Talk Point: Does PM Modi’s recent speech put to rest worries about India’s economy?

Narendra Modi addressing the Golden Jubilee Year Celebrations of the Institute of Company Secretaries of India, in New Delhi | Source: pib.nic.in

Prime Minister Modi’s in a speech Wednesday promised to fight critics of the NDA’s economic policies. Defending GST and demonetisation, the Prime Minister argued that he may not be an economist, but a slump in the GDP for a quarter was not a harbinger of doom.

With data and slides, Modi stressed that his government had performed better than the previous UPA government and highlighted reforms implemented so far. The Prime Minister stressed on his government’s commitment to reforms and said it was ready to take decisions that would turn the economy around.

Question: Does Prime Minister Modi’s recent speech put to rest anxieties over India’s economy?

For the Modi government, there is no time for defensiveness or denial 

Milan Vaishnav
Senior fellow and director of the South Asia program at the Carnegie Endowment for International Peace

The PM’s recent speech defending his government’s economic programmes and pledging to arrest the slowdown in the economy could not have come sooner.

The first step in reversing the slumping economic trend is to accept you have a problem. While Modi acknowledged the country’s slumping growth in his speech, he refused to accept blame for other economic travails. For instance, Modi had little to say on the investment slowdown, which has festered for over three years now.

The government came to power believing it could grow the economy fast enough to minimise the twin balance sheet issue. This optimistic projection has not come to pass.

On demonetisation, Modi is banking on long-term gains, but the evidence to date suggests the government wildly miscalculated on the short-term economic gains. Thus far, notebandi has been a political winner rather than an economic one.

Finally, the GST roll-out has been rocky, to put it mildly. Over the long haul, the GST will be a net positive for the economy but the government must work overtime to fix the plethora of implementation roadblocks. For the Modi government, there is no time for defensiveness or denial. If it goes down that path, it will merely be repeating the sins of its predecessor.

Instead of indicating government’s response, Modi concentrated  on comparisons with the last three years of the UPA

Abhijit Sen
Former member of the Planning Commission of India and currently professor of Economics in Jawaharlal Nehru University

Anxieties over the economy vary. At ground-level, the main issues remain farmer distress, lack of employment growth and fuel prices. But demonetisation and GST roll-out have also raised doubts over this government’s ability to manage the economy. It is these doubts which were aggravated when both Subramanian Swamy and Yashwant Sinha pointed to a continuing slow-down of GDP since January 2016 and warned of possible economic “tailspin” and “hard-landing”.

The Prime Minister’s speech at the Institute of Company Secretaries was clearly a response to the situation created by these seniors in his own parivar. Although Modi started by saying that he was not well versed in economics, the speech was mainly around a presentation on economic data which, significantly, had no mention at all of farmer distress, employment or fuel prices. It was aimed against “some people who sleep well only after they spread a feeling of pessimism all around”.

The main point of the speech was that GDP growth of single quarter (2017-18, Q1) should not be taken too seriously, especially when other indicators, including inflation, foreign exchange reserves, and deficits (both fiscal and on external current account) are presently better than what had been inherited from the UPA.

Such reassurances against a possible economic collapse was probably necessary.  But, instead of acknowledging that problems do exist and indicating what government would do in response, the rest of the speech was simply comparison of the present with the last three years of the UPA. Since performance in those years was clearly bad and led to a rejection by the electorate, this is unlikely to restore belief in acche din.

The stage is now set for a slanging match over economic data (for instance, that almost all improvements claimed were during June 2014 to January 2016 when world oil prices fell from $110 to $30) instead of serious debate on economic policy (for example on fiscal stimulus as against interest rate cuts in the background of a seriously stressed banking sector).

The PM stuck to the political mantra that has worked for him– cede no ground to the opposition.

Pranab Dhal Samanta
Editor, ThePrint

First up, it may have come across as an emphatic state of the economy address by a Prime Minister whose government is under duress for its economic performance, but PM Narendra Modi’s 4 October speech went far beyond just that.

In fact, at the core of the PM’s address was a sharp political riposte, not an economic report card as many would say.

Despite the visible pressure on him, the PM stuck to the political mantra that has worked for him thus far — cede no ground to the opposition.

So, before offering any explanation or data, he set it up for the audience by first tearing into the opposition, his critics, and naysayers in his party.

He used the Shalya analogy from the Mahabharata  to bunch them as negative minded opportunists, who tailor data to suit their arguments. Then, he picked on another familiar narrative peg of positioning himself as the ‘outsider’ to address the question of criticism by economist-reformers.

Here again, the PM did not cede an inch. He pulled out data from ‘when big economists ran this country’ to show how they fared. While he gave no context to those numbers, in that one sweep he made light of the likes of Yashwant Sinha and P Chidambaram, including, perhaps, even his predecessor Manmohan Singh.

As for data, Modi made it clear if they could produce negative data, he could produce just the opposite and paint a different picture.

While making no political concessions, he did leave the door open for considering any suggestions for improvement in the implementation of GST.

In other words, the PM let it be known that he’s willing to be flexible but at zero political cost.

The speech was probably Modi’s most significant political statement since 2013

Shekhar Gupta

Editior-in-Chief, ThePrint

If you want to resolve a problem, the first step has to be accepting that it exists.That is what the prime minister’s speech earlier this week did.

He said things have been worse in the past, and that things are not as bad as they seem to be. He also said it is not because he has not tried to do something and maybe there are some side effects due to what he has done. But all that implies there is an acceptance of the problem he needs to address. It is not the same as saying: there is no problem and this is all propaganda, everything is hunky dory.

The speech was probably his most significant political statement since 2013, when he emerged as the obvious claimant for national power. Every statement or speech since then has been one of confidence and signalled his further rise as well as increase in power, and in campaign mode it has been a statement of aggression.

This speech is significant because it is the first time in almost four years that he has been on the defensive and fighting back. He fought back very well, he put his critics on the mat, he used examples, threw a bunch of data, and had his homework done.

Modi did not go into other areas which would have caused bigger anxieties. One is the anxiety among common people like job losses or stretching incomes to suit needs, particularly as salaries and bonuses don’t rise and casually employed people find the frequency of paid work coming down. He might address these now by cutting fuel prices and concessions on GST (particularly for the SMEs).

He was very convincing, at least to the faithful. But the fact is, there is a shift.

This speech signalled that he is acknowledging a shift in the mood. He has seen the need to come out and fight back like this and put his best foot forward. He is obviously paying greater attention now to economic planning and policies in the country— something he normally would have scoffed at —because he believed he had the big answers and solutions, while bureaucrats would manage the details.

I think his speech is good evidence that the political mood in the country hasn’t changed, but new doubts have come up. Some of those doubts are assailing Modi’s mind as well.