Finding a mention in The Economist weekly magazine is usually a harrowing thing for
state leaders. Very rarely do anyone get praised for what they had done. Such
rare admiration generally occurs long after they had retired or had been removed
from power and when The Economist
goes after the fallacies of their successor. This week’s issue of the magazine
appears with the cover of Narendra Modi riding the tiger of economic reforms.
On closer inspection, the tiger appears to be made of paper and the word ‘illusion’
come into view. It presents two major articles on India – the state of reforms
and the environment ministry’s directive, regulating supply of cattle for
slaughter.
The articles list out the accusations against
the government – the foremost being that he is a good administrator, but a poor
reformer. The counts on which he had failed are so general in nature, that can
be leveled against any government that ruled post-colonial India. The
shortcomings are listed as follows.
1. Lending to
industry is contracting, for the first time in 20 years (isn’t this due to the
rise in NPA of banks?)
2. He should be
working to simplify the over-exacting labour law
3. Less repressive
approach to protests in Kashmir
4. Obligation of
banks to make at least 40% of all loans to “priority sectors” such as farms and
small businesses
5. The electricity
firms remain fundamentally unprofitable, because authorities refuse to end the practice
of giving farmers free power
6. Fares remain
absurdly cheap for political reasons
7. Companies deemed
to earn excessive profits are hounded: makers of stents, pharmaceuticals and
seeds have been forced to cut prices recently
8. Waiver of
farmers’ loans will bring short-term relief but make it harder for farmers to
borrow in future
On the other hand, the magazine grudgingly concedes some credit for the Modi regime. First among them is the absence of corruption at least at the highest levels of government. It even admits reluctantly that Modi and his party is likely to retain power in the next election slated to be in 2019. The points which are deemed advantageous are as follows
1. A good
administrator but not a good reformer
2. Corruption seems
to have abated, at least at the highest levels of government
3. Deserve credit
for bringing macroeconomic stability
4. Double-digit
inflation and ballooning current-account deficits have been absent
5. Liberalisation
of investment rules has helped to attract record amounts of foreign cash
6. The stock market
has boomed
7. A new bankruptcy
law, introduced in May 2016, may enable the enforcement of lending contracts
8. Made it possible
to get subsidies straight to the needy, cutting out venal intermediaries, who
in the past pilfered up to three-quarters of the money in the system
Now, if we balance the pros and cons
suggested by The Economist, to which
side the balance will swing?
