With “wealth creation” as the central theme of 2020 Economic Survey, Modi government has harked back to its capitalist orientation in the backdrop of an economic slowdown. In its first term, the government was labelled a “suit-boot ki Sarkar” (pro-rich) by Congress leader Rahul Gandhi, forcing it to roll out a slew of rural welfare schemes like direct money transfer to farmers and loan-waivers.
ThePrint asks: Wealth creation in Economic Survey: Slowdown forces Modi govt to shed ‘suit-boot’ fear?
Wealth creation important. Modi govt working towards a transparent and corruption-free businesses ecosystem
National spokesperson, BJP
The BJP has always been a Right of Centre party that believes in fostering a market economy. The 2020 Economic Survey, with its focus on wealth creation and market economy, reiterates that. Wealth creation is important and the BJP has been working towards building an ecosystem of transparent and corruption-free businesses, especially for the MSMEs.
After the 2019 Lok Sabha election, PM Modi had categorically said that the size of the cake does matter for the economic well-being of the nation. So, the government has set an ambitious target of $5-trillion strong Indian economy by 2024.
Ease of doing business promotes entrepreneurship and self-employment. And increasing employment is the focus of Modi government’s policy, particularly with regard to the Make in India initiative. The government will be able to tackle unemployment with many infrastructure and investment-related initiatives.
The Economic Survey has rightly identified the role of market forces in resource allocation, including trust in the government policies. The Survey also emphatically brings out the government’s success in moving India towards a formal economy. In fact, the Survey states that employment in the formal economy increased from 17.9 per cent in 2011-2012 to 22.8 per cent in 2017-2018. The Modi government’s efforts since 2014 of resolving the problems of the banking sector have strengthened financial institutions and have spurred capital formation.
2020 Economic Survey tries to hide Modi government’s financial mismanagement
Congress MP
Rather than reflecting on the current economic crisis, the 2020 Economic Survey window dresses, hiding the Modi government’s financial mismanagement. The government has done many flip-flops when it comes to economic policy-making as it does not understand the fundamentals of the GDP.
Former Prime Minister Manmohan Singh, who was an expert in economics, understood that GDP had to be above 7% to fund rural welfare programmes, which is why the programmes announced during his tenure were complementary to GDP growth. When BJP came to power, it inherited a healthy economy created by the UPA regime. But then, the BJP with its poor policy decisions jeopordised the GDP.
GST and demonetisation also hurt India’s economic growth. Despite this the Modi government continued to announce more and more social welfare schemes without worrying for the finances. These two policy missteps lowered India’s GDP rate by 2 per cent and GST collections fell way below initial expectations. The government even slapped an 18 per cent GST charge on the real estate industry, which is now suffering.
The Modi government lacks a basic understanding of economics and its extreme shift in economic approach is proof of that. Without increasing wealth, economic growth, jobs and demand, how will the Indian economy thrive as a whole? The BJP must shed its egoistic mindset. The economy is not like history or politics — it is an independent and scientific realm.
2020 Economic Survey reads pretty much as a preface of what to expect in the 2020 Union Budget
Marketing executive and commentator
More than Congress leader Rahul Gandhi’s “suit-boot” jibe, following his sartorial faux pas at the Obama reception, the real setback for Modi 1.0 was the backstep it had to take on land reforms.
This also brought home the realisation that the political classes were not willing to back PM Modi through tough reforms and the captains of industry were happy to stay quiet letting him fight his own battle.
That probably deflected Modi more left than the Left. Instead, Modi decided to spend his political capital in preparing the ground for reforms 2.0 with GST, banking, the Insolvency and Bankruptcy Code, direct benefit transfer and digitisation of the Indian economy through the controversial and much-maligned demonetisation move.
Contrary to popular perception, in his second term, Modi is moving with a very clear agenda, both on the political and the economic front — front-ending the tough decisions to the early overs of his innings, keeping the slog overs for recovery.
So, the 2020 Economic Survey reads pretty much as a preface of what to expect in the 2020 Union Budget. The repeated reference to “crony capitalism” is significant even if it sounds a tad defensive — perhaps, to pre-empt the criticism of the opposition that PM Modi primarily works for a few industrialists.
However, in the final analysis, no one could fault Modi on intent or words. It is the implementation that has let him down repeatedly. The real proof of the Budget will lie both in the speed and efficacy of roll-out of schemes. PM Modi would need the results of the reforms to kick in time to consolidate before 2024.
Modi govt’s priority is corporate sector, but economic slowdown will force it to address rural demand
Associate professor of Economics, JNU
The Modi government has neglected rural sector ever since it took office and has always prioritised the corporate sector. The government provided Rs 1.45 lakh crore in tax relief to corporates, which is 2.5 times more than what was allocated to MNREGA in Budget 2019.
All data on the Indian economic slowdown show that the rural economy is in crisis and the poorest of the poor have been hit. A section of the rural population is even cutting down on basic spending on food and water, which shows how dire the situation is.
Welfare programmes for rural upliftment have been short-lived and poorly implemented. Take the PM Kisan scheme that was announced before the 2019 Lok Sabha election. Numbers after the election showed that around 75 per cent of farmers didn’t receive all the three instalments of Rs 2,000 that they were promised under this scheme.
Ironically, despite the Modi government prioritising the corporate sector, the current slowdown will force it to address the rural demand, something which the BJP should have done in the last five years. The government’s priority may still lie with the corporate sector and any apparent change in its stance will only be out of compulsion.
2020 Survey tries to do an uphill task: re-establish ‘Modinomics’ as a Right-of-Centre economic doctrine
Reporter, ThePrint
The 2020 Economic Survey has tried to accomplish an uphill task: re-establishing ‘Modinomics’ as a Right-of-Centre economic doctrine. The repeated invocation of “wealth creation”, “invisible hand” and “market economy” is an attempt to somehow magically revive the animal spirits of the Indian economy.
Traditionally, Economic Surveys used to be an annual assessment of the country’s public finances. Former Chief Economic Adviser Arvind Subramanian started the trend of turning these Surveys into academic op-eds. The 2020 Economic Survey marks another departure. The Survey is fundamentally a political document, which ambitiously tries to frame a moral debate in favour of free-market economics.
There is an optimistic reading of the 2020 Economic Survey and then, a slightly less generous one.
Considering the popular perception that the PMO drives India’s political economy more than the Ministry of Finance, the 2020 Survey signals an intent of course correction. It explicitly talks about how government intervention in markets hurts the economy, correcting bank nationalisation, and the virtues of integrating into global value chains. So, it is possible that Modi may finally be preparing to shed his populist impulses.
Less optimistically, the Survey comes with the usual trappings of India’s Hindu nationalists. The opening chapter talks about complimenting the “invisible hand” with the “hand of trust”. While the actual value of “trust” in markets has murky evidence at best, it is actually a clever way to dodge the question of uncertainty — something that the Modinomics is replete with.
The question isn’t if Modi can unleash reforms, but is whether the PM can stick to them until he faces a new state assembly election?
Also read: Air India sale: Congress & Subramanian Swamy right to call Modi govt bankrupt, anti-national?
By Pia Krishnankutty, journalist at ThePrint