Modi’s Policy Stands Economy In Good Stead

India will rise steadily rather than spectacularly if Modi continues in his style; a boom and a gloom under him are hypes by his supporters and detractors respectively

Indian economy

After recovering the 34,000 mark a few days ago, the Sensex surged by 300 points again today. The wider National Stock Exchange Nifty crossed 10,550 points, too. Pundits are attributing the rise to Morgan Stanley’s favourable India outlook, a good show of Asian and European bourses, an upward trend in Wall Street and other “positive global cues”. When the gross domestic product data is released this Wednesday, showing the country grow expectedly at a rate of 6.9% or beyond, considerably higher than the 6.3% that had depressed many, the stock exchange is likely to reflect the boost again. Real estate, automobiles, capital goods, banking, infrastructure, metals, power, oil and gas, public sector units and consumer durables sectors are all doing well. The losses owe to the loss of confidence in the scam-tainted Punjab National Bank and Simbhaoli Sugars besides those who couldn’t cope with profit-booking. The information technology, electronics and healthcare sectors are not doing well. The slump in IT is partially due to the protectionism of the United States-led West. Telecommunication in the urban landscape had saturated long ago; they will be pushed up considerably when the rural networks turn fully operational. And then, aping the telecom companies that have entered Africa, the IT counterparts should look for new, greener pastures in the not-so-rich countries of that continent as well as South America. The quality of healthcare includes the status of pharmaceuticals although medicines fall under the Ministry of Chemicals. Here, while the Modi government must explore how to get the best out of philanthropic doctors, incentivise small-scale private health centres for rural outreach and initiate a nationwide training of paramedics, India’s generic medicine industry will look up when the patients and their kin are adequately informed of the National Pharmaceutical Pricing Authority that releases lists of affordable medicine for scores of diseases on a regular basis. All these cheap, but as effective and authenticated, drugs are made in India.

In the past four years, the international market has time and again paved the way for an Indian boost. However, the reluctance of the National Democratic Alliance government to go full throttle on economic reforms did not permit an Indian leap disproportionately higher than the global hike. Yet, some judicious decisions were taken in view of the medium-to-long term, which will hold India in good stead in the coming years. One such decision was to not reduce the petroleum products’ prices when the crude oil price per barrel nosedived in the oil-exporting countries. The amount thus earned went into the construction of highways, ostensibly one of the best performing sectors in the Narendra Modi era. When the government says people are getting employed on a large scale for construction works — while not so visibly in other areas — the innovative ideas of Nitin Gadkari are to be credited as much as the decision on excise. The village electrification drive under the former power minister Piyush Goyal helped generate rural employment while former railway minister Suresh Prabhu’s act of making some resources of that department accessible to the private sector will generate jobs there as well. All these policy directions come from the prime minister, of course. One wishes there was a way the stocks could reflect the employment scenario, but they don’t. When the per capita income data is released next, traders should be happy that consumers now have more purchasing power — provided the figure of the increased number of provident fund accounts is more reliable than the Labour Ministry’s assessment of the situation.

India will rise steadily rather than spectacularly if Modi continues in his style. The banks’ non-performing assets in general and the PNB fraud in particular have led to a gloom, which does not have the politically safe solution of loan reconstruction. If the opposition is genuinely angry about the fugitives, it should support the government to privatise public sector banks because daily transactions that the employees officiate over cannot be monitored by the Finance Ministry while the money that recapitalises the fraudulent banks includes the money of citizens who have not been their stakeholders and, therefore, not liable for ‘punishment’. The current shape of the Financial Resolution and Deposit Insurance Bill is another Damocles’ sword hanging over the unassuming depositor. The initial labour reforms were good for employers; the proposed ones will be better for employees, but unlikely to lead to job generation. Where the opposition does not agree, some reforms can still come through executive decisions. The uncertainty caused by the disruptive adjustments like demonetisation and goods and services tax was more a hype by the opposition than a concern of citizens. The government is addressing the GST-related hassles of businessmen by downward revisions of the rates every now and then. If Modi is receiving more flak than what is due to him, it’s because he had raised the expectations too high in 2014.