Union Minister Arun Jaitley and Outgoing CEA Arvind Subramanian.  (PTI)

Does The Modi Government Have One Unifying Economic Policy?

The Narendra Modi government’s economic policies are driven by the prime minister’s welfarist vision, according to former Chief Economic Adviser Arvind Subramanian.

“The [Modi government’s] vision is the following: The centre is going to use the latest technology in order to deliver essential private goods and services to the people, especially the poor,” Subramanian said in an interaction with BloombergQuint at the Delhi launch of his new book ‘Of Counsel: The Challenges of the Modi-Jaitley Economy’.

It’s a different kind of welfarism compared to the old Congress’ socialist vision, Subramanian added.

Edited excerpts:

Can you demystify this government’s economic policy for me? What is it? Is it just a bunch of dots or is there something that connects them?

It’s a very good question. I would say somethings are done as a response to pressing challenges at hand. The two big achievements of the government were responses [to challenges]– 1) the GST and 2) IBC.

In that sense, you’re right, these are not a part of some overall vision. But if there is an overall vision for this, I would say, it’s the prime minister’s welfarist vision.

It is a different kind of welfarism. We’ve had the old Congress’ socialist vision. The [Modi government’s] vision is the following: The Centre is going to use the latest technology in order to deliver essential private goods and services to the people, especially the poor.

This is the animating vision of the prime minister. The government will provide toilets, housing, bank accounts, power, medical insurance using the latest technology. This animates a lot of the vision. It is not a model, in practice, in which the provision for education, especially primary, and health have necessarily been privileged.

Also read: Does Arvind Subramanian Believe India’s GDP And Fiscal Deficit Data?

You have called it an alternative model of social welfare in the book. As a financial journalist, I would try and understand the policy, what is the architecture and where is this going. Was this predetermined, did it play out in the fashion as you mentioned?

Some of these things become clearer over time. But I think that there is enough going on here which is part of a pattern that it would be unfair to rule out the possibility that there was something behind this. The first things that the government did was the Jan Dhan bank accounts, which I thought was interesting and over time, it happened sequentially. The concept of JAM (Jan Dhan, Aadhar, Mobile) is really about harnessing the technology, where the Prime Minister is very keen on and very comfortable with. However, in the service of something which is really concrete and providing these essential goods and services, there is some pattern to say that there is an underlying vision.

Also read: The Two Puzzles Of Demonetisation - An Excerpt From Arvind Subramanian’s Book ‘Of Counsel’ 

Many of the schemes like bank account, Aadhar were conceptualised in the previous government. This government has definitely done a better job of execution, putting them together and leveraging them together in one way or the other. When you called this an alternative model of social welfarism, how is it welfarism to not give adequate attention to primary healthcare, and primary education? You had also raised this in your book stating that they are something that they didn’t get the attention they deserved. Second, how is it welfarism to demonetise that contributed to 40-50 percent of the economy and is the weakest sector, just ahead of introducing something as disruptive as GST, which in the countries has been introduced, we know it causes at least two-to-three years of disruption as the formalization process play’s out?

There are two separate parts to this question. The first is the critique on healthcare and education. I think. But I don’t know enough about this whole Ayushman scheme. Therefore, I think some of them may be addressed to that. But the broader point is the primary basic health services and primary basic health education is something that has not happened din India in 70-75 years. I think there are a lot of historical reasons for it and everyone is someway responsible for this. There is a huge complication of many of these being a state subjects and therefore the ability of the centre to drive these things is not negligible but its not the main driver of some of these issues. To some extent, the question on health and education we should ask is not why the central government has not done it, it why over 70-75 years of state governments who have the constitutional mandate to do this haven’t done anything. The deeper question is why doesn’t Indian politics make provision of health and education, a politically salient issue?

Catch the entire discussion here: