Modi’s Independence Day Economic Speech From The Ramparts Of A ‘Pink’ Fort
The PM could have used his legendary oratory and hope-generating skills to assuage the economy. But alas, writes Raghav Bahl.
Main jaanta hoon ki aaj desh ek aarthik mandhi main hai; lekin main 130 crore desh vaasiyon ko yeh vishwaas deta hoon ki hum jald hi isko aarthik josh main badal dengey! (I know that we are currently in the grip of an economic slowdown; but I want to assure my 130 crore fellow Indians that we shall soon convert this gloom into economic optimism!)
I was yearning to hear these words from the Ramparts of the Red Fort. I wanted Prime Minister Narendra Modi to use his legendary oratory and hope-generating skills to assuage the economy. But alas, he did not even acknowledge that there is a severe slowdown of demand and investment. Instead his prescription was more of the same same, with an additional/unusual invocation to domestic tourists!
So I Turned From The Red Fort to The ‘Pink’ Fort …
I have no hesitation in admitting that I was a vocal critic of Modi-nomics 1.0 from 2016 to 2019. Do read these articles as proof: Why Modi Regime is the Most Statist and Interventionist Since Liberalisation and Modi Report Card Part Two: Ten Economic Stats To Surgically Erase. After hearing today’s speech, I had almost resigned myself to an unchanged Modi-nomics 2.0 until my eyes fell on this quote, from The Economic Times, Aug. 12, 2019:
This synched with his near-deification of wealth creators today – almost an admission that his regime may have been too harsh on them until now. I began rubbing my eyes in disbelieving joy! Was Prime Minister Modi turning over a new leaf? Willing to admit the excesses of his babus (bureaucrats)? Conceding that the state was guilty of a dangerous over-reach on his watch? Finally trusting the preachers of private enterprise and coming good on his much-violated promise of “minimum government, maximum governance”?
So, I dove deep into his three-page-interview-spread to make up for the deficit/silence in today’s speech. That sumptuous exchange was nothing short of an Independence Day Address for India’s Economy from the ‘ramparts of a pink paper’. He had used many feel-good Wall Street-isms, almost straining to sound market-friendly. The emphasised phrases, in colour below, seemed to be liberally borrowed from MBA 1.0:
But Alas, the Babu-dom Is Alive And Kicking Hard
As I got into the weeds, I began to encounter the familiar, dreary dead habit of the bureaucracy. The shibboleths that had kept Modi-nomics 1.0 moored to statism/incrementalism were hiding in plain sight within Modi’s MBA-crafted lines:
- EODB is derived from the subjective views of a few dozen experts in Mumbai and Delhi. That’s it!
- Most of the improvement came from just four rules that were swiftly changed in a ‘Kota coaching class’ approach to ‘gaming the system’:
- enforcing a single window clearance for building permits in Delhi and Mumbai;
- allowing exporters to seal their containers electronically, reducing physical inspections to 5 percent of shipments;
- introducing a single form for company incorporation; and
- lowering the cost of getting electricity.
So, I’ll say it once more. That’s it! And never mind the fact that on three significant parameters – paying taxes, resolving insolvency and enforcing contracts – we actually slipped. Frankly, it’s time for Modi-nomics 2.0 to quit using such trivia that only fools us into believing that “all is well” when there’s hardly any improvement in rigid factor markets, or stalled projects, or extortionary tax policies, or intrusive raids/inspections, creating a huge unease of doing business.
- The Modi regime’s unusual hostility towards equity capital, which is the lifeblood of spurring an entrepreneur’s animal spirits. They restored long-term capital gains tax, did not abolish securities transaction tax, began taxing dividends in investors’ hands, but did not abolish the dividend distribution tax – so the same equity investment is taxed four times! Add “angel or valuation mismatch taxes”, and you really don’t need to ask why private investment is flagging
- The Modi regime’s unusual penchant for keeping real interest rates the highest they’ve ever been. When, for instance, did you last see, in any sane/mature economy, that the central bank cut rates by 35 basis points, but the 10-year treasury bond gained 35 basis points in the next few days!? It’s perverse, but it just happened in India last week; proving that Modi-nomics has bloated the government to such an extent that private investment is being crowded out
I can go on and on, but that would be just a lot of dense drivel. The fact is that Prime Minister Modi, in his address from the Ramparts of the ‘Pink’ Fort, made a clarion call for a market-friendly economy; but his Raisina Hill bureaucrats continue to doggedly cling on to big-government-knows-best policies. This must change. How? Let’s keep that for another day.
For today, Happy Independence Day!
Raghav Bahl is the co-founder and chairman of Quintillion Media, including BloombergQuint. He is the author of three books, viz ‘Superpower?: The Amazing Race Between China’s Hare and India’s Tortoise’, ‘Super Economies: America, India, China & The Future Of The World’, and ‘Super Century: What India Must Do to Rise by 2050’.