 percent. Ask why it’s not crossed $ 100 billion this year.
Do everything possible to ensure that Vodafone and Airtel continue to remain solvent.
Try to understand why our exports have collapsed. Yes, collapsed, in the noughties. We ranked a healthy tenth in global exports, growing at 20 percent every year, nearly twice the world rate. But over the last five years or so, we’ve slipped to almost the 33rd spot, even as annual exports have stayed flat at around $ 325 billion.
Don’t get blind-sided by our“spectacular” rise in the World Bank’s Ease of Doing Business (EODB) Index. Yes, the Modi government needs to be patted for pulling India up by 79 places (from 142nd in 2014 to 63rd in 2019) on its watch. But on the meatier issues of “protecting minority investors” and “enforcing contracts”, we’ve either slipped or stayed stagnant.
Never forget that we’ve slipped – yes, slipped – ten spots on the global competitiveness index.
Acknowledge that we’ve“copped out” of the RCEP (Regional Comprehensive Economic Partnership). The harsh truth is that our manufacturing sector is simply too trussed up and uncompetitive to survive in this dynamic trade block of 3 billion people producing a fifth of the global GDP. We must dare to reform our hidebound economy and join RCEP, sooner than later.
Arrest the rising tide of protectionism, which in turn is riding on the bogey of “economic nationalism”. Next to Donald Trump’s whimsical, quasi-literate tariff wars, India has imposed the maximum number of trade restrictions in the past three years. Let’s not regress into the high-cost, inefficient, autarkic 1970s/80s.
Don’t kill the messenger when Moody’s Investor Services cuts India’s sovereign outlook to negative.
Finally, let’s learn from that stark, unprecedented, never-occurred-before duality that has, well, become a reality today (I for one never thought it would happen in my lifetime) – business confidence has dipped to its lowest point in 6 years (it’s at 103 now compared to the earlier low of 100 recorded in that “abysmal UPA” year, circa 2013), even as the stock market is at lifetime highs. Why?
The answer to India’s economic conundrum perhaps lies here!
So now my final question. Imagine that Prime Minister Modi summons you and asks: I need to concentrate all my energies on one, just one, option. It should be the most powerful stimulant, one that could heal several other ills. Tell me, which one out of the ten options should I pick?
Of course you, dear viewer, will have your call, but I have no hesitation in picking Number Ten.
Because today, India’s entrepreneurs feel “othered”, their mistakes criminalised, their failures magnified, and their resources circumscribed.
But if they are feted as “wealth creators”, as per Prime Minister Modi’s own clarion call from the ramparts of the Red Fort on 15 August 2019, their self-esteem shall get reignited.
Honestly, if PM Modi can genuinely pull this mindset change off within his regime, India’s economic gloom will dissipate.
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