Modinomics, the route to economic revival and growth

You need neither a degree from Harvard University nor ‘animal spirit’ to get the Indian economy going. What you need is common sense and commitment — Narendra Modi has both...

Modi is a maximalist who wants the most for India

Frankly you don’t need either a degree from Harvard or ‘animal spirit’ to revive the Indian economy. If knowledge imbibed at Harvard and unleashed animal spirit could have propped up the economy then it would not have been in such a sorry mess today nor would we have had to witness our Prime Minister and Finance Minister blaming the world for India’s plight. This reality, however, has not prevented our Harvard educated Finance Minister from rudely poking fun at the BJP’s prime ministerial candidate Narendra Modi. Among the many insults hurled by P Chidambaram is his boorish comment that Narendra Modi’s knowledge of economic affairs could be written on the back of a postage stamp. True to his style, Narendra Modi has given it back in full measure and more: While addressing economists, business executives and diplomats at the India Economic Convention 2014 organised by India Foundation in New Delhi last week, he said his knowledge was far less than what could be written on the back of a postage stamp.

The irony was not lost on those who tuned in to listen to Narendra  Modi talk about his economic agenda. That a Finance Minister who has spectacularly failed to halt, leave alone reverse, India’s rapid economic decline would have the temerity to scoff at a Chief Minister who has stayed the course of economic growth and development and heads a State whose contribution to the national economy has helped in no small measure to keep the latter afloat tells its own story of unbridled arrogance. But while being supercilious may titillate the establishment media, it does not detract from the fact that he will be leaving the robust economy which the Congress inherited in 2004 in a shambles.

Nor can P Chidambaram’s smart retort hide the fact that Manmohan Singh, touted as an ‘economist’ Prime Minister and wrongly credited for the 1991-1996 reforms that were part forced on us as part of a bailout package by the IMF and part driven by PV Narasimha Rao’s agenda to discard the baggage of Nehruvian socialism, has singularly contributed to killing the India Story. A feckless Prime Minister who chose to be in office as a stooge of the Nehru Dynasty and presided over a recklessly corrupt regime while feigning ignorance of the unrestrained loot right under his nose could not have been expected to fuel the economy with either policy or imagination. That many expected otherwise shows the Great Indian Rope Trick is not entirely a myth.

Speaking at three separate events in New Delhi this week, Narendra Modi demonstrated that the solution to the myriad woes that afflict the Indian economy can be found in good old-fashioned common sense and that thing called political determination. Both are understandably alien to those who survive on scraps from the high table of the Nehru Dynasty: Their Pavlovian response would be to peddle the voodoo economics of Sonia Gandhi’s National Advisory Council as the prescription to cure India’s creeping economic paralysis. There was a time when Manmohan Singh would, in unguarded moments of candour, call for out-of-the-box thinking — that was long before he decided to unleash his “animal spirit” only to discover even if the spirit was willing the flesh was too weak to respond to the looming crisis.

To think out of the box, to think radically, to think big and to think beyond today and tomorrow requires both common sense and commitment — call it political determination if you will. Narendra Modi is right when he says governance is not about rocket science, it is about clarity of purpose and integrity of action. Once these are in place, the rest follows by way of forward looking policy and implementable programmes that address short-term, medium-term and long-term concerns. It is not enough to talk about reviving investor confidence so that the tap of investment is turned on. To create that confidence, good governance is a sine qua non as is faith in the political leadership not to be persuaded by bogus schemes of which we have seen one too many during the wasted decade of UPA rule.

When Narendra Modi talks of investing in infrastructure, reviving the manufacturing sector, nursing the agricultural sector, boosting the service sector and infusing all of them with state-of-the-art technology, he is not really saying anything radically new. To meet the demand for 10 million jobs a year, all this needs to be done. But what makes him stand out and his voice heard in the cacophony of prescriptions is the sincerity with which he says this and the experience he draws upon. He does not pander to populism that the Congress believes fetches votes but also fetches ruination. He does not promise hollow rights but emphasises on dignity of labour and empowerment. He does not talk of giveaways but asset creation and tapping the entrepreneurial spirit and aspiration of Young India.

Many would argue that it’s not pragmatic to talk about the need for Indian companies to become globally competitive and bravely confront challenges in the run-up to elections. Even in the US, Presidential election candidates, irrespective of their political beliefs, turn to peddling protectionism and raising the bogey of foreign competition. That’s considered conventional wisdom. It requires courage to turn conventional wisdom on its head and Narendra Modi has dared to do precisely that. He has talked about the need for Indian companies, big and small, to become competitive and slug it out in the global market with competitors. He has talked about the need for changing attitudes, the need to look beyond the obvious, to embrace challenge as an opportunity, to invest in technology. He frames diplomacy of the future in terms of economic engagement and trade.

That a man whose knowledge can fit the back of a postage stamp eloquently talks about next generation technology, who calls for investment in biotechnology and environment technology, bears testimony to the stupidity of those who make bold to mock at him. Narendra Modi does not look at the small picture, the minor details, the nuts and bolts; that’s the job of those who are tasked with the responsibility of implementing policy. He thinks out of the box and he thinks big. That’s the way it should be. A Prime Minister should really be looking at the big picture, setting targets and goals which are seemingly impossible to meet. For evidence, go back to his speech at the BJP National Council on January 19 in which he talked of 100 new cities to cope with irreversible urbanisation, super-fast trains with dedicated corridors, new expressways and highways, and high technology-driven high yield farming, among a host of other big ticket ideas.

It would be easy to scoff at him and ask, but where will the money come from? The answer to that question is simple: Once investor confidence is restored and the economy’s slide is reversed, the India Story will once again capture the global imagination. Let us not forget that despite the post-Pokhran II sanctions the BJP-led NDA was successful in mobilising resources for path-breaking big ticket projects. Prime Minister Atal Bihari Vajpayee did not allow minor details to come in the way of realising big picture ideas. A lot happened. A lot more shall happen when Prime Minister Narendra Modi takes charge.

Incredible ignorance

A response to Salil Tripathi - II

Facts are sacred; comment is free.


In his column ‘Here, There, Everywhere’, published in Mint under the headline “Incredible impunity” on February 29, 2012, Mr Salil Tripathi displays incredible ignorance (I sincerely mean no offence for he is a writer gifted with incredible intelligence) of Gujarat’s incredible economic growth and incredible prosperity, both of which are the envy of every State in the country.

The economic development and growth, and the consequent prosperity, witnessed in Gujarat have whetted the aspirations of Indians from Kashmir to Kanyakumari. They have brought about a paradigm shift in the people’s expectations from their Government – in their respective States; at the Centre. All this, of course, is inconsequential to Mr Tripathi who is neither impressed nor moved by Gujarat’s giant strides!

Reluctant to use the term ‘Modi Model’ for reasons that do not merit elaboration, a senior CPI(M) leader of West Bengal, reflecting on what went wrong with the Left Front that led to its decimation in the 2011 Assembly election, ruefully told me: “If only we had worked towards adopting the Gujarat Model…”

Those who are determined to demonise Mr Narendra Modi and deny him any credit for the ‘Gujarat Model’ of remarkable growth and prosperity are welcome to live in cussed denial, but that won’t change the ground reality – Gujarat’s economy has grown; Gujaratis (both Hindus and Muslims) have prospered. Nor will it influence the manner in which investors at home and abroad view the State.

Vibrant Gujarat has set new standards for other States to emulate. That entrepreneurs from other States, including Jammu & Kashmir, want to set up their businesses in Gujarat explains what sets this State apart from others. That difference is on account of the political leadership of the day.

Comparisons, as the adage goes, can be odious. Hence they are best avoided. But since Mr Tripathi has compared Gujarat to Maharashtra in a strenuous effort to belittle the former’s achievements, it would be in order to not only suggest that he and other critics of Mr Narendra Modi should revisit the socio-economic profiles of the two States for a closer scrutiny of details, but to also point out that a vast gulf separates these two States.

That gulf is about probity in public life; it’s about the integrity of those who are in charge of the Government; it’s about, to put it in two words, good governance.

Mr Tripathi is right when he says Gujaratis are an enterprising lot and that they have always done better than other Indians, even in trying circumstances – for instance, when Chimanbhai was Chief Minister of the State, the man who was known as “Chiman Chor”. Gujarat’s economic growth and prosperity over the past decade has been accompanied by a thorough cleansing of the system. Mr Narendra Modi can justly claim: “Na khata hoon na khilata hoon.”

That, understandably, leaves many disconsolate.

Stray statistics, confusing and plucked at random, find mention in Mr Tripathi’s column: They have been quoted to put down Gujarat. I can only cite from official documents a set of statistics that I have cross-checked with friends in the Planning Commission:

Gross Domestic Product: At current prices, Gujarat’s share at Rs 5,13,173 crore is 7.17 per cent of India’s GDP. At constant prices (2004-05), it’s Rs 3,65,295 crore, or 7.48 per cent of India’s GDP.

Net Domestic Product: At current prices, Gujarat’s share at Rs 4,40,942 crore is 6.89 per cent of India’s NDP. At constant prices (2004-05), it’s Rs 3,09,409 crore, or 7.16 per cent of India’s NDP.

Per Capita Income: At current prices, it is Rs 75,115 compared to the national average of Rs 53,331. At constant prices (2004-05), it’s Rs 52,708 compared to the national average of Rs 35,993.

Monthly Per Capita Consumer Expenditure (NSS 2009-10): In rural areas of Gujarat it is Rs 1,065 compared to the national average of Rs 953. In urban areas it is Rs 1,914 compared to the national average of Rs 1,856.

While the manufacturing sector and agriculture have suffered huge reversals across the country in the recent years under the UPA’s tutelage, Gujarat has bucked the trend. Manufacturing and agriculture continue to register impressive growth in the State. In 2002-03, ports in Gujarat were handling 841 lakh tonnes of goods; in 2010-11, that figure had grown to 2,309 lakh tonnes.

Mr Tripathi mocks at Mr Narendra Modi’s claim that Gujarat will soon be in a position to provide power to power-starved States. He overlooks the fact that Gujarat is the only State which can today boast of 24x7 power supply to industry, farms and homes. It’s absurd to compare Gujarat’s power generation capacity (GSEB alone produces 4,996 MW) to that of north-eastern States. The former has heavy industrial and agricultural demand for power; the latter has virtually none.

I wish Mr Tripathi had compared the power situation in Gujarat with that which prevails in Maharashtra or Uttar Pradesh (where I live and hence am acquainted with the reality) or India's capital city, Delhi (where I work and hence am also acquainted with the reality).

The comparison reminds me of how Jyoti Basu had once proudly proclaimed that Calcutta, as Kolkata was then known, had left behind its terrible days and nights of relentless ‘load-shedding’. What he forgot to mention is that West Bengal had left behind its glory days as the industrial hub of the eastern hinterland.

I could go on citing statistical details, but the list is far too long. Those who are interested in the specifics will find them in the latest Socio-Economic Review of Gujarat. A patient reading will tell you why it’s incorrect (and grossly unfair) to try and diminish Gujarat’s spectacular social and economic achievements.

“So many things work properly in Gujarat that it hardly feels like India,” the Economist said in a review of Gujarat’s economy. The report was telling published under the headline, “India's Guangdong: A north-western State offers a glimpse of a possible industrial future for India.” The report can be read here.

Mr Tripathi has chosen to play fast and loose while discussing Gujarat’s commitment to fiscal responsibility. It’s possible he is not aware of the minutiae of the FRBM Act and the fact that the 13th Finance Commission has set targets for each State Government and every State has to periodically report progress which is documented. Compared to other States, Gujarat has been well ahead of meeting the targets that were set for its compliance to fiscal responsibility. The details are available over here for those who are interested in the specifics.

Admittedly, nobody is perfect. If Mr Narendra Modi is guilty of anything, it is of pursuing purposeful policies of enablement and empowerment of all, irrespective of gender, caste and faith, while eschewing wasteful policies of entitlement. That’s where the 'Modi Model', or call it the 'Gujarat Model' if you wish, stands out in stark contrast to the 'NAC Model'.

That, understandably, leaves many incandescent with rage.

(To be continued.)

Upswing in relations with Israel

Mark Sofer, Israel’s Ambassador to India, is returning home after completing his tenure. During the four years he has spent in India, our bilateral relations with Israel have grown and branched into new areas of mutually beneficial cooperation

Four years after he arrived in India as Israel’s Ambassador, Mr Mark Sofer returns to his country, leaving behind a large number of friends and well-wishers and carrying with him happy memories of his stay here. During these four years India-Israel relations have gathered speed and branched into new areas of cooperation that are mutually beneficial. There has been a quantum leap in bilateral trade. Once the Free Trade Agreement is inked, hopefully by the end of 2011, trade could treble in a couple of years.

“I am returning to Israel with a great deal of optimism about our relations with India,” Mr Sofer told me when we met recently. “There are two reasons why I say this. First, there is tremendous goodwill across India towards the state of Israel. This goodwill is not just something that is spoken about, it is actually felt. Similarly, there is tremendous goodwill in Israel for India. Second, there is something special about India: It is the complete and utter lack of anti-Semitism. There is no a priori negative reaction towards Jews,” he said by way of elaboration.

To read excerpts from my conversation with Mark Sofer, click here.

India awaits NaMo

The juggernaut moves on

The venerable Economist has finally taken note of what is common knowledge in India: Gujarat is racing ahead of the rest of the country. The credit for Gujarat's booming prosperity which has benefited all communities (Muslims included, lest the point be missed or lost in the cacophony of Left-liberal rant)should go to Gujarati entrepreneurship and Chief Minister Narendra Modi's visionary leadership.

Here are two telling excerpts from the report, headlined "India's Guangdong",published in the latest issue of the Economist:

These days Gujarat accounts for 5% of India’s population but 16% of its industrial output and 22% of its exports. Its growth has outpaced India’s (see chart) and it wins accolades from business people. A recent comparison of Indian states by McKinsey, a consultancy, waxed lyrical about Gujarat. It might yet play the role of industrial locomotive for the country, as Guangdong province did for China in the 1990s. There is lots of excited talk about exporters switching from China to India...

Gujarat could be a vision of India’s future, in which manufacturing flourishes, soaking up rural labour. Its economy is expected to grow by double digits, even as India’s rate slows to 7-8% this year...

The Congress, of course, would brush aside the Economist's assessment, insisting 'poverty in an entitlement-driven India is better than prosperity in a entrepreneurship-driven Gujarat'. Recall how the party and its pseudo-secular drum-beaters, among them the Left-liberal intelligentsia and the intellectually bankrupt Delhi Commentariat, once argued that 'corruption is better than BJP' while propping up the Jungle Raj of Laloo Prasad Yadav in Bihar.

I can almost hear Teesta Setalvad and Arundhati Roy ranting -- the first in television studio debates which increasingly look like WWF matches, the second through 10,000-word essays in Outlook and Frontline -- that it's all a Right-wing conspiracy. What would the poor (and I don't mean so literally) sods do if India were to say goodbye to all that is wretched with our economy, and hence our society and polity?

[Narendra Modi at India Today Conclave 2011. Watch 2:44 onwards.]

It's a pity that the Delhi4 are yet to recognise what the world has begun to hail as India's biggest (and only) success story since 2004: NaMo's leadership and its consequent bounty of riches for Gujarat. And reconcile themselves with the reality. But then again, D4's reading habits are restricted to Times of India, possibly Hindustan Times, and Dainik Jagran. These publications provide stimulating fodder for their addled minds.

Meanwhile, our 'economist' Prime Minister should check out the latest issue of the Economist for a reality check on which way is India headed under the NAC's tutelage and which way is Gujarat headed under NaMo's leadership.

[Also see 'Gujarat shows astounding growth in female literacy': NaMo leads from the front to educate the girl child. By Ashiya Parveen.]