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It isn’t an expression our political class likes to use often, but there is talk every now and then to unleash the animal spirits of Indian entrepreneurship. Dr Manmohan Singh and later Jaswant Singh (as Vajpayee’s finance minister) are the only leaders we’d recall having appealed to these instincts from corporate India. This Modi government has tried lately to do so as well, in its own words.

In his Independence Day speech, Prime Minister Narendra Modi did some reaching out to India’s “wealth creators”. He said his government respected them and acknowledged that they also made an essential contribution to nation-building.

It was among the strongest endorsements of private enterprise by any Indian prime minister from the Red Fort. This has been followed by much other corrective action: Big corporate tax cuts, capital gains tax changes and reversal of that hare-brained idea to criminalise what some inspector might see as non-compliance by a company of its obligation to spend 2 per cent of its profits “correctly” on Corporate Social Responsibility.

Similarly, the egregious tax-hit on the capital gains of Foreign Portfolio Investors (FPIs) was also withdrawn. For a risk-loving government that never reversed a decision once taken, never blinked once it had decided to jump out of the back of the plane, without even bothering to check the parachute, these retreats were a new experience.

No one in the government would admit to it, but it has been made to realise for the first time that there was something even the incredible personal popularity of the prime minister, the clout of his government riding its second majority cannot control: The markets. The judiciary, media, Election Commission, even Pakistan, can all be dealt with by a government of such power en passant. But the market isn’t an animal political power can tame.

For the past many weeks now, Finance Minister Nirmala Sitharaman has been reaching out to the business community. She has unravelled some of the most problematic parts of her budget on a press conference-by-press conference basis. The finance secretary, who was probably key to the drafting of this “bad news” budget, was moved out and has since sought premature retirement. Since the budget, the RBI has carried out two quick rate cuts and generally spoken what the financial press describes as “dovish” language.

Yet, there is little improvement in the mood, no uptick. No upbeat, smiling faces even at the World Economic Forum’s India Economic Summit. Animal spirits? They are visible for sure. Just that the animal isn’t what you wish it to be: A crouching tiger with its tail up. It is more like an abandoned puppy cowering with its tail between its legs.


Also read: If anything can defeat Modi, it’s the economy


If you don’t like this metaphor, or abhor dogs, I can fall back on something more conventional, like a demoralised army. You can give one the best weapons, but if the generals are already defeated in their mind, they can’t rally their troops into battle, forget winning a war.

This, the complete loss of morale — even much self-esteem — is the reason this flood of good news that the government has been unleashing, almost every Friday, is going down the drain. The corporate tax-break was a straight Rs 1.45 lakh crore impetus to Indian business. It led to a couple of days’ rally on the markets. Since then, however, the larger reality has returned.

From the post-tax cut peak on 24 September, companies on just BSE’s Sensex have lost a fresh Rs 2.53 lakh crore. Other reversals and reforms, including interest rate cuts, have vanished in the same spate of pessimism. The markets are not particularly in good odour globally in the post-Piketty world. But you have to acknowledge that however wayward, imperfect or unequal they may be, they aren’t afraid of speaking truth to power. India’s markets are fearlessly doing what many in the greater and more hallowed institutions like the media and even the judiciary are no longer willing to do: Give Modi government the bad news.

Last quarter’s growth rate of 5 per cent looked a shocker, but only to the innocent. Anybody keeping track of the economy would have expected this. It is difficult to see it improving any time soon unless something drastic is done. What that can be, no one knows right now. Because if they did, at least among the circles where our fate is decided, the RBI would not have cut this year’s growth forecast to 6.1 per cent from 6.9.

Entrepreneurship is driven not so much by profits or tax cuts today, but by optimism for tomorrow. That has been declining, especially since the first Modi government broke its own economic momentum with demonetisation.

Businesses are no different from ordinary people and families. When they see a bleak future, they fold all fresh incomes, savings, bonanzas like the recent tax cuts, into the family’s savings for when times get worse. It is only if they are upbeat that they invest in enterprise, take risks.

Again, companies’ capital expenditure data from CMIE will tell you the story. It was Rs 3.03 lakh crore in the quarter ending December 2018, came down to Rs 2.66 lakh crore by March this year, and then to a mere Rs 0.84 lakh crore and Rs 0.99 lakh crore in subsequent quarters. Again, CMIE data shows the latest quarter’s sales growth for all companies has gone marginally in the negative to -1 per cent. The last time this happened was in the worst quarter of the Lehman crisis in 2008. This is not a slowdown. This is a rout.


Also read: The economy is India’s most potent weapon, but it’s losing its power


You can cut and dice this data any which way, and the story is the same. All economic indicators, with no exception, are down and have been so for some time. You can blame some of it on the global environment. But that is only a small part. The roots of the problem are here.

When almost all, including those like Mukesh Ambani, are sitting on cash, or de-leveraging and de-risking, repaying their loans and waiting, it is unfair to expect the rest to begin investing. If you ask India’s finest business leaders why, they now tell you, in whispers, of course, that the mood has never been so glum after 1991, and their self-esteem this low.

This comes not just with the weaponisation of tax authorities, with exaggerated and unfettered new powers of raids or arrest, but also the treatment of bad loans. If everyone, from an ordinary individual borrower to a sincere entrepreneur genuinely struggling in a bad business cycle and a loan-thief, is treated with equal suspicion and disdain, it leaves no incentive for entrepreneurs to borrow and for bankers to lend.

All business involves risk, a prominent and respected corporate leader tells me, but if I think even a 30-day delay in the repayment of my borrowing will have the bank publish my name in the list of defaulters and refer me to the NCLT for bankruptcy, why would I risk it? “If a person falls sick, do you send him to the hospital or the shamshan ghat? This bankruptcy process under the latest RBI rules is the last rites of Indian entrepreneurship and a populist and revenge-seeking state has built us this shamshan ghat called NCLT.”

The crisis in the economy is now beyond the pale of tax cuts, incentives, pep-talks and promises. Some of these might work, but only fleetingly, like a shot of steroid or insulin. India’s economy now needs some genuine, brave reform. Maybe beginning with a big and genuine privatisation of PSUs. If a Modi government won’t do so even in its sixth year, it will only vindicate those who believe it has lost its reform mojo and is just an election-winning machine where growth is a desirable objective, but not essential.


Also read: The disruptive reform that’s responsible for India’s consumption slowdown


 

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52 Comments Share Your Views

52 COMMENTS

    • A telling graphic. Thanks for sharing.
      Looks like we need a nimbu and a mirchi to make an economic turnaround! And let’s not forget the coconut.

    • One has to be careful with these graphs. What is the cause and what is the effect?

      Do people become less religious as they become richer? This conclusion is as valid as saying that if you are religious then you become are likely to be poorer.

      Indeed, the two squares at the bottom show that there is little correlation between being religious and being rich. You have an almost equal number of countries that are not religious but relatively poor compared to the reverse.

  1. Shekhar Gupta knows a shit about any thing related to himself leave alone economics. By his own admission he was unable to grasp the reach or effect of policies such as Ujjwala scheme or swachh Bharat abhiyan. Indian businessmen are risk averse idiots who will go to lengths to avoid risk while business all about taking calculated risks. They are finding it difficult to work because they cannot choke their competitors by starving off the resources or buying all the resources, besides more than one eminent business person has stated publicly that Indian industry is struggling because of their inferior product quality and they cannot export the same. There is certainly merit in the case that Basel norms are adopted too quickly but I am sure this government will soon find a way. The most of the businessman are fixers and dealers rather than entrepreneurs.

  2. It is unfortunate that Modi does not understand economics but all indian PMs never understood economics. Modi need to appoint Subramanian Swamy to FM and let Swamy change the economy to free market without any interference.

  3. All it is non sense to say that economy is in bad shape. See sale effected by on line retailers. current Indian growth rate is better than many other countries. It is certainly betters than Nehruvian rate of growth of Seventies ,Eighties , nineties When Nehruvadi policies added abated and appreciated by Congis supporting journalists and Media mughals misled the people of India . India is on growth path . old age model of business are being replaced by new business models. The shouting indulged by super rich and big industrialists are just to blackmail to garner biggest chunk of growing riches. Likes of Print are not ashamed to support them.

    • Sad to see so many fellow Indians delusional enough to be in denial like Vikram here. Probably never ran even a small business or was in any position of responsibility in any firm – private or government owned.

  4. All points of root cause well known. But why do the solutions culminate into flogging, dissing of public sector enterprises and finally their sell off is dished as a panecea for growth.

    If private entrepreneurship has to revive, privatization of PSUs through private investors who have turned risk averse due to other structural or policy consistency expectations for revving up economy is a misguided solution.

  5. There are a lot of interesting comments below. However, everyone is blaming only one guilty party, the government.

    Neither the author nor the commentators below talk about the real level of Indian industry – especially the private sector. It’s always the PSUs that get the flak.

    Just make the following random comparisons:

    1) Infosys vs Google
    2) TCS vs Facebook
    3) Tata vs Hyundai (for cars).

    The first two companies were already relatively well-established around the turn of the century. They never made the transition from just earning money to becoming real companies making products.

    Tata started making trucks in 1945 and Hyundai cars in 1968. While Tata cars remain ‘Indian’, Hyundai has surpassed even Toyota in dependability.

    I wish that The Print dedicate a special issue to the real level of Indian industry.

    • You have made a relevant point, this can be stretched into a larger domain: (1) Indian conglomerates and entrepreneurial start-ups have always been weak in the products area. Especially for the start-ups, the preference has been to offer services. Some which started in the products domain also tilted towards services, for example, HCL and Wipro. (2) Many of the entrepreneurial companies, that became global brands during PVN Rao, and became flush with cash thereafter, didn’t truly explore concentric diversification with a mix of innovative products and services, in spite of having knowledge surplus in the knowledge economy (look at Amazon Kindle, Alexa etc.). (3) even those in the products domain, didn’t invest in breakthrough innovation or explored the next big thing. I won’t be wrong to say that the last exciting innovation coming from an established Indian brand was Tata Nano, which never saw commercial success; (4) Indian companies have always lacked the will to build global brands.

      With these flaws, and an economic atmosphere not really conducive to entrepreneurship (a big generator of employment), things might get only worse. What’s more, China is becoming the biggest source of venture capital for Indian entrepreneurs, and there may be red flags in the coming years, given India’s treacherous relationship with China. It is a complex scenario with multiple dimensions. The key point is whether India has the means and the will to collectively come together (public-private-government) and produce synergies that raises the GDP, creates employment, increases per-capita, leads to sustainable development across urban-rural consumers, and yet protects it from unscrupulousness venture funding from perceived enemies.

      • By sustainable development I mean environmentally friendly development. Aarey tree felling shows that this may be a challenge in a country with a unhealthy tree cover. So twisting it further, even if GDP increases, the lack of water and non-polluted air will keep India on its toes, never becoming prosperous in true sense of the word.

        • Agree with you on almost all the points that you have raised. Except for the Nano

          India’s problems actually started in the 70s when a lot of good people left India and Indian universities to settle abroad. That left a very big vacuum in India.

          Moreover, while the expatriate Chinese contributed a lot in terms of money and knowhow to the growth of China, NRIs and OCIs have contributed little to raising the level of Indian technology.

          All’s not lost. But it will take a superhuman effort to get back on track. But first one has to identify clearly the various parameters that have contributed to the problem.

          Talking about the Nano, the moment it was declared a Rs. 1 lakh car it was doomed. Unfortunately the same seems to be happening to Isro. Doing thins on the cheap is an Indian fetish. Good in principle. Bad in reality.

  6. In retrospect Urjit Patel led rbi must take a lot of the blame for the current slowdown. They went down the path of a tight monetary policy while also pressuring the banks to clean up all the NPAs. It broke the credit lines in the system and forced NBFCs to become the primary lender of choice. Now with a weak real estate market the NBFCs are precarious and we are in a slowdown. The recovery will be slow but they can do something by addressing the real estate sector especially in the ‘luxury’ segment. Some amendments to the way you deal with real estate NPAs can do a lot in the short term to ease pressure even on nbfcs. Of course disinvestment are absolutely needed. For a change i think i will say this government has now got it right on the economy but just needs to go a bit further to get a u-shaped recovery.

  7. Businessmen need to get used to getting things done following the rules. The days of taking short cuts and doing deals behind the screens are over.

    Bureaucracy also needs to learn to getting things done without arbitrary delays. The days of holding up processes expecting an additional unaccounted income is over.

    Until then the sentiment will be down as the informal economy which was compensating for both factors is dead. Let us not fool ourselves and get back to the olden ways of MAI BAAP SARKAR in the name of improving business sentiment.

  8. Actually it is simple to revive economy > Step 1. Reduce the prices of petrol diesel to 50% of existing. This will give lots of money in the hands of common man , from Moped wala to Mercidize wala and from Tata Ace owner businessman to Transport industry. This will be immediately available to everyone to spend and revive demand. ( remember government has given Rs 1,40,000 crores to rich businesses ) Step 2. Remove FM Nirmala Sitharaman , she was the one whose idea to make CSR default criminal . This idea is indicator of low understanding of people’s mind and also real economy.

  9. Its amazing how the media still doesn’t get Modi even after observing him since early 2000s. His record as Gujarat CM, if only the 2002 riots obsessed media had observed was hardly inspiring as far as economic reforms were concerned. Expecting brave reforms from this government is a pipedream. This is nothing more then another in a long list of control loving extreme left wing socialist governments that India has been cursed with since 1950s.

  10. Having dealt with the supply side of things, it is urgently required for Sitharaman to fix the demand side. That can be done if she swallows some pride and implements Rahul Gandhi’s idea of a basic income of RS 72000 per annum for 25% of our poorest people.

  11. The only reason for which Modi government can be blamed for economic slowdown because he promised ‘change’. That ‘change’ was not strictly defined. In Hindi it was called ‘Achche Din’. The incongruity has emerged because citizens understand ‘achche din’ as prosperity, growth in income, productivity, opportunity. Whereas, Modi meant change in the way Indians should view constitution, Gandhi and Nehru. What’s more, in the first term Modi almost behaved as a PM-trainee-on-job. His own insecurity and habit of looking over his shoulder to check whether the Gandhis were catching up (just like they did in 2004 with Vajpayee government) kept him busy, and perhaps sleepless at night. Result: he behaved erratically vis-a-vis his own citizens. On top of it, his choice of finance minister in Term 1 (and now again in Term 2) has been very poor.

    That said, haven’t we been on this wicket before? When the world was gripped in financial crisis, UPA II came into power again and instead of taking advantage of India’s relatively strong economic position, made a mess of it. Where was governance then? I won’t hesitate to theorise that UPA II encouraged scoundrels like Malaya etc to seek inspiration from Wall Street’s crookedness instead of bringing in strict corporate governance that was required at that time.

    Finally, one of the reader’s on this news website on an another article made a very interesting comment. He implied that this economic mismanagement is a deliberate approach adopted by Modi because if public becomes prosperous, they will have no use for Modi, because priorities will change. This is the same conspiracy theory that has been heard before, in relation to Congress, and it seems to have some substance to it. Therefore, learn to live on populism, hyper-nationalism and jumlas till 2024 because economic reform is not on the agenda of this government.

    • Correctly put but UPA 2 was voted out precisely for the reasons you have mentioned. Only thing it was replaced by UPA 3, renamed as NDA 2 . As for the conspiracy theory you are correct again. All governments since 1947, want to play mai-baap, delivering welfare and handouts to the great masses. Nobody wants to empower the masses, hence education and healthcare were always neglected. Better to give alms and get votes.

      • the hard fact is modi has squandered his majority in two terms. BJP on its own, but UPA did better in a coaltion constrained govt. So Modi has higher standards to live to – in fact it was expected ,because he himself claimed that a full majority bjp can do what he wants. After full majority for two terms, and poor choice of ministers ,sidelining those more accomplished like swamy or sinha, he is definitely not going to deliver acche din in 10 years as he had promised in 2014. But the electorate gave him 10 years.
        Now all he has to do is crap like NRC, hindu-muislim, temple construction, going abroad every time though we see he’s not been a great success at pushing anything but mega rallies for himself.
        Modi goes on criticizng nehru but he is doing much worse than nehru did in the early fifties. Modi’s command and control economy is on the road to failure and india is the perpetual failure

  12. Two of our best PMs did try to privatise PSUs and thereafter lost elections!! Before attempt of privatisation, media cries there are no reform happening and post privatisation same media rants family silver sold off by the govt!! No govt wants to lose its next election and it won’t lose its next election if it just cares for 70% of India who don’t bother about GDP, economy or growth but their own next meal!!

  13. This government brazenly killed Jet Airways. Refused to convert debt into equity while it is now dying to do the same for DHFL!! Such brazen hypocrisy and double standards are responsible for the present state of Indian economy.

    Jet was in salvageable situation, it was no Kingfisher, yet under rivals lobbying pressure government allowed it to die.

    And thus India lost a global brand (among one of its few and finest), along with thousands of jobs. It has shown criminal lack of sympathy for both job creation and job losses. Taking full advantage of TINA factor.

    Worse, now the government is hounding its promoter thru ED despite the fact that in the forensic investigation ordered by its own bank SBI no proof of any wrong doing was found!!

    Mark my words things are going to get out of control from here. We have MA history pass as RBI chief, he has no reputation in the market. His level of understanding of economics can be gauged from the fact that this guy felt shocked after 5% growth rate!! Even a retail player in the market was expecting it!! Sometimes market dynamics and economics is difficult to understand for seasonal guys, one can imagine how much respect the market will give to the talks of this BA-MA history pass babu. LOL.

    Dooms day kind of situation. Swamy might have got this one right!!

  14. Why Indian economic tiger became puppy with tail between legs ? Because an honest business was made unsustainable.
    The reason is obvious, the animal spirits of the greedy wealth creators were unleashed on us. Their wealth creation was the NPAs of the banks and what they could rob from their own shareholders. The list of these wealth creators is growing by the day which includes who’s who of the past years.
    The other set of fastest wealth creators were our own rulers. The less said the better because we put them in that position.
    When the puppy’s tail comes out from between the legs, it will be full of what …….. and all that will splash on some very honorable people of this country, not that, so far it has not.
    Modi keeps wining on the corruption issue, because that money saved, goes to build toilets, give gas connections and electricity. The beneficiaries of old systems will not and cannot accept this reality. They want Modi to do everything other than to stop and catch the corrupt.

  15. Animal spirits are alive and kicking ,no not like the tiger ,nor like the dog with it’s tail between it’s legs but like our holy cow. If one observes a cow , while one can make out that it is moving, the direction and speed are suspect.

  16. It’s really a crisis of credibility. When a government becomes unpredictable both in it’s policy and actions. Then, except for a select coterie of cronies, “in the know”, there’s a loss of confidence in the citizenry across all levels & the basic instinct for self preservation kicks in, with the ensuing drop in demand except for basic necessities.
    It took more than a century for the masses across India to have faith in the paper currency introduced by the British. I know from personal experience that even till the early 1980s, the sardars of the Meena community would transact only in silver rupees. And demonitisation would have reminded them of their original suspicions of lack of intrinsic worth of paper money. This, coupled with the pre election, “jumlas” etc were bound to erode confidence in the masses generally.
    Other actions, including retrospective taxation & factors mentioned in this article have deeply eroded the confidence of the business, trading and investing communities & individuals, all of whom know that unpredictability increases risk, and all of whom know that they live in an environment with no safety nets. All this has led to an evaporation of demand in all sectors except essentials.
    And confidence in a Government is inextricably linked to it’s reputation for probity & consistency in all matters affecting people’s lives, including the economy. To my mind, loss of confidence in a government is akin to loss of confidence in a doctor; and what will it take for one to ever trust him again. A really uphill task with such a track record.
    Even now, most of the measures are aimed at the supply side probably hoping that this will spur demand. I think they are blind to the real reasons, more so because of pliant institutions. And the small spurt that is likely to occur during this festival season will be tom tommed as a real recovery., a la “acche din”,
    Future historians are likely to dub these as the lost years of economic growth.
    The theme song for the next election is likely to be, “hyper nationalism” and it’s myriad avatars.

  17. Creating a “ nice media “ was a fatal mistake. The continuing coverage and feedback when things are going wrong was switched off very early on. Kitna waqt tha to course correct, take fresh initiatives, some of what FM is belatedly attempting. Instead, a cloying echo chamber. The other set of valuable inputs could have come from India Inc, whose hagiography has been taken to the next level, even as they see the rising waters swirl all about them.

  18. Sound and fury signifying nothing. A five – now six – year long PR campaign, masquerading as governance. All sources of genuine, well meaning feedback stilled. Ideology has been given a free run, whether it is the cattle trade or policy towards Pakistan, apart from its earlier fixation with education and culture. A Himalayan talent deficit. 2. All wounds on the economy are self inflicted, barring Trump’s recent trade war. In fact, a number of tailwinds in the initial phase. An unceasing election campaign, an aggregation of political power without any ennobling vision of what to do with it. 3. Since foreign policy is my other interest, consider what this is doing to how India is regarded globally. Read Ms Suhasini Haidar’s column about the Senate Foreign Affairs Committee holding unanimously against us on Kashmir. This after EAM did what is called a full Jaishankar.

  19. The issue of NCLT is chasing the efficient businesses in such a way that the sound businesses are repaying loans from dividend instead of reinvesting in capacity expansion or in other new initiatives. Therefore, reduction in corporate tax will not help much to increase the private investment in India. Therefore, the only solution is to increase the loan disbursement. However, no one is ready to take loan as banks are reluctant to disburse loan without 100 percent collateral guarantees.

    In such a scenario, Govt has to introduce a policy for banks to disburse cash flow loan. Bank should become shareholder of the business from day one. Daily monitoring of operation and its financial health is mandatory. Problems, if any, arises, has to be solved jointly on day one. Govt has to beleive that 95% of the people take loan for good intention to grow. Further, the diversion of funds will not happen if banks are monitioring on daily basis.

  20. Shekharji,

    Please get one article on insolvency proceeding delays and its effect on demand to economy.

    Please get details of employees claim accepted in insolvency but case held in delays.

    I can give details for my company.

    I will tell I myself have helded my expenditure and will buy many things if my claims is released.

    Claims released of employees us direct demand to market.

    If full claim cannot be realised partial future FD to be given.

    Future saving will also be considered as current demand.

    Just allocate urgency for proceeding closure in stipulated time.

    Atleast 25% demand cannot be controlled due to lack of judges.

    State of urgency shown in Ram Mandir case is encouraging.

  21. The Govt is not interested in the real stuff; people who spoke truth to the powers, first within the four walls and when the Govt PM Modi and his cabal, didn’t pay heed to it, they even started speaking even outside of it; this resulted into they being booted out.

    PM Modi then came in with the harebrained idea of Demonetisation which kicked in at the midnight; one wasn’t enough when came in another midnight intervention, right in principle but wrong in design and that led to Economy where it is.

    Another RBI Governor soon decided to walk out, which was followed by the ‘Manager of Demonetisation in Ministry of Finance’ replacing him and thereafter it appeared that the RBI HQ have moved out from Mint Street to the North Block. A series of reduction in Reverse Repo and Repo rates have followed but the economy has not benefited. It’s because the Low Inflation is due to the Demand being low and the market is flush with the supply; the same is true about the Growth which too is low because of low utilisation of capacities which is due to lower demand, then from where the investment will happen?

    It prevented the statistics to come out in open; NITI came forward to help the Govt in this with the bosses coming in open and defending it. Post-23 May 2019, the reality is out and these guys of NITI have withdrawn in the shell.

    PM assigned the responsibility of the important ministry dealing with the Finances of the Govt to Nirmala Sitaraman; I recall a commentator in the program anchored by Karan Thapar said, “She is too conservative to do any harm but one can’t expect much from her either or something to this effect!” She has managed to disprove even him.

    However, the Govt PM Modi and his cabal are busy inventing ways to keep itself busy with the Kashmir and NRC while has left the handling of the economy to Nirmala Sitaraman who has neither the skillsets to deal with nor the grasp to deal with the ideas that come to her from outside of her. It only resulted in a Bad Budget and complete reversal of it in the next two months.

    Please keep your fingers crossed until a new Financial calamity might hit the citizens.

  22. Problem is we believe every thing can happen in a blink of eye just as after demonetization we thought economy will become formal and immediately after GST we achieved every thing but that led to huge losses to majority of businesses and that deserted the feeling to bounce back and reduced risk taking capacity and those of informal sector become jobless leaving majority of population with no money even to buy daily necessities and now we are still searching growth it’s like asking a fractured person to run.

  23. After usual ranting, Shekhar finally could indicate just one reform- privatization of PSUs!! Many structural reforms could be thought of such as 1. Partial abolition of Income tax up to say income of 12 lacs per year and remove all permissible deductions except against home loans 2- Impose wealth tax at very moderate rates based on value of individual wealth (real estate, financial assets) above, say 5 crores, linked to PAN/Aadhar numbers 3. Lower Corporate taxes and remove all deductions 4- Other administrative reform of tax machinery 5-Single or two rate GST structure 6-permit land leasing for agriculture land with guaranteed rentals for corporatizing/collectivizing agriculture 7- other agriculture reforms like APMC, free import export etc. 8- Finalize a DBT package for farmers and remove all subsidies to allow market forces to work 9- finalize a DBT for unemployed and persons above 70 years 10- Have a benchmark for linking budgetary income to DBT expense and flexible FRBM targets. Consequences of resultant fiscal deficit to be explained and politically accepted 11- Private PSUs 12- Get out of PSBs but have one saving instrument where people can deposit money which will be 100% risk free (other deposits will be protected by Deposit Insurance) and government takes funds as its borrowing 13- Government to have its on bank for distributing loans for its specific programs 14- Labor reforms which permit hire and fire but with compensation 15- Major improvement in functioning of judicial system and contract enforcement etc.

    It is for PM to take the political decision and for FM to implement them. Someone close to PM needs to tell him that his real lasting legacy will not be that he could finish off long pending divisive political issues ( abolish Art 370, implement UCC, build Ram Mandir, one election for both Lok Sabha and states or even remove the word ‘secularism’ from the preamble to the Constitution, promote national icons as a group of seemingly contradictory leaders like Gandhi, Ambedkar, Savarkar, Deen Dayal Upadhya and Lohia etc.- which he will anyway do) or teach a lesson to Pakistan or build up India’s international image and stature ( which is anyway happening) but sweeping clean (Swaatch Bharat of ) the cobwebs of the last 70 years of economic policies and macroeconomic management architecture by the and making a fresh start for an economy which betters that enemy no one next door, China. To an ordinary Indian, finally, it does not matter who is the PM ( finally he and his party is democratically elected) but what he delivers to the country. In the long march of this nation, Modi has a great opportunity to contribute in the sphere of economy, now that he has full political authority and support of the majority.. Hope he delivers, ,

    • good concrete suggestions.we need solutions and some of which already announced.Have patience.parralel economy is uprooted.formal economy will take time to settle just as other countries implementing GST

  24. Shekhar Gupta seems to be in a tearing hurry and doesn’t have patience to wait and watch for some time for the fruits of recently a “announced” reforms to emerge, as a result of his habit of not missing an opportunity to lambast Modi govt. He should note that UPA govt reaped benefits of reforms initiated by previous Vajpayee govt., when it came to power after 2004. An expert economist knows the principle of time lag in this. Shekhar wants results barely days after announcement of new economic measures by Finance Minister to boost exports and investment climate. Shekhar Gupta wants us to be blindsided like he himself is.

  25. Communist doctor will treat economy with freebies subsidies loan waivers. He will give 1 crore compensation for farmers growing paddy in desert. Jai Karl marxa.

  26. An excellent article. We must get rid of of the ‘ magic wand’ mindset. A blind hope that a great magician would solve all problems with a swing of a wand is not only irrational but self-defeating. Magicians come and go, but the issues persist. Imaginary build-up of high expectations and delusional self-glorification can cause a counter disillusionment wave, unless something concrete is not done to counter the recessionary trend. No magic therapy is available. The nation will have to toil hard at least for a decade to resolve persisting economic issues. : Despondent corporate sector, declining growth, rising burden of NPAs, recurrence of financial scams, fiscal strain and stagnant tax revenues, and above all the tendency to hide the picture and projecting fake stories, instead of endeavouring to resolve these issues. One doesn’t know when and how this will end.

  27. Someone may call me a deshdrohi for saying this, but for me I’m being a top-rung patriot for saying : “the present government must go before any corrective steps for the economy are even tried.” Mr Modi just doesn’t know that a poor country has scarce financial resources – – that’s why it is poor in the first place, as simple as that. He believes in GRAND, GRAND, and one more time, GRAND. He, not for his abilities, but for his weaknesses deserves to be the president of the USA, or better still, the king of Brunei. LIC, RBI, ONGC and petroleum companies, all have been milched, and a brand new NEW Delhi still remains to be built! And so on and so forth. Someone should tell “our dear leader” that he is not merely causing hardships but DEPRESSION to our poor countrymen. Lot of statistics is floating in the air; take it from me, within 6 months a new data will start getting talked about – – increase in suicides in our country. And without a shade of doubt, at least in mind, due entirely to the two leaders from Gujarat. And only one of them can be reasoned with, even if with the greatest of effort. The other is completely beyond all reason. Who is which, tell me, tell me!!

    • I don’t know if it is true but read recently that a number of CEOs have committed suicide. Would not be surprised if they have. Nanak dukhiya sab sansaar.

        • Finances will kill small businessmen and poor workers, SIP will kill the middle class salaried when MF refused to pay them back, and some will die because of NRC. But the government will announce that they all died because of heart attacks!

    • That is because people in India start business without even knowing about business. Why blame Modi govt, he is fine. The issue is democracy which needs to go for one party system.

      • Think you should spare us your pearls of wisdom Rajvir. There are more accomplished people discussing issues. Stay quiet and learn.

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