Sunday, 22 May, 2022
HomeNational InterestIf anything can defeat Modi, it’s the economy

If anything can defeat Modi, it’s the economy

The struggling economy is Modi’s biggest challenge. He could defy it and continue to rise spectacularly, or fix it miraculously and do even better.

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The many years I spent covering and travelling to countries where people weren’t quite as free to speak against their rulers as in a reasonable democracy taught me an important lesson: One thing that blooms in tough times is a sense of humour and irony. If anything, hesitations and fear get the creative juices flowing. Some of the best cracks at the Soviet regime were heard on the streets and in the shops of Moscow, but in whispers.

Yesterday’s whispers are today’s WhatsApp forwards. Since no one quite knows who first invented the joke, there is safety in anonymity to begin with, and in numbers later. The flavour of this season is the state of the economy, never mind the latest desperate steroid shot of Rs 1.45 lakh crore worth tax-breaks, even as Nirmala Sitharaman’s budget unravels press conference-by-press conference.

Among the many memes and cracks on the Modi government’s shambolic economics that landed in my inbox — and probably yours too — was about a maharaja and the elephant he loved. Unfortunately, it fell mortally sick. The heart-broken maharaja said he’d behead anyone who first reported to him that the elephant had died.

The inevitable happened. But no one would dare to tell the maharaja. Finally, the mahout gathered courage and, trembling, informed the boss his elephant wasn’t eating, getting up, breathing or responding.

“You mean my elephant is dead?” the maharaja asked.

“That, only you can say, maharaj,” said the petrified mahout.

Now our economy, we are told here, is the ‘elephant’ of this story. So many ministers of this government are announcing that the ‘elephant’ is probably dead in their own different ways. But nobody is willing to announce clearly that it is dead.

Now, to borrow from Mark Twain, reports of the Indian economy’s death are greatly exaggerated. But it is deeply and perilously sick.

The markets, untameable, unlike many other institutions, are voting with their feet. In that sense, the market is the mahout of this story. Nearly Rs 11 lakh crore of investor wealth has been lost since June, also wiping out most of the new capital the government gave its PSU banks in the first round. The only good news is inflation, but it is now so low, it conforms to the dictionary definition of that mostly malapropistically-used expression in Indian English: Doldrums.

The government’s responses fall in three categories: The first, that this is all rumour-mongering and disinformation by Modi-haters.

The second is yet another press conference by the Finance Minister, where she makes a couple of more announcements. The latest was more substantive, a mega, one-off tax-slash without a game plan. A great headline for the Houston weekend, and a couple of days’ celebrations at the markets. But, unless the government is bold enough to cut its own expenses to pay for this bonanza, it will either be funded by printing more currency, or indirectly taxing the poor. Good money will go down the tube and the crisis will worsen.

The third, and the most important, is that these are early days in this term. Modi is first fixing some of the biggest challenges of the past 70 years. First step towards a Uniform Civil Code with the criminalisation of triple talaq, Article 370, and soon enough, may be as early as November, the building of the Ram Temple will also begin.

Then, the argument goes, the toughest but most essential things done, Modi will take charge of the economy directly. And you know when he does that, no miracle, or even that $5 trillion by 2024, is unachievable. I can only sincerely hope, and pray, that these voices are proven right.

Another view is that probably things will not improve dramatically on the economy anytime soon. But, as we said in National Interest in May 2018, since Modi’s mass popularity isn’t just unassailable in the old, American Teflon-coated sense, but in a sui generis cast-in-titanium one, he will ride it out. His voters will sacrifice for him.

This was articulated most brilliantly by Haryana Chief Minister Manohar Lal Khattar at ThePrint’s ‘Off The Cuff’ conversation with me and my colleague Chitleen Sethi in Chandigarh earlier this month. He said when there is a nationalist upsurge, people readily accept economic sacrifices.

When nationalism is so strong, he elaborated, even a setback becomes a unifying factor. Example: How the entire country, awake to watch the Chandrayaan-Vikram landing until 2 am, rallied together even in the heartbreak of its loss.

What this means is that periodic bursts of other such events and headlines can keep people, and Modi’s popularity, on a high, even if the economy struggles. Watch the mood, for example, on the ‘Howdy, Modi!’ night in Houston.

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

The rise, rise and rise of Narendra Modi has shattered conventional political analysis. India has forgiven him for the unmitigated folly of demonetisation. The jobs situation has been bad, but it hasn’t hurt him electorally. Travelling during the elections, it was striking how many ordinary, poor people said they were hurting, but what was a little personal sacrifice “desh ke liye (for the nation)?”

It isn’t impossible that they will continue to shower him with the same affection. The headline management, spectacle and smart new schemes (I say so without any sarcasm), like Nal Se Jal (water on tap) and Ayushman Bharat, in addition to the already existing, successful ones such as LPG, toilets, rural housing and Mudra loans, will all help. But there is a catch.

In his first term, he was able to fund these, despite indifferent growth, essentially through the additional excise duty (around Rs 11 trillion) in 4.5 years. To create additional money now without growth will be impossible. And, if crude prices rise — unlikely but not impossible — it will destroy this political economy.

Right-wing ‘socialism’ or socio-populism rules the world now. So, you could keep taxing, spending, distributing efficiently and winning. If growth, however, collapses or even stagnates at the 1980s level, as T.N. Ninan had warned on this page earlier this month, there won’t be that much to tax. This budget raised capital gains tax and introduced a tax on share buybacks by listed companies, which was partially rolled back Friday.

The last time we had a leader enjoy such popularity was Indira Gandhi. In early 1972, after Bangladesh’s liberation, she was at her peak. She could do nothing wrong. She launched herself on a series of economic blunders in her hard, destructive Left turn. It was, actually, quite popular among the poor then, as appearing to hurt the rich usually is.

This logic has also inspired Nirmala Sitharaman’s budget, with the effective tax going up to 42.7 per cent. Everyone knows it will bring little extra revenue. Tax collections, if anything, are falling. But the rich are angry and complaining. So, the poor must be happy. What worked for Indira in 1969-73 must also work for us now.

Except, the same Indira, who could do no wrong in 1969-73, was doing nothing right by mid-1974. Her nationalisations and nationalism had combined to ruin the economy. She made a terrible blunder in nationalising the grain trade, egged on by her Soviet-inspired advisers, and it wrecked the rural economy so badly, it became the first time she blinked, and rolled back a socialist disaster. Compare that a little with Modi government’s panicky Rs 1.45 lakh crore corporate tax write-off. This is a loss of nerve.

Mrs Gandhi’s decline was spectacular. The Arab-Israel Yom Kippur war, followed by the operationalisation of OPEC and the oil price shock came at the wrong time for her, as Black Swan events usually do. By mid-1974, hers was a lost cause. Pokhran-1, the annexation of Sikkim, nothing could rekindle the fire of mass-sacrificing nationalism. Not with rising unemployment and inflation rate exceeding the 30 (yes, 30) per cent mark.

Maybe Modi is indeed a once-in-a-millennium, cast-in-titanium phenomenon and he will defy this history. Or, maybe, as his most committed loyalists say, he will take charge of the economy and work a miracle. We can only hope the second proposition becomes a reality.

Also read: To avoid sinking to 1980s levels, Modi must take direct charge of economic policy


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  1. I want to comment on your cut the clutter video on howdy modi. I couldn’t find a comment section there so I am commenting here. I feel sad that you were able to find ten good points about the speech, a speech in which Modi says “everything is fine” back in India at least ten times while we know in our hearts that it is not.

  2. You are not as good as they say you are ,when you are winning nor as bad as they say when you are losing .Success is the only thing in this world that matters .Modi has achieved ‘unprecedented ‘ success electorally and were not for the south he could easily have beaten Jawahar lal nehru and rajiv gandhi’s 484 victory .
    Here an analogy with the markets will be apt .Nobody quite knows in the throes of a bull market , whether it is a bubble or a economic fundamentals being reflectd untill the market crashes . So is this a ‘bull market ‘ or a bubble of Modi , nobody’s papa knows for sure .

  3. It has just begun and Modi will stay on – no logic to prove it, for he is loved like Nehru and is dispassionate like Indira. Nothing justifies Love and it does not vanish just like that. 370 has gone, Ram JanmBhumi issue would be resolved and Uniform Civil Code will come. And all of these were more than once advocated by Nehru too – one may very well go on putting BJP and/or Modi in dock for these. Indira lost due to Sanjay and Emergency Excesses – without these she could come back again in 1980 – but this time destiny was not with her, but her charishma remained in tact !
    We are fundamentally crazy people – when we love, we forget and are prepared to bear a lot till our trust is torn. This psychosocial current has been with us from eternity. Our passion has always been commanding our reason. Came 2014 and we were just fed up – fed up of everything. And Modi came with a dream and with a strong thread binding the youths and youthfulness of the country.
    Modi commands the love of people as Nehru did and He does not have Sanjay as Indira had and he would not tolerate Corruption which Indira always either ignored or even encouraged. And if we combine the virtues and charishma of both Nehru and Indira minus the vices they had, the result is an invincible Modi.
    He has grabbed all the agenda of Congress including it’s copyright i.e Gandhi – no Congressman now a days talks of Gandhi as frequently as Modi does. And for the very first time in BJP’s history, it’s leader is seemingly concerned about the poor and the downtrodden – Jandhan, Aaushman Bharat and Ujjwala, not even Vajpayee could reach there, where Modi is standing. Thus he has been able to snatch complete soil beneath the feet of Congress or even the left and thus he did completely changed the ethos of BJP – a Masculine combined with left to centre look too.
    And if the leader is having a clear conviction to the cause/s he stand for, if he has zero tolerance for Corruption and Incompetence and if he is free of prejudices, he is bound to find solutions to any problem. Thus the economy too will ultimately thrive and grow. Series of measures that the govt is announcing very frequently only indicate towards the restlessness that is there within the govt. Modi is not going to digest any type of complecency in any wing of his govt. The crude and rude statesman that he is, makes him all the more vulnerable to the performance and results. He has been put on the peak, which always remain sharp – sharp to inflict deadly injury to a slight shift too. There is no alternative to results for him and he is destined to get them.
    Modi hopers are too sure of his huge possibilities and capabilities and he is is not going to fail them and just see what the Stars and Omens indicate – an unopposed atmosphere with crippling dissents !
    And for the Modi haters – they have a long long. …. too long a wait to even imagine as of Now.

    • Wah. Wah. Yet another one with a great sense of logic. So when a country has a Great Leader like Modi, the economy grows automatically. Breathtaking conclusion.

  4. This article is puzzling, if one refers to articles published before and during the election campaign, by the author, who is not anyone. The author believes that only the economy can possibly defeat the party in power. Perhaps? But the problem is elsewhere, it seems. Political parties and especially the congress have become disconnected from the Indian reality. They ignored the rise of youth and its aspirations. They also ignored India’s absence on the international scene. So there was a ground for the theses of the right-wing parties and those of the extreme right to prosper. 1984 was a first try for these parties. 2014 and 2019 allowed these parties to exercise power, even while the economic record is controversial, disputed. What is interesting is that since 2014 everything that was repressed in the Indian spirit stands out and seems to reinforce the orientations of the party in power. From then on, the start can only come from youth and from all those who feel that directing and driving a country is not limited to playing on emotions. But, this also supposes that there is a real opposition knowing how to propose a new political offer meeting the expectations of Indian society, and drawing a line on personal ambitions, and recognizing that politics is not a dynasty affair, no only at the federal level but also at the state level.

  5. Mr. Gupta: you left out the govt’s Neanderthal idea of imposing Hindi , a language useful for Bollywood but with zero use in science & technology as a “unifier” will shave off more than a few basis points from future GDP growth. In any event, a better analogy is that Modi has become an emperor without any clothes and no one is willing to tell him that his colorful turbans and outfits notwithstanding he is walking around naked metaphorically speaking when it comes to the economy . But why lament? Hubris will take him down and successes like 370 , the bankruptcy laws, Clean India will do nothing to help him get re-elected i 2024

  6. Shekhar knows it. Modi, apart from whatever he has so far done, will soon resolve contentious political issues of last few decades like UCC, Ram Mandir and a few others. With this, politics in India will change. There is no more appeasement politics n dividing of votes on caste lines. Clean government is the hall mark of his government. Economic performance, the last refuse of ‘scoundrels’ like our journalist and left sickular liberal, is not a major issue for voters and they vote based on his intention and promise and are patient enough to wait for results. Modi can bring major structural reforms in one shot and can change the face of economy in one big announcement. But some reason known to him or due to lack of good advisers ( like how Amit Shah pushed the envelope on Art 370), Modi is not taking a plunge, though he did demonstrate it during demo. So Shekhar knows that Modi is here to stay but hopes that bad state of economy will defeat him. That’s the only untested issue so far for Modi!! Good wishes to Shekhar and his sorts….

  7. Oh No! Modi can be easily defeated by a politician, who has the right credentials. He shouldn’t have any self respect. Shouldn’t ever think of the long term interests of the country. Shouldn’t have any hesitation in telling lies. Problem is, we don’t have any such politician in the ranks of the ruling party or the opposition.

    • Halwa Khata Dant Ghanse to Ghansne de Ghar me dhan aata Log hanse to Hansen de.
      Jalne wale Jala kare Kismat Hamare saath hai.
      Jab Jab desh me Paap badh jata hai to Bhagwan khud desh me abtarit hote hain Paap aut Paapi ka satyanash karne ke liye.
      Shekhar Gupta will be bankrupt by 2024 and his all property will be sold by Govt under IBC act
      DONT CRY Shekhar ,MODI JEE will be PM till 2030
      MODI will finish all opposition by blessing of 135 crores People

  8. Shekhar Gupta is getting more and more confused. Is he frustrated as nothing seems to work to defeat Modi. Whatever opposition may aspire, Modi preempts opposition that has once again focused on wrong priorities and Modi once again stool the lime light. Modi’s government has once again shown that it is a responsive government and do not hesitate in reversing or changing it’s own decisions. Shekhar Gupta’s problem is that he continues to use references from Congress time rather than from BJP’s time. I don’t get why Shekhar gupta wants Modi to be defeated even though the alternatives to Modi are far worst

    • Guptaji, at least have some respect for another Gupta. You need to go back to school to improve your reading comprehension skills.

  9. When it comes to the economy it’s dopey Modi.
    The man is clueless and foolhardy – he sidelined people in his party who were knowledgeable and could have averted this mess.

  10. The reality of India is that as long as urban India votes, Modi will continue to win – and there is an explanation for it.

    Urban India – that breed of largely salaried or business-owning people – has little or no stake in the economy. Because, for this segment to have a stake and start revolting will take an economy in a Zimbabwe-like Mugabe-induced disaster – and despite the oodles of incompetence on display from the Modi government it seems unlikely that the economy will ever get “that” bad. Until that happens, Urban India is fine – their salaries will be paid, their businesses will – mostly – make the money they are used to, their home loan EMIs will still be affordable, their two-car lifestyle is not at risk, and they can continue employing their two or three maids, plus a driver. What this means is that whether we have a Modi government or some other coalition government, these things are not at risk. And, even if they will not admit it, urban Indians know this reality. Which means, then, that the differentiating factors are things of little consequence to these lifestyle choices – hence the collective orgasming over Chandrayaan, Article 370, triple talaq, NRC, Ram Mandir and the like.

    If you want to know where such urban Indians can be found, look no further than those who criticise this article.

  11. India has a strange relation with economy. She wants to become a rich developed industrialised country without embracing free market Capitalism.

    • Wealth is caused by free market capitalism is/was a myth that even EU does not accept today. Why must India believe this trash? All Invaders in to India were looters and had rich free market in their regimes?? Yeah the British looted 45 trillion dollars from India. Where is it now?? Guess you need to retake salt water Ecoomic courses. The more recent clean water economics is a Bullshit like that behavioral economics. Garbage stinks in any place but more so in India.

  12. Yes our PM now that established good connects all over India invite his close associate country Japan to participate in major infrastructural projects of large size to be spanned over next 10 years in India .. this can be a win win opportunity as Japan going through deflation will work for ROI which can be unimaginably low. He should take direct control of Finance portfolio . vasudevan

  13. This slowdown was happening from last December… Due to elections it never came up…. I have to say this to media houses …. Why why why you didn’t raise this issue… You are the fourth pillar of economy… Then why…. Truth is very funny in its own terms… You can press it … Deny it… But definitely you cannot hide it….These matters are very serious…. One cannot show patriotism with hungry stomach…

  14. He has got time, four and a half years to be exact. It is really unfortunate for the people that we do not have any other alternative economic narrative. Forget a bad economic alternative, there is simply nothing on the plate unless one is ready to consider economy shrinking once from the left. Does not mean that Modi has anything to do with the economic left and right – there are economic U-turns after U-turns.

    • And I always wonder how seemingly educated citizens chose a chaiwala to be a PM. Onnce you do shame on you, twice you do shame on India.

      • This is one fallacy that needs to be busted. I can bet that Narendra Modi was NEVER A CHAIWALA. He was a Gujarat CM for 15 years and I do not remember even once hearing this word ‘chaiwala’ in his context. It has been added only in his PM publicity to give a poor man image for effects.

        It is easy to find out if he ever was one or not. Put the lot of Chai paraphernalia in front of him – – cups, kettle, pot for making tea, ginger, milk, piece of cloth for straining it etc – – and ask him to demonstrate “how he used to do it”. He won’t be able to do it, I’m sure. Or at least ask him how he used to wield multiple cups while selling tea on a railway platform.

        • Anyway the country is hurting when a chaiwala clocks a fish climbing the tree. A brain surgery needs no one but a brain surgeon. Like it or not that is life. 15 lakh for every one, demonetization, double farmer income, 5 trllion economy, Ram Mandir etc are thought process befitting a chaiwala. And so they remain delusional.

      • I fully agree Raghuraman. The same Indians who proudly say they voted for a chaiwalla are the ones who shame Soniaji for being a bar dancer . Whats wrong in bar dancing. It is much better than selling tea.
        the same set of shameful Indians are the ones who delusionally look down at karunanidhiji because if his family profession as courtesans and brokers to courtesans. They also tease laluji for being a rustic fellow.

  15. From the Opposition and most of the media, the incumbent is getting a free pass. Without social media, we would be possibly be 20% as well informed. So judging popularity levels and shifts in the public mood is not easy. One cannot recall from childhood job losses on this staggering scale in an economy where job creation is the imperative need. With sources of intermediation between rulers and governed no functional, widespread economic pain could translate into inchoate anger and public agitations.

    • Never mind the state of economy, just remember, “Last month, a media poll predicted that in fresh elections the ruling Bharatiya Janata Party would win an even larger majority than it did in May.”

    • Economics not Pakodanomics is what India needs even if Pakoda is all you know. Wake up, time is not on India’s side.

  16. Eleven trillion came from oil taxes. Another eleven trillion from LIC. Cash rich PSUs like ONGC have been sucked dry. If indeed these giveaways have bought popularity, it has drained vitality from the economy. So if something has to be given away, by natural selection, let it go to the most productive parts of the economy, companies that are still keeping their head above the water. Why the economy has been treated with such disdain, one will never know. Shri Arun Jaitley was the most highly regarded minister, FM for the entire first term, and he was reduced to writing Blogs which I could never summon the will to read because I knew he was defending the indefensible.

    • Ashokji you are right. We need talented people in government which is sadly lacking now. Vadraji who was a successful business man ( made 2 lakhs into 100s of crores) was made to run with all sorts of cases. If that is the case for son in law of the country which business man will invest ? We have talent available from Rahulji who is a Developmental economics scholar and used to teach in Oxbridge. But Indians defeated him squarely for two times in a row. Obama used to take advise from Rahulji but Modi in his arrogance is ignoring him

  17. The only thing that can defeat Modi is if there are corruption charges against him as a person. Every past dispensation has had its shares of economic slowdowns but they were all accompanied with massive corruption and scandals. As beautifully explained by the chairman of SBI, before the demo there were two economies the formal and the parallel. The profits were definitely better in the parallel economy, because no taxes were payable. Demo hit at the very root and all the businesses are now struggling to shift to the formal economy which will take time, the shift has to be honest that is more important. Can the losers in the demo make a change in government the reply is no they are so few in nos.
    The days of narrative creation are over. The opposition needs to accept that a NA KHAUNGA NA KHANE DUNGA, coupled with gas, electricity, housing, jan dhan is the success story. All those not wanting MODI or wanting to come to power will have to do better than this or on similar issues.

  18. Nothing can defeat Mr Modi other than himself! He is an astute politician, no doubt, but economics is another cup of tea.

  19. Who says that Mr Modi is not in direct charge ? He’s in direct charge of these tax cuts as well as any other important announcements like the 3000 tiger story. It is not as if Sitharaman worked out all these plans by herself and announced them , as would happen in any normal Union Cabinet. Everything including the good moves and the blunders have come from one source.

  20. The economists are very positive about low inflation.Is low inflation really a good sign?
    can it be one of the signs of a dying economy?- particularly since low demand
    for may goods in the market is a undeniable reality?

  21. One can only sympathise with self certified liberals. They have never ever sacrificed anything for their principles; not their sinecures, not their privileges, not their Leytuen’s bunglows, nothing. Hence they are unable to comprehend why people with so little are still willing to give up whatever they have.

  22. Foolish arguments at the behest of Congress Party in this paper. It the economy recovers, which it would, then you should jump in the lake Mr. Shekhar Gupta.

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