Thursday, December 8, 2022
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Modi shouldn’t echo Xi’s policies because India isn’t China on so many levels

Market economies seeking private investment don’t function well without autonomous institutions, checks on executive excess, and freedom to express opinion without fear.

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The new tack that the Narendra Modi government has spelt out on economic policy needs proper understanding, to figure out whether it will work. For, it includes not just the privatisation of government-owned companies but also of more sectors — like power distribution, where consumers are now promised choice of supplier.

There is the promise of a change in attitude. For, while praising wealth creators, the government has also talked of de-criminalising company and tax laws, and further de-personalising tax assessments. This promise of a friendlier business environment and a less suspicious government has taken most people by surprise. But the ground was prepared with the new labour codes, the proposed opening up of agricultural marketing, private sector entry into mining and rail transport, and an incentive-driven push to promote manufacturing. Seven years after Modi said the government had no business being in business, the business community senses real change.

The rediscovery of that forgotten dictum may well be born out of disappointments with past initiatives. Because of the failure of goods and services tax to deliver what was promised, tax revenue has fallen in relation to GDP. Non-tax revenues offer little hope of future buoyancy, given that telecom, state-owned oil companies and even the Reserve Bank of India have all been milked dry. What else is there to do now, other than borrow to the hilt, sell companies, and monetise government assets? In other words, privatisation and the proposed monetisation of government assets have emerged from a fiscal cul-de-sac.

Other policies too have not enjoyed great success, whether in banking or making in India, in exports or overall economic growth. So it seems the decision is to let up and let go, though that is not the natural instinct of the Modi government. Hence, the disconnect between its new stance on business and the older push for dictating the narrative when it comes to politics and public life (think media and civil society). Market-oriented economies that seek private investment don’t function very well without an array of autonomous institutions, checks on executive excess, and the freedom to express your opinion without fear. The Modi government would find it hard to argue that this is what it has been promoting, given that even international arbitration awards don’t seem to have much effect.

Also read: Economic ideology is the new binary in Indian politics as Modi swerves Right & Rahul Left

Against this, there is the interesting argument by Ravinder Kaur in her recent book Brand New Nation: Capitalist Dreams and Nationalist Designs in Twenty-first Century India, that there is in fact no contradiction between Right-wing politics and Right-wing economics, and that the two have gone together in the creation of a new image of India. Perhaps, but how well it might actually work remains to be seen. The results of similar experiments elsewhere have varied. In Turkey, under Recep Erdogan, the currency has collapsed amid capital flight. But in Viktor Orban’s Hungary, taxes have been reduced and user charges dropped, the fiscal deficit and public debt have been controlled, and unemployment has fallen even as growth has done well. The worst-case scenario is, of course, Vladimir Putin’s Russia, with its beholden oligarchs and suppression of growing dissent amidst a non-performing economy.

At the other extreme, you could point to China, which has made a remarkable success of dealing with the contradictions of welcoming foreign investment while pursuing the repression of the Uighurs; becoming the factory to the world while President Xi sidelines or imprisons his opponents or rivals in the Chinese Communist Party; and laying down the law to global tech giants or shutting them out completely while still managing to gain international traction.

Some of those approaches find muted echoes in Modi’s India, but taking a leaf out of Beijing’s book is not going to work. For one thing, China is much better at executing its plans while India has its IAS, as Modi noted. For another, protesting farmers in India can block entry points to the capital for months on end without the government even contemplating a Tiananmen-style crackdown. If the truth is that India is fundamentally ungovernable, all that Modi might achieve is a continuation of that old Indian tradition of muddling through.

By Special Arrangement with Business Standard.

Also read: 5 key areas Modi govt should focus on to walk the private sector talk


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  1. It’s no secret that in democracies, political parties have an adversarial realationship, especially the parties not in power vis-a-vis the govt. But that assumes that these opposition parties take their roles seriously and responsibly but that’s not the case as, they only see their role as to opposing for opposing sake every and all govt policies and initiatives, even ones meant to benefit the masses most.

  2. Mr. Ninan:
    “If the truth is that India is fundamentally ungovernable, all that Modi might achieve is a continuation of that old Indian tradition of muddling through.” Really, what are you want/expecting? India is a country of 1.5B, maybe of which 500M has what one would call fulfilling/taxable jobs. What does a PM , any PM do to bring majority of folks below or close to poverty line in India to so called middle class. Instead of a straight up criticism of whatever the person in chair does do you have any alter-plans? Any ideas?

    If not why not just pick up some useful activity like classical singing /painting ot travelling and spare us the pain?

  3. “Market-oriented economies that seek private investment don’t function very well without an array of autonomous institutions, checks on executive excess, and the freedom to express your opinion without fear. ”

    Ninan in his old age has gone bonkers. All countries in East and SE Asia — from Japan in pre-WW2 to S. Korea, Singapore, Malaysia, Thailand, and now Vietnam — and of course, China — do they have, or did they have market-oriented economies? And if they have, or did do they have too much freedom of expression or an array of autonomous institutions and blah blah. And yet these countries are known as “miracle economies”.

    Ninan’s hatred for the Modi govt and his terrible bias is clouding his ability to think.

    NINAN: please do your readers a favour. Kindly take retirement. You are getting senile.

  4. I suppose it would bode well for the Nation if our “experts” are less prescriptive and more suggestive, so that the expertise is not wasted in politics.

    Tail piece: Credibility of “experts” can be established when they speak/write about both sides of the coin. The good done along with what may have to be done in ADDITION. Speculative writing does not help anybody.

    • The only issue here that anything given out free is either exploited or loses quality. Look at free air and water for instance!!!

  5. privatization and the proposed monetization of government assets have emerged from a fiscal cul-de-sac. Noted correct observation in India……………all that Modi might achieve is a continuation of that old Indian tradition of muddling through. Again the correct observation of reality in India. How high Ram Mandir and cow puja will take India up in a economic trajectory will become obvious in 3 years ahead. The covid excuse has not been used fully yet. Good piece.

    • Ha!! Ha!! Han communist Chinese killing Muslims and sleeping with their women to keep the threats to their civilization at bay is a better model for India!!

  6. Liberals leave no chance to highlight China’s sucess in various fields to downplay India’s achievements. Yet if the government tries to implement the Chinese way of governance, they feel uncomfortable.

    • These so called liberals bed with communists & Islamist’s but talk of democracy & free speech!! Democracy & secularism has been a boon for Breaking India & anti national forces!!

      Much of the English speaking elite & so called journalists like this author can only copy/paste western ideas, NOT come out with any analysis & ideas of their own!!

      Nehru too was a “liberal” but his incompetence in protecting this nation & it’s civilization is for all to see!! It’s better to bury these liberals & move on!!

      • Well said!! The commies & their allies need to be hunted & buried just as the Americans did during cold war!! These people are against this nation, it’s civilization & Hindu/sanatanis!!

  7. does it merit a duscussion on whether democracy is the best form governance for developing nations especially as diversified as india?
    what are the additional checks and balances to be introduced?

    • KK,

      Democracy is fine. The problems are with the people and not in the system. The three problem areas in India are:

      1. The media feels that highlighting only the negatives is the meaning of “Free Press”.

      2. While valuing freedom, the citizens are unaware that it is not limitless and one has to pay a price for it.

      3. The opposition takes its role literally to oppose anything and everything and political parties fail to separate Governance from politics.


      • Democracy in a country like India with myriad external & internal enemies is surely not the right model!! Indeed! Indian democracy creates more problems than gives solutions!! A cat is a good cat only if it catches mice!! In India, democracy doesn’t allow anyone to progress or catch the mice which poison the nation & it’s native civilization!!

      • @Col KL Viswanahan (Retd): The problem with India is the communist class which doesn’t have any brains of it’s own!! They just import western ideas and try to paste in India!! All big Indian institutions talk in English instead of speaking Indian native languages!! This type of colonization creates slaves, NOT innovative & productive citizens!!!!

  8. Even an ungovernable India has made a success of Pharma and IT services . Someone with the intellect and brains should study what was done there and plan to emulate his in other sectors as well. First look for the required brains, because they are in terrible short supply in Delhi.

    • @Sudarshan Nityananda: You don’t create innovators with demoralized, brainwashed & slave mentality!! India has been made such incl. ungovernable by the commies/jihadis!! This can be reversed!!

      For that to happen, stop Hindu apartheid by freeing Hindu temples, encourage native languages, teach true Hindu/Indian history & the greatness of it’s legends! Finally, act in accordance with the splendid Bhartiye civilization & everything else will fall in place!!

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