The Maahaul of India Shining!

If you are an avid watcher or reader of global commentary, you cannot miss the ongoing spotlight on India and mostly for good reasons.  India seems to be the shining star in what otherwise seems to be a global economy that is still coming to terms with post-Covid recovery and the spiralling effects of the Russia – Ukraine war. The past few weeks have seen a downpour of bad news on the economic front globally. And it is not just from the US which is a prime mover in the global economy but other developed nations as well.

India though seems to be a lonely planet in the universe. The stock markets are on a historic high as we approach the end of this calendar year and despite the global demand situation, the Q2 GDP numbers at 6.3% demonstrate that India is tiding over the global headwinds reasonably well. Therefore, on cue, we have been seeing many opinion pieces, commentaries, and encomiums of late not just within India but globally, saying that this could be India’s decade and so on. I am calling this the “India Shining” sentiment for easy understanding! The point to note is the maahaul of India Shining keeps visiting us every 5-6 years and ebbs off after a while.

The phrase “India Shining” was of course used for the first time by the Vajpayee-led NDA government to project a positive outlook of the country to foreign investors back in 2003-04. The campaign was envisaged by Jaswant Singh as the finance minister. Later on, it took shape of a political campaign for NDA in the 2004 polls. Many expert commentators till today opine that the India Shining campaign was the main reason for its defeat in the 2004 Lok Sabha elections. If one does a fine toothcomb analysis of the results, it will be clear as daylight that NDA was defeated due to other issues. We will keep that for another day, another blog.

The campaign did help to improve the image of India worldwide in that period. India was part of the BRICS coinage, a commentary that would have done countries like India, China, Russia, etc more good than any global PR campaign ever did. I remember in that period wherever I went, the BRICS story dominated discussions in board rooms and what followed was a long period of India Shining till the Global Financial Crisis in the form of Lehman shock struck in 2008.  If you recall, the period 2003 – 2008 saw huge investments in real estate and retail with the free flow of “Hot money” to India, all thanks to the positive India Shining sentiment.

The next brief and passive wave of India Shining started in 2014 after Narendra Modi took over as the Prime Minister of a full majority government after 1989. India was the flavour of the world then and this lasted for a few years till 2017.  The stock markets saw new highs with a heavy inflow of FII in this period.

What we are seeing now is the return of the BRICS type hype. The difference is, three of the constituents of BRICS namely Brazil, Russia, and China are no longer in the good books of the world while India continues to be. There are a few things that are going well for India overall now. A politically stable government that is confident in itself and no longer suffering from coalition compulsions.  A government led by a leader whose popularity and credibility among the masses is unprecedented in a long while which helps take decisions without looking over one’s shoulders.  Introduction of structural financial reforms like the GST and IBC that have stabilized and yielding results. India coming out of Covid relatively better off with life and business back to normal. The swift post-pandemic recovery in the economy despite the global headwinds due to the ongoing war. A nuanced management of the economy in the past few years and in a sense better than what the minders of the economy are being credited for, in my opinion.

Countries and Corporations who had conceived the China+1 strategy back in 2013 to de-risk from China are actually getting serious about executing the strategy now by shifting part of production elsewhere. The Covid pandemic and the way China has been handling the pandemic has now morphed the China +1 strategy into ABC (Anything but China) strategy.  These have certainly helped the cause of manufacturing in India as we can see in the exports of Mobile phones out of India now. We are still scratching the surface here and still miles to go before we become a credible +1 in manufacturing.

There is a visible infrastructural transformation that is happening in India as we speak. Highways, Railways, Airports, and seaports are all getting upgraded or added at a speed not seen before. Again, the pandemic derailed the progress for two years otherwise, many would have seen completion by now.

There is credence therefore to the India Shining sentiment that we are witnessing at the moment. Here is where I would like to add a caveat. Developed countries like the US, Western Europe, Japan, and so on look at other countries when their internal situations are not good. That is how China got the benefit of a huge benevolence from the US in the 90’s when the US outsourced almost its entire manufacturing to China.  Similarly, the US Economy is going through a trough presently with the spectre of a recession looming large. The economy is indeed resilient but there are lots of ifs and buts. Commentators call this the “Yes and But” situation.

If you look at India, I would say we are in a “No and But” situation. Living in India, one cannot resonate easily with the India Shining maahaul. Our cities are in a state of perennial under-construction.  Projects, whether they are flyovers or Metros just don’t seem to finish.  Interest rates have become so high that have pushed EMIs over the roof.  IBC has not helped to resolve quickly the issue of bankrupt companies. In Mumbai, bankrupt builders have ditched projects midway spoiling the aspirations of so many middle-class families and filling the skyline with incomplete towers. Jobs and Unemployment data point to a very grim situation for the youth.

But the economy is indeed growing. GST collections have been on a healthy trend. People are travelling and holidaying like there is no tomorrow. Just look at the long queues for check-in and security checks in big airports like Mumbai and Delhi in the early morning hours. Festival and marriage shopping crowds have been unprecedented of late in shopping areas in all cities. Cheap data and bandwidth have transformed our day-to-day lives in more ways than one. The “India stack” is a global case study. Amidst all the negative sentiments globally, there is an air of positivity in India. We have to move to a “Yes and no But” scenario that too as early as possible.

As Shekhar Gupta says in one of his columns, we have a habit of flashing victory signs early.  India as we speak is still a WIP and a lot of work is yet to be done.  From here, what we need is an uninterrupted home run where the economy keeps clocking 7-8% if not more on a year-on-year basis for 20 years.  If that happens, we will not be talking of just a maahaul but an actual India shining!

Pic credits: Alex Fine in The Economist dated 13th May, 2022.

Where is the “India Story” headed?

  • World over, inflation is at an all-time high.
  • Oil prices are shooting up.
  • There is a shortage of Wheat and other food items.
  • China has shut down its major cities in pursuit of its “Zero Covid Policy”.
  • Experts expect China to be in some kind of a lock down till 2023.
  • Supply chain disruption which started with Covid in 2020 is still on.
  • US GDP growth rate this year is likely to surpass China’s after four decades.
  • The World’s love affair with China is over.
  • Russia’s Ukraine war is dragging on without an endgame in sight.
  • US companies have pulled out or shut operations in Russia.
  • Affinity for Globalisation is now fraught with “Conditions apply”.
  • Almost all nations are seeking “Atmanirbharta” in some form or other without saying so explicitly.
  • A Unipolar world with US as its vertex that existed for two decades since the end of Cold War has now withered.

So, if one looks around, the picture is not very rosy. Where does that leave with the much touted “India Story”?

I think that this phase of 2/3 years is most crucial for India that can make or break the India Story. And the reasons are as follows:

  • Globally companies who had invested heavily in manufacturing in China are looking at de-risking from China. As a country with a huge population and therefore a source for cheap labour, India can fill in, if we get our act together quickly.
  • We are largely English speaking in business and our systems are integrated with the world unlike China which has strong firewalls in place for integrating all systems.
  • India has already proven its prowess in IT and IT services worldwide.
  • We have a functioning democracy that provides inherent checks and balances where transfer of power happens smoothly as per the will of the people.
  • We have a stable government in place now for the past 8 years at the Centre with a leader who is acknowledged and regarded worldwide.
  • India is back on its feet after two years of Covid.
  • With a large consuming domestic population, it is an attractive market for many corporations.
  • India can be the magnet for attracting manufacturing investments in areas where we have core competency like Auto, Pharma etc.
  • India maintains friendship and strategic relationships with big powers like US, Japan, UK etc…

In short, reasons which are all obvious and which we are all mostly familiar with.

For a world that is looking at options, India can be that next best choice if we get our act together quickly. And that is a big IF. Why is it so?  History of India is replete with missed opportunities. Opportunities missed at times due to external geopolitical reasons but largely thanks to internal politics.  Can this time be different?

I believe keeping aside what happened in the past, as an eternal optimist, things can be different if we played our cards differently.  Towards this, I am suggesting a three-point agenda:

  • Put economic prosperity and therefore growth at the top of the country’s agenda. Think, breathe, and act basis the same.
  • This means that at the Centre, States and local level including WhatsApp groups, we must put a stop to all divisive agenda items. The country must focus single minded on issues related to economic growth. Today, at these crucial times, we are spending our time and attention on issues like origins of temples and mosques. I think we all know the origins of the temples and we don’t need to further spend time and resources to establish the facts.  This is a needless distraction at this point of time for us.
  • Centre and states must work towards this goal of economic prosperity as a team. Unfortunately, today, there is an atmosphere of Centre-state friction for which I believe both the Centre and States are responsible. On the other hand, if Centre and states co-operate and work together, I am sure the pace of growth can be fastened. Let me cite two examples to demonstrate my point:
    • In Mumbai, one of the crucial Metro line projects is now in limbo because of the tussle between Centre and State over the location of the Metro car shed/depot. This is clearly unfortunate and there seems to be no sign of a solution to break the impasse.
    • Last week, at the World Economic Forum at Davos, many of the states from India had individual booths along with a strong contingent to pitch for investments. This is indeed appreciable. But, what if, instead of states fighting among each other to attract investments, the Centre and states had worked a joint plan? What if we had a common India pavilion at a much larger scale with separate booths sector wise with participation from concerned states? I feel this would have made a much larger impact and will also ensure joint ownership in execution once a project is landed.
      • Labour is indeed a state subject. But it is high time a common acceptable labour code is thrashed out between Centre and states and implemented asap. A GST council type labour council be set up asap to arrive at a consensus on this. I believe that such a labour council will also help to wade off local political opposition to changes in labour laws for all political parties.
      • One of the key issues for attracting investments for manufacturing is making available land at reasonable prices. Again, a consensus among states and Centre needs to be arrived at for changes in the current land acquisition bill and implemented asap.
    • In essence between the Centre and State what is needed is Co-opted federalism and not Competitive federalism. Dwelling too much on semantics like “Union Government” Vs “Central government” is just a sheer waste of time.

Author and Columnist T.N.Ninan in a recent piece in The Print says, “For India, economic disorder is a reality to be reckoned with, but it also presents an opportunity” and I agree completely.  If we blow this opportunity, I am afraid that the India story will turn to be a Saas-Bahu type soap where the end doesn’t matter as long as there is some drama every day.

HNY to HNQ??

As I sit to pen my first blog for this year in the early days of another New Year, I am reminded of my first post for the last year which was titled “Thank God it’s a New Year”! That time (1st week of 2021) we were just coming off what appeared like a terrible year. The entire world was disrupted by the global pandemic in a scale not seen or heard in many, many decades.  But then by January, we already were recovering and started gradually getting back to pre-Covid way of living. Lockdowns were over, travel started and so on. So, the theme of my piece then was that the worst was behind us and we must thank God that we are in a New Year and raring to go.

In the year 2021, we did finish the first quarter on a high. There was optimism all-around of a sharp turn around. But then, just in a few weeks, the world in general and India in particular was mauled by the 2nd wave.  I shudder to recount the horrifying things which were happening around us in the months of April/May/June/July. Enough to say that the cursed tentacles of the virus were still spreading all over spelling doom on all recovery predictions.  Drawing room conversations were all around the availability of vaccines and the time when vaccines will provide an eventual shield for the virus.

If we recall, by the third Quarter of 2021 however, things on the ground started changing rapidly. The vaccination pace picked up dramatically with better availability of vaccines by August. And we were talking about flattening the curve for the second time. Through the festival season in the months of October/November the mood was upbeat and we could start seeing the recovery even in “Contact sensitive sectors” like travel, tourism and so on.

Things started dramatically changing again with the discovery of the Omicron variant in South Africa in early December. And towards the end of December and as we speak now, we are witnessing another rapid spike in cases and preparing ourselves for the inevitable third wave!  If you have been following the IMF predictions for the global economy and specific countries through the pandemic, you will realise that they have been changing their forecasts every quarter up and down. Now, what am I trying to drive at here?

With such an uncertainty in the world triggered by a virus and its variants today and it could be something else tomorrow what does it leave for long range planning for a country /company /household etc.?  It is tough. To elucidate this point let me talk about the way Indian government handled the economic support during the pandemic versus some of the larger well to do countries. When the pandemic struck in March 2020, big economies like the US, Canada and European countries who could afford, opted for cash transfer to its people to pump prime the demand and therefore the economy. Some of the Non-resident Economists of Indian origin of the likes of Dr. Raghuram Rajan, Dr. Kaushik Basu and Dr. Abhijit Banerjee also advocated this route for India and were extremely critical of the Narendra Modi government for not going the whole hog and opting for a more calibrated “Drip support” approach.

In this approach, instead of direct cash transfer, the government opted for free supply of rations to the needy and generous support of working capital to ensure that the businesses stay afloat. There were also moratoriums on loan repayments for most part of the year 2020. The logic of the economic think tank that included the likes of Dr. Bibek Debroy (Chairman – PM’s Economic Council) , Sanjeev Sanyal (Principal Economic advisor in the Finance Ministry) and Dr Krishnamurthy Subramanian (Chief Economic Advisor) was to take one step at a time when how the virus situation will pan out was uncertain, uncertainty being the key word. The time period for which any support was to be provided was not clear. Also another important thing, during the pandemic induced lockdowns, the issue was in the supply side largely. People stopped going to salons during the pandemic not because they didn’t have money. The same logic can be extrapolated to other service sectors as well. So, the idea was to keep the powder dry for eventualities in the future. As per IMF’s Dr. Gita Gopinath, large economies including the US have no more leg room left to keep supporting the economy and hence are facing an imminent challenge if the virus continues to hold sway. I must say therefore that the Indian think tank certainly stand vindicated on this account when we had to contend with the second wave and now the third wave.

My point therefore is, are long term planning or Annual plans relevant anymore? Things on the ground change so dramatically and drastically these days that any assumption for the better or worse of the future happenings is proved wrong very quickly. Since in India we understand similes from Bollywood easily, let me give an example. RRR is the next film after Bahubali from the ace director Rajamouli. This is also a magnum opus that has been made in multiple languages. Obviously due to the huge budget involved, it had to opt for a theatrical release and was planned for a release in January. The entire team was seen doing mega roadshows in different cities as part of the promotion for whole of December. But then, I see today that they have taken a call to postpose the release due to the like increase of restrictions in many cities due to the Covid surge of late! So it is a matter of few weeks for things to change for the fate of a film that was on the works for five years!

Even in the context of business in the pre-Covid times, I have not been a big fan of rigorous annual planning as, over a period of time, I have seen that assumptions and market conditions change drastically leaving the annual plans as an academic exercise. Now in the post Covid New normal, I feel that time has come to focus on QSQT (Quarter Se Quarter Tak).  While an overall Annual plan can be made for directional purposes, the drilling down of everything to quarters and months and weeks is a wasteful exercise in my opinion. In the sense does it make sense to assume that Omicron is not going to impact the economy so much and plan expenses accordingly for the coming fiscal year? Or we in any position to comment the recurrence of any new waves in the future? Instead in the current situation, whether it is the country or corporation or housing society or our own house hold we may be better off to keep the horizon of three months and take it from one quarter to another. On that note, wishing you all a Happy and contented New Year or should I say Happy New Quarter (HNQ)?

Image courtesy: Kat Millar.com

When Farm laws became Former laws and the lessons therein!

Guru Nanak Jayanti henceforth, will have an additional reason for celebration for many. Apart from celebrating the revered Sikh Guru on his birthday, the day will be also be remembered and celebrated for bringing Narendra Modi’s strong government down on his knees. This week on the day of Gurpurab, the Prime Minister chose to announce the repealing of the three farm laws which were meant to reform agriculture. This after almost 18 months of relentless protests by farmers mainly in Punjab, Haryana and Western UP. That the government had to finally relent and nullify the laws is unfortunate.  From here on, it is going to be tougher for this government to push through reforms of any nature. The opposition and the other adversaries have smelt blood and have found the soft underbelly of this government and hence a template for pressurising this government.

Farmers celebrate after India’s Prime Minister announced to repeal three agricultural reform laws that sparked almost a year of huge protests by farmers across the country in Singhu on November 19, 2021. (Photo by Xavier Galiana / AFP) (Photo by XAVIER GALIANA/AFP via Getty Images)

This means that moving forward, the Government needs to be inventive and creative in pushing through contentious reforms and bills so that the same fiasco is not repeated. And here are some unsolicited, practical ideas to the government to help push path breaking but contentious reform bills:

  1. Say No to Ordinance: The word “Ordinance” immediately raises the antenna of the opposition and commentators in civil society who deride anything that is an ordinance. Even if it’s a legitimate cause, pushing it through the ordinance route, unnecessarily gives it a colour of conspiracy.  If the Government opted for the Ordinance route to save time, then it is ill intentioned. In India, in matters of reforms, we are used to passing laws after 10 years of debates and discussions. So, trying to cut a few months of time by opting for the ordinance route is not worthwhile. And as we have seen in the Land acquisition bill and now in the farm laws, ordinance route has not helped at all. Considering the fact that the government has a comfortable majority on its own in the lower house and can manage a majority in the upper house, it is wiser to table the laws in both the houses, do some discussion and pass them as laws legitimately.
  2. Roll the red carpet to “Select Committees”: Opposition parties have egos. And egos need to be massaged often. What’s the other better option for this than rolling out the red carpet to “Select Committees”? In your planning cycle for tabling a bill that is reformist in nature and which will attract the ire of the opposition, buffer in certain time for sending the bill to “Select Committees”. It is usually said that “When a government cannot commit, it committees!” I would say that even when a government is clear in its mind and can commit, it should “committee” so that the opposition feels that they have been consulted and the law has been passed after due process. Now the flip side of this is possible dilution of certain provisions which may distort the intent of the law itself as we saw in the case of the “Land Acquisition bill” which the UPA government passed.  Ultimately it has become an ineffective piece of legislation that is the reason for delays in many of the infrastructure projects that are underway. But here again, I would say that with the numbers on its side, the opinions and recommendations of the Select committees can be managed in its favour by the government and in case there are some genuine provisions that need correction, that is welcome.
  3. Head hunt key opposition leaders to be ambassadors: Most of the reforms that are being brought about by the government are long pending once that have been talked about for a long time now. So, in public domain we can always check if any key opposition leader had a favourable view on the subject. It is important to head hunt such leaders and co-opt them as ambassadors for the law by reaching out to them before the law is tabled in parliament. This will not only divide the opposition but will also help in influencing public opinion in favour of the intended reforms. For example, in the case of farm laws, it is known to all that Sharad Pawar when he was the Minister of Agriculture had talked in favour of some of the provisions in these laws. So when Pawar expressed his reservations on the farm bills, the first attempt of the ruling party leaders was to expose his hypocrisy. Instead of that, the government should have reached out to him and sought his support before the bills were tabled. He could also have been used to influence other parties and fence sitters could have been won over. This approach needs a bit of deft floor management and handling of the opposition which I feel is lacking with the Modi government presently.
  4. Cherry pick opinion leaders to influence opinion: During UPA-1, the nuclear bill which Manmohan Singh was personally championing got into rough weather when its own allies from the Left were opposing the bill tooth and nail. The principal opposition party then which was the BJP, also took an opposing view though it was NDA under Vajpayee rule that had sown the seeds for engagement with the US on the nuclear front. In a masterstroke that set the cat among the pigeons in the BJP camp, Sanjaya Baru the media advisor to Manmohan Singh then, reached out to Brajesh Mishra, who was the National Security Advisor to Vajpayee and a vocal supporter of the nuclear bill. Brajesh Mishra came out openly in the press to support the nuclear bill which took the sting out of the BJP attack in the parliament and outside. The present government can take a page out of this play book and cherry pick opinion leaders from civil society to come out in the open to support the proposed reforms. While on this I must add here that many commentators who were in some point of time votaries of the farm bills turned their back and changed their opinion just because the reforms were brought by the Modi government.  This sort of exposed the intellectual dishonesty of such commentators and this is another reason why I advocate that it is important to cherry pick and co-opt some of these commentators who can influence public opinion.
  5. Debate and Debate: I have been reading that the farm laws were passed by the Modi government without any debate or discussions with the stake holders. A lie repeated often becomes the truth. This government might not have debated the bill in the floor of the house during this regime but the subject of agri reforms and the need to reform the APMC act have been discussed and debated enough since 2000. One has to just read this finely detailed paper titled “An intellectual biography of India’s new farm laws” by Gautam Chikarmane to understand the chronology and the journey of these laws. My proposal is, for future even if the need for a reform has been discussed many times, provision a few weeks for repeating the same in the parliament in your regime. Because in India, carrying out the debate in the floor of the parliament is supreme, notwithstanding the quality and the purpose it serves.

The government has its plate full in terms of the reforms agenda in the months to come.  Opposition parties and other interested parties can and will try to follow the SOP of the farm bills in derailing these reforms in the remainder of this term of the government. Therefore it is important that hard lessons are learnt to ensure that this government under Modi is not seen just as a harbinger of “former laws”!

Pic Courtesy: Forbes India

Catching up on the Economic Agenda!

Social Media is an ongoing battlefield for the IT Cells of political parties. There, you routinely find claims and counter claims by BJP and the Congress, which get forwarded and go viral.  Among the regular updates from the BJP side, the ones which are popular are those where Narendra Modi era (Post 2014) and Manmohan Singh era (2004-2014) are compared which show how the country has progressed rapidly in the last 7 years whether it is Highways construction, Rural Electrification, Toilet construction, Clean water supply etc. etc. However, one thing on which the BJP IT cell is put on the back foot by the Congress is the Economic growth. This is a graphic which is popular among the Congress supporters and rightly so where in comparison, the Singh era shows higher average GDP growth than the Modi era, so far.

I am certain that if there is one thing Modi as a person, who likes to leave behind a legacy in whatever he does, would like to correct, it would be this. Frankly, I had high hopes from this government in its first term on its economic agenda. I thought that with a clear majority, it will pursue bold and long pending reforms with a much higher vigour than the reformist Vajpayee Government which was always bogged down by coalition pressures.  It turned out that, but for the introduction of GST (a landmark and very important reform, in my opinion) and Demonetisation (in which the costs outweighed the benefits), the 1st term was lack lustre and was more or less on “Maintenance mode” as far as pursuing a bold economic agenda was concerned.

It is my opinion that lawyers do not make good Finance ministers. P.Chidambaram, a fine lawyer, who is regarded as one of the most reformist Finance ministers the country had, always use to come up with one nit picking thing in his every budget, which cast a dark shadow on all the other good reforms he came up with. We all know what happened with Pranab Mukherjee, another Finance minister with a legal background. His retrospective taxation idea much against the wishes of even the economist Prime Minister Singh, punctured the “India Story” then and our economy went into a tailspin. So, that’s what happened with the Modi Sarkar in its first term. Arun Jaitley, another fine legal eagle was picked as the finance minister but, even during his regime the retrospective taxation was not rolled back! With no much economic traction, the 1st term of Modi ended on a disappointing low economic growth path.

In 2019, when Nirmala Sitharaman was made the Finance minister in a very surprise move (not Piyush Goyal who was touted as the favourite), expectations were quite low. But, I had mentioned that time, that she could surprise the critics at the end of the day. I felt that considering her background and her studious nature, she can be expected to meticulously follow the agenda as laid out in the manifesto. Not just that, but also follow through methodically in terms of execution.  You can see that this is what is happening now.  In her 1st budget in 2019, when corporate taxes were cut – a bold economic move to boost private investments and sentiment, it appeared that the Modi Government in its second term had got its intentions right in pursuing its economic agenda to boost growth which faltered in the 1st term.

 

The pandemic though, which hit all economies hard including India in Feb/Mar 2020 put a spoke all further bold moves. Economic management during a pandemic is a double edged sword. The government needs to focus on lives on one hand and livelihood on the other and that too when its income is crippled.  But, I thought that the team managing the economy in this government weathered the Covid storm very well and managed to tide over the crisis very well, under the circumstances.

In the midst of the pandemic last year and perhaps even now, top economists of the likes of Dr. Abhijit Banerjee, Dr. Raghuram Rajan and Dr. Kaushik Basu have been of the opinion that the Central government should not worry about fiscal deficit, agency ratings and all. Among other things like increased spending on health, they maintained that it should just do cash transfers through DBT mode to the needy. However, the government took a more cautious and calibrated approach of support by providing free ration to the needy, extending loan support to businesses etc. instead of cash transfers.  This has been a clash of ideas between the economists in the government and economists commentating from outside.  Frankly, I felt that what our government did is a better approach for a country like India.

Unlike the West, in India, people are more conservative financially. So, when a person gets free cash during a pandemic his first instincts will be to save it for spending on essential goods rather than on non-essential stuff to boost demand. Secondly, thanks to the lock down, there were supply restrictions. It is not logical that people will spend money just because they have been provided with cash support. So, the Government’s calibrated approach of providing free rations to the needy serves the purpose of protecting livelihoods during the pandemic. The salaried upper middle class and above were anyway not so affected as they were getting the salaries and even they spent only on essential stuff basically due to lockdown restrictions. So, the argument that Direct cash transfer would have boosted demand in the times of a pandemic doesn’t seem logical at all.  If not all, a few economists like Swaminathan Aiyar finally admitted that this approach worked better for India.

It is in this context of understanding the thought process of this government on handling economic issues during the pandemic that I bumped on this video. In this speech, Sanjeev Sanyal, Economist and Principal Adviser in the Ministry of Finance, articulates brilliantly the approach of the government in managing the pandemic from an economic stand point. If you haven’t watched it, please do so.  It answers quite a few questions which are routinely thrown at this government at the way it has been responding to the pandemic.  Its clear from the speech that there is a “method” in the thinking of the government while there is “madness” in the newsrooms that feed us information.  I wish that the government articulates the thinking behind their decisions more regularly for the benefit of all.

Now if you see the last few months, it is clear that the government is dead serious in reviving the economic growth. Some of the decisions since March have been bold and commendable. The rolling back finally of the retrospective taxation is one.  The Asset Monetisation program is another.  Taking a call to relieve the stress on the balance sheets of the banks by forming a “Bad Bank” is also another one.  Again, addressing sector specific long pending issues like in Telecom is yet another.  So, there has been a slew of bold decisions recently that gives a hope that in this term, with the pandemic hopefully behind us, the Modi Sarkar is pushing aggressively on its economic agenda.

As an economy, I believe we are at an interesting and crucial point. The pandemic is ebbing (or so we believe). Vaccination is progressing at a rapid pace. Economic activity is getting back to normal. These should bring the economy soon to pre-Covid levels. Now, if the bold reforms that have been unleashed this year has the desired effect, the growth only can be higher from here. For the Modi Sarkar which is finally catching up on the economic agenda, it will be a lasting legacy to demonstrate a higher average economic growth than the Singh era. And for the IT cell of the ruling party, few memes less to counter!

Debate around the Growth of the Indian Economy!

Few weeks ago, the GDP numbers for the 1st quarter of this fiscal year for India were published. As per that, the Indian economy grew by 20.1%. In the following days, there were columns, Op-Eds and Social media commentary on whether it was a good quarter or not. Since “Neutral media” is an Oxymoron, depending upon the leanings of the media, the economic performance was either branded “historic” or “pathetic”. There are no surprises here and we have now learnt to live with the media spin on all issues.

Along with the media, the tribe of “Neutral Economists” is also on the wane.  Depending upon their political affiliation, the first quarter performance was touted to be “record breaking/highest ever” or “worst/shocking” in decades by reputed economists.  Therefore for an Aam Admi, it is difficult to judge what actually the situation is. And the truth as in many situations may be somewhere in between.

I am no economist but as an ardent follower of the Indian economy, I tried to make sense of the numbers and the trends thereof and this is what I find. I would like to hear the opinion of the readers as well on my hypothesis.

In isolation, a GDP growth of 20.1% is of course very good. But, we should not forget that this is at the back of a low base of -24.4% same Quarter last year. In that sense, some of the commentary from pro Government circles that this growth is massive and is earth shattering etc. is immature.  At the same time, commentary from the opposition side comparing this with GDP rate pre-Covid and claiming that actually it is lower than what it was two years ago is equally immature. And this is why.

First, the reality is, on a trend line after a massive negative growth of 24.4% in Q1 last year and growing marginally by 1.6% in Q4, a growth of 20.1 in Q1 this year shows that the economy is indeed recovering and the recovery is V-shaped to be precise. This is certainly to be happy about.

Second, we must keep in mind that during Q1 this year, we got caught by a massive second wave which again put several curbs on the functioning of the economy, which was as such firing at much lower levels than before. So, among the eight buckets which contribute to the GDP namely Manufacturing, Construction, Agriculture/forestry & fishing, Mining & Quarrying, Electricity/Gas/ Water & other utilities, Trade/Hotels/Travel & Communication, Finance & Real Estate and Public administration, Defence & other services, it is obvious that a couple of engines are not firing at all. It is therefore natural that when you compare with the pre-Covid situation, the GDP in absolute numbers will be lower. This however does not take away the fact that with the easing of restrictions, the economy is obviously recovering.

Third, let us take a look at the monthly GST collection numbers for the past couple of years.  The average monthly GST collection figure in 2018-19 was Rs. 98,114 Cr. and the average in the 1st four months of 2021-22 is Rs.113,333 Cr. 2018-19 was pre-Covid, normal times and these four months are right in the midst of Covid. And compared to Rs. 101,818 Cr. monthly average last year. So just a cursory glance shows that the economy is on the mend clearly this year.

Here, I would like to dwell into a larger point and thereafter a question.

I would presume that GST collections represent transactional activity in the economy with respect to both goods and services. We are all aware that post the pandemic all “Contact” based sectors have been severely affected. This includes the likes of Travel, hospitality, Wining and Dining (all these for business and pleasure), impulse shopping, recreation and entertainment of all sorts and other human touch related services (salons, spas…). While the Software industry per se has not got affected due to Covid with “Work from Home” filling in well, the ecosystem around it has been significantly disrupted. This includes transportation, catering, real estate, utilities, other discretionary spending and stuff.

As common public, our shopping is mostly restricted to what is required. We travel only when it is utmost required.  The “Festival economy” which is big in India has been crippled since last April.  So my question is, when transactions around goods and services have been curtailed, how is it that the monthly GST collections have shown a growth over 2018-19? (Pre-pandemic period)

There are can be two inferences from this trend:

First, if the monthly GST collection is showing such a robust 15% growth (over 2018-19) even during the pandemic times, once we are done with the pandemic and when all the cylinders start firing, we are looking at an exponential growth in monthly GST collection figures. (Even adjusting for inflation)

Second take away is, either with whatever limited avenues left to us, we are consuming much more than average or there is a significant shift towards formalisation of the economy. I would like to believe in the latter. I don’t think we are consuming more than what is required. However, certainly our purchasing patterns have changed. Due to the pandemic imposed curbs, it is possible that our dependence on the neighbourhood mom and pop stores have come down and we have got used to the convenience of door delivery for everything.

As a personal example, pre-Covid, we used to buy vegetables and fruits from our neighbourhood bhaiya. Once lock down struck, this shifted to a vegetable vendor who was arranged by our apartment complex for door delivery. Here, payment was through G-pay/PayTm etc. Now in the past few weeks, the same vendor is now part of an E-Commerce aggregator called Bhajiwala.com! Bhajiwala.com, I am sure is within the ambit of GST and hence clearly part of the formal economy! My view therefore is, the benefits of GST implementation which we were all looking forward to is beginning to accrue and will be more visible when we are out of the pandemic.

It was widely believed that once GST is implemented, it will add 1-2% to the annual GDP. I now believe that once the pandemic is over and when economy starts firing in all cylinders like before, the bump due to GST could be in excess of 2% because of the increased formalisation of the economy is the last 2/3 years. This I am talking about even after the pent up demand effect.  That should put the naysayers of the GST to rest.

Though we cannot take the stock markets as a real indicator of the state of the economy thanks to its fickle and speculative nature, probably the markets are seeing into the future as above which others are not.  Which is why the markets have been on fire since the last few months even in the midst of the pandemic.

In conclusion, I would like to say that yes, the high growth in Q1 is due to the low base effect.  Yet, it is a significant milestone and pointer towards a robust economic recovery. It is certainly one to be cheered upon if not celebrated upon as yet.  Acche Din are around the corner!

Pic Courtesy: The Economic Times

Wanted – Reforms on “Kaizen” Mode!

In the last few days, newspapers and online portals have been filled with nostalgic Op-Ed pieces on how the 1991 reforms happened as we celebrate 30 years of the reforms. These pieces by some of them who were part of “reforms team” then and other commentators often talk about the circumstances in which the reforms were unleashed, how the then Prime Minister Narasimha Rao weathered the political storm in taking some bold steps and how the then Finance minister Manmohan Singh and his team went about implementing them finally.

Yes, the “1991 reforms” was a significant event in our post Independent political history and in terms of impact on the ground, probably the most significant. Though it was not realised then, the reforms package helped to change gears of the country which was stuttering at a modest pace of growth all along, while the rest of the world was galloping.  It also helped lift millions of Indians out of poverty in the next 20 years.  So, it is apt that we give due recognition to the process and the people behind it and celebrate with much enthusiasm.

As a country, we are in a phase where we need the next reforms momentum. One that will define our growth trajectory for the next 30 years. In that sense, we need to now move on from living in past glory of what the 1991 reforms delivered and initiate the next cycle of reforms. So, what could they be? A reform is defined as a change brought in an existing system to make it better. Therefore there are reforms that result in incremental changes, thereby incremental benefits and there are reforms that are big which result in monumental changes and thereby impact. 1991 reforms can be grouped in the latter category.

 In the last 20 years, since the Vajpayee regime till now, it’s not that there have not been reforms of the big impact category in our country. But they have been few and far between. In the issue of reforms, I would like to see the glass as half empty. What we need is the next bust of reforms one shot that will change the course of our country forever and for the better. And if at all there is an opportune ‘muhurat’ for the same, it is this. Because when we come out of Covid hopefully very soon, we need to not just recoup the lost two years but get back to an irreversible high growth trajectory.  And for that, we need a whole set of big bang reforms that need to be unleashed ASAP. And I will group them in the following critical areas:

  1. Ease Of Doing Business: While we continue to say that we have improved our ranking on the Ease Of Doing Business front from before, those of us on the ground very well know that India continues to be a complex country to do business in and with. And the issue of “Central” subjects and “State” subjects adds complexity to the whole thing.  To put this in perspective, we have 1536 Acts, 69233 Compliances and 6618 filings to comply with for our businesses in our present regulatory environment.  There have been bits and pieces effort in states to remove/amend rules and regulations in the last few years. But these are just incremental changes and do not move the dial. What we need is a complete review of the existing rules and regulations across all states that include Central laws and state laws and a wholesale repeal of all the frivolous ones.
  1. Labour: This is connected to the “Ease Of Doing Business” but has scope beyond that as well in terms of ensuring competitiveness and achieving productivity as well. A paper I read on Labour Reforms mentioned that labour laws in India constitute 30% in terms of acts and 47% in terms of compliances in our regulatory framework! In terms of numbers, it is 463 labour Acts, 32542 labour Compliances and 3048 labour filings! Not that the existing regulatory environment has benefited the labour so far. The current labour laws cover only 9% of India’s employee base! So, there is an express need for simplified labour laws that will help the industry to grow while remaining competitive, will be fair to the employees while empowering them while bringing a majority of the labour force in its ambit.
  1. Infrastructure: It is undisputable that the general infrastructure in India has grown leaps and bounds in the last 20 years. There are two ways of looking at this. If we compare with where we were in the past, then of course, things are certainly better. If we look outwards and compare with our peers, then we will realise that we have still a long way to go in basic infrastructure. It is also a fact that with respect to infrastructure we are always in a perennial “catch up” and “Work in Progress” mode. And I will explain this with an example. In 2005, in the Nagoya city of Japan, a new airport was thrown open just to coincide with the World Expo that happened in that city. When I visited Nagoya in that year, I was appalled to find the new airport almost empty though, it was witnessing almost 4-5 times the normal traffic on account of the Expo. Compared to the old airport, the new one was huge and I was told then that this airport was now built forecasting for next 30 years of traffic growth so that they don’t have to meddle with this for a long time. Now, this is the approach required for infrastructure projects. However in India, we build projects based on today’s situation and by the time the project is completed, it is already bursting at its seams. The new Bengaluru Airport is an example of this. Inaugurated in 2008, it had to launch its expansion by 2011 within just three years! Most of our highway projects are planned like this. That’s why I say that the grudge towards the bullet train project in India based on today’s situation is ill informed. By now, we should have kicked off at least eight bullet train projects, not one.  Unlike in the past, financing for infrastructure projects is no longer a concern. There are global multi-lateral agencies backed by developed countries willing and waiting to fund viable infrastructure projects in a country like in India which offers potential and returns.  In the area of Infrastructure, we need drastic reforms in our planning method and execution. And that brings me to the next critical area.
  1. Land: Most of our infrastructure projects get stuck or go through inordinate delays due to the issue of land availability aka land acquisition. This is an indeed complex issue but we need to study best practices in other developing nations and come up with a new method that is fair to all and makes the process easy and less time consuming. The present Land Acquisition bill in its form needs urgent reform.

There are other areas too where reforms are the need of the hour and I will continue with those in Part – 2 of my blog next week.  But my focus remain on areas related to economic growth. To part conclude this piece, I would like to say that “Reforms” are a continuous process. And so continuous improvement of what we do is required. Going back to the Japanese way, they call it the “Kaizen” approach in management.  In India, we need Reforms on “Kaizen mode”!

To be continued.

 

“JUST” learning to live during the pandemic!

Vijay Yadav* is a small time vegetable and fruit vendor who has been carrying out his business in Mumbai since 2 decades now.  Ever since the lock down, in our apartment complex, he is one of the suppliers of fresh vegetables and fruits. Twice a week, we place order over WhatsApp to him and he delivers the same at the parking lot of our building. He informs us the due amount on WhatsApp and we pay the amount due to him through Google Pay.

22nd Aug, 2020 was Ganesh Chaturthi. Due to the current pandemic situation, we couldn’t go to the local market for Pooja related shopping (different types of Flowers, Garland…) on the eve of the festival. When we were wondering what to do, Meena*, our regular flower seller informed us to our pleasant surprise that she will home deliver whatever flowers and items we need and asked my wife to send the list over WhatsApp. On the 21st evening, the list was delivered at our ground floor. She informed us the amount and we made the payment to her through PayTM.

On 22nd Aug was also our Avani Avittam (Janeu changing ceremony) for which our regular Cheenu vaadhyar (bhatji) sent us the YouTube link to join him. From home, we completed the rituals and promptly sent the Acharya sambavana thro Google Pay.

In between we had to consult for a routine ailment with our Homeopath doctor.  We did the same over phone. He said he will send the medicines to our house within 1 hour. He has a tie up with Swiggy and the medicines were delivered at our doorstep. The doctor gave his UPI id for transferring his fees, which we did.

What is common in all these? It is that we and the other parties involved were able to carry on with life even during the lock down period without stepping out of our place, fairly smoothly. And if you look at it closely, this was made possible through a combination of Smart phones, Bank accounts (to which we could transfer the money) and more importantly the UPI platform through which we could transfer money real time into bank accounts of beneficiaries.

It was Dr. Arvind Subramanian, Ex-Chief Economic Advisor to the Government of India who in his 1st Economic Survey document coined the term – “The JAM Trinity” and said that the potential of Jan Dhan Yojana, Aadhaar and Mobile phone could be harnessed to plug subsidy leaks and ensure a more targeted delivery to those needy.  This was the beginning of Modi’s 1st term during which, the government gave a huge push to opening Bank accounts for the poor through the Jan Dhan Yojana and also advocated the use of Aadhaar for identifying the needy.  However, in the aftermath of Covid-19, I would tweak the JAM Trinity and say that it is the “Quad of JUST” which is helping to keep the bottom of the pyramid afloat during the pandemic.

If you look at the examples I have provided at the beginning, you would realise that even with the unexpected strike of the pandemic, what has been sustaining at least some fraction of the economic activity is a combination of

J (Jan Dhan Accounts) – through which we could transfer money to beneficiaries who are not so privileged like Domestic helps, small time vendors and so on.

U (UPI Platform) – without which money transfer to bank accounts through mobile wallets like Google Pay or PayTM for example, couldn’t be so easy and swift.

S (Spectrum) – as in the advent of 4G which has made data usage cheap and ubiquitous in India

T (Technology) – Without which all these would not have been possible at all.

In this four, I would like to focus on the UPI bit. United Payment Interface (UPI) developed by National Payments Corporation of India was launched in India in April 2016. But it was post the Demonetisation that UPI as a tool got its fillip in terms of adoption and usage. Just look at the numbers. From just 21 banks who were part of UPI in 2016 when it was launched, today it is more than 140. The transaction volumes have grown exponentially from 2.06 mn. in Dec 2016 to 1.49 bn. in July 2020. And in terms of revenue, it has gone up from Rs. 13.17 crore to Rs. 29.05 Lac crore in the same period!!

It’s been so much of a runaway success that Google (which is part of the UPI through its GPay product) has written to US Federal Reserve Board urging it to build a similar faster payment service platform in the US citing the case study of UPI.

As documented very well by Shankkar Aiyar in his book, The Accidental India, in post Independent India, almost all of the successful economic transformations happened as an answer to a crisis. Similarly, the success of UPI in India also, could be pointed towards the cash payment crisis situation that resulted due to Demonetisation in November 2016. While Demonetisation might not have yielded the originally intended objective of the government namely to suck out the black money from the system, I feel that it has delivered or still delivering other positive outcomes.

Among the top is the formalisation of the economy which is a Work in Progress. The huge success of UPI has made conducting business smoother and easier even during lock down times even for the micro business community. At the same time, the added benefit is the expansion of the formal economy where less and less transactions happen through cash.

The last few months ever since the pandemic struck, have been testing times for any country and its economy.  It’s my feeling that after the initial complete lock down phase of two months, Indians have accepted the reality and have started looking at ways and means of getting on with their lives even without any dole from the government in the form of cash support. Purely from the stand point of micro businesses, they have all tried to adapt their business models to at least survive and stay afloat. Accepting orders through WhatsApp, doing home delivery and equipping themselves with online payment options are some of these adaptations. And these may very well stay even after the pandemic is over. In that sense, while the media commentary (when not busy with Sushant Singh’s death that is) could be around doom and gloom due to Covid in India, the common man has learnt to live during the pandemic with the “Quad of JUST” and will to survive.

Postscript: Way back in November 2016, in the aftermath of Demonetisation I had written a post titled Cash Mukt Bharat (Read here) where I had fantasised of an India where cash transactions have reduced completely by 2025. We are in 2020. Looks like many things mentioned in that post have already become a reality.  Amen.

*All names changed.

Pic courtesy: Yourstory.com

Packaging of the Package!

In India, in the past few days, most Indians or at least the urban folks have been hooked on to the television by 4.00 p.m. every day. Ever since Prime Minister Narendra Modi made a grand announcement of ushering in an Atmanirbhar Bharat with an economic package of Rs. 20 Lac Crore, not just the devil, hope was also in the detail. So, it was left to the finance minister Nirmala Sitharaman to announce the details that would not belie the hopes of millions of Indians.

In India today and probably the world over, if one has to depend on the media commentary to make up one’s mind on an issue, it is virtually impossible. On any topic, the tone of the commentary and its conclusion can be guessed without even reading the piece or watching the full clip, by just looking at the author’s name or the medium carrying it. These days, very rarely you get to read a piece that gives a balanced opinion on a topic, the two or more sides of it, the pros and cons and possibly the positive and negative impact.  So, even to the slew of announcements the finance minister has been making, the reactions have been on predictable lines. The pro-government media/authors have been only praising the initiatives while those opposing have only picked up holes in the announcements. Balanced commentary is increasingly becoming as oxymoron.

It is under these circumstances that I feel, any government today needs to be super-efficient in its communication, so that it has the intended impact on people.  The usually communication savvy Modi Sarkar, has been found wanting particularly in these dire times, when it is utmost critical to bring in comfort and then confidence to the public at large. I will explain why and will try my best to provide a balanced view.

  • First up, the intention of the government not to get bogged down by Covid, but use it as an opportunity to re-define strategic priorities for the country is welcome. To that extent, Modi’s speech on the 12th May, was pretty much on point. There was a vision and though delayed, a financial economic package to the tune of Rs. 20 lac crore,  which are both commendable.
  • The details of the package were to be released in the next few days which is what happened in the last few days, beginning 13th Feb and ending today.
  • The announcements do reveal that the government has done a lot of homework and that probably explains the delay in the unveiling of the package. Having said that, there has been issues with the content and form.
  • First the content.
    • The government in its wisdom chose to use this opportunity not to just announce the economic stimulus package but also address long pending reforms and amendments in laws which is appreciable.
    • Globally, there is an Anti-China mood and having a strategic game plan to take advantage of the changing winds is important. So, some of the measures announced I believe, are in that direction which augurs well for the country.
    • While few may understand that some measures are meant for short term remedy and others are meant for long term transformation, most of us cannot make the distinction.
    • It would have been better if the Government had broken down the announcement into two parts.
      • The first one, to just focus on the immediate short term stimulus/support measures that will “comfort” the ailing strata of the society. This announcement was the one which was widely and eagerly expected. So, what is in it for the MSMEs whose businesses have suffered badly, the urban and poor workers who are left without work and wages, and the farmers who have lost their income?  In this regard, some of the initiatives like the expanded MSME credit facility even without collaterals, free ration to the poor including those without ration cards and the Additional MGNREGA allocation are greatly appreciable.
      • There has been all around pressing calls for cash transfer to the poor as the panacea for the migrant crisis that has unfolded. The government’s view is that, it believed in empowerment rather than entitlement as a route to support poor at this stage. Also, there is a view that money transfer may lead to longer lines in front of liquor shops. There are no doubt, merits in these arguments. But, considering the current acute distress situation, it would have been good if, the government opted for cash transfer to Jan Dhan accounts of women for the next six months.  That would have addressed the lack of money and the alcohol problem in one bullet.
      • The second part could have been reforms and parliamentary actions that are more strategic that will give “confidence” to investors – domestic and foreign.  Muddling all these and choosing to announce major and a lot of minor initiatives together, has resulted in a problem of comprehension.
      • On each of the days of announcement, Twitter and WhatsApp groups were buzzing with more questions than answers, as to what all these actually meant the Aam admi. If the urban elite couldn’t make out that, how do we expect the poor who are expecting some immediate succour desperately from the government to comprehend what is in it for them?
      • If restricting the announcement to the top four or five big “new” initiatives would have reduced the stimulus to Rs.15 lac crore or something, so be it. That is better than creating a Shock and Awe with a huge amount and eventually leaving the public to just count the zeroes in it for the rest of the year.
  • Second the form.
    • In India, most of us suffer from what I call as the “More Points in Power point” syndrome. We feel that if there are more points in the slide, it is always better. In the corporate world, this syndrome translates itself into “More strategies”, More Key Actions”, “More priorities”, More slides, More everything!
    • In this case, the government too being a victim of this syndrome, ended up re-hashing many old initiatives, repeating stuff which have already been announced in the last budget. For example, the “One Nation One Ration Card” initiative was first announced if I am right in 2016. Stuff like reforming the Essential Commodities Act etc. have been touched upon in the past budget speeches.

The result is that, the Finance Minister ended up making her third budget speech for this year, the only difference being, it was in tranches. From the government’s point of view, this would have helped in deflecting the headlines for a week from the migrant crisis and other related bad news. But, I am not sure if the budget speech type announcements have helped in either “Comforting” the needy or building “Confidence” among the business community!

When marketing Guru Philip Kotler first talked of the P’s of marketing, he just referred to 4 P’s – Product, Price, Place and Promotion.  As marketing evolved, more P’s like Positioning, People and Packaging got added over a period of time. In the modern retail world, packaging got a lot of prominence due its influencing role at the point of sale. In today’s era of political communication too, I believe, even an economic or a stimulus package needs to be “Packaged” properly to reach its desired outcome.

Lest we forget, Narendra Modi has been the maiden recipient of the Philip Kotler Presidential Award.

Cartoon credit: Satish Acharya

COVID-19 aftermath – Time to revive two flagship programmes of GOI

If there is one quote which has been oft repeated by commentators of all hue in the past few weeks as the world grapples with the COVID-19 crisis, it is this. Winston Churchill’s “Never let a good crisis go to waste”! As India locked itself down in its fight against Corona Virus, the lessons for future are many. And indeed it must learn those and never let this crisis go to waste, once things settle down. In India, we have a tendency to move on quickly from natural disasters and other calamities without learning the lessons and putting them to practice for future.

In the context of COVID-19, once we are out of the crisis completely, two programmes of the central government which were launched with much fanfare in the 1st term of Modi Sarkar but which lost steam or didn’t take off the way they were envisaged come to mind. It’s time to revive them and re-launch them with added rigour. And in the aftermath of the Corona virus pandemic, I do believe that the chances of them now doing well have got better.

On the 15th of August, 2014, when Prime Minister Narendra Modi announced the launch of Swachh Bharat Abhiyan, it caught the imagination of the public by and large. “A clean India would be the best tribute India could pay to Mahatma Gandhi on his 150 birth anniversary in 2019,” declared the Prime Minister. This was the first time, cleanliness entered public discourse since Independence. Immediately after the launch, there was an air of excitement and flurry of activities. I remember voluntary groups and public carrying out weekend shramdaan to clean up the neighbourhood. Celebrities did their bit by participating in symbolic photo ops with brooms to spread the message of cleanliness.

What started off very well, soon started losing steam with the typical Indian attitude of laxity creeping in, after the initial enthusiasm.  From the government perspective, we also saw that Swachh Bharat Abhiyan from the original goal of a “Clean India” by 2019, moved to making India “Open defecation free” by 2019!  So, accordingly the focus turned towards building toilets across the country and giving the poor access to toilets even in the remotest of villages.  In his address to the parliament in Jan 2019, the President announced that over 9 crore toilets were constructed across the country under Swachh Bharat Abhiyan program and that the coverage of rural sanitation went up from less than 40% in 2014 to 98% in 2019.  While these are commendable data points, we were not close to becoming a clean and hygienic country by Oct 2019, as envisaged by the Prime Minister when he kicked off the programme.

While not taking any credit away from the government for pursuing this initiative, I have always maintained that Swachh Bharat Abhiyan is not about cleaning and more cleaning but, reducing the need for cleaning in the first place. That essentially means developing instinctive disciplinary traits and attitude toward cleanliness like for example, the Japanese.  This calls for a huge attitudinal change among us as we are by and large happy to keep our own four walls clean while not being concerned about littering in public.

It is undisputable that COVID-19, in the last few weeks has increased awareness of self-hygiene as well as community hygiene in a big way in India. Use of sanitisers hitherto seen as a “NRI tantrum” while in India, has now got into the collective conscience of India. I do believe that thanks to social media like WhatsApp, the ills of a pandemic like Corona Virus have reached the nook and corner of India and hence messages concerning the need to maintain cleanliness may be received with more seriousness than before.  By the end of 2019, looking at the way the programme sort of petered out, I concluded that a “Clean India” may be a few decades away when the current student generation with more awareness from childhood stages take to public cleanliness more seriously.  However, now I feel that COVID-19 has given us a great opportunity to reach our goal of a “Clean India” probably a few years earlier and it is important that we as a country seize this opportunity.

Weeks or months later when we get over the COVID-19 crisis, the governments – Centre, States, local municipalities and panchayats should step up the gas on Swachh Bharat Abhiyan once again.  The government must use all the communication machinery at its disposal to build up on the Corona Virus messaging of “washing hands” to start talking about keeping one’s surrounding absolutely clean and safe to prevent further epidemics like this. We should move from friendly nudges to slapping heavy fines for offences like littering in the open, urinating on the side of the roads, Open defecation when toilets are available in the vicinity and spitting on the roads and walls. We must remember that making India a “Clean India” is not just the look out or job of the government of the day but is in the hands of the public. So, as a society, we must not let this good crisis go waste on the hygiene front and make our march towards a “Clean India”!

“Make In India” is another flag ship programme launched by Modi Sarkar way back in September 2014 with a view to give boost to the manufacturing sector in India with an eye on creating lakhs of jobs. Initially conceived to cover 16 industries, the scope was expanded later to include 25 identified industries. Five years hence, when one looks at the outcome of the programme, it’s a mixed bag. “Make In India” has seemingly done well in mobile phone and allied manufacturing with around 268 units producing phones and related accessories in India as of November 2019. This was just 4 in 2014. We are now the 2nd largest manufacturer of mobile phones in the world.  But beyond mobile phone manufacturing, other electronic manufacturing has not taken off in India as yet.  We are nowhere close to the objective set of making manufacturing contribute to 25% of our GDP. With the economic slowdown in the last few quarters and the disruption due to COVID-19, the outlook for manufacturing looks even bleaker.

This is where, COVID-19 could provide a window of opportunity to India in next five to ten years. COVID-19 which erupted from China with the industrial province of Wuhan as the epicentre, has ended up disrupting the global economy in more ways than one. When the virus spread was around China in the month of February, the talk was about how the global supply chains particularly in the Automotive, Pharma and electronics sectors have been disrupted. With the contagion now spreading alarmingly all over the world, COVID-19 could emerge as the single largest cause and effect on the global economy in many years. It is estimated that the global GDP could shrink by 2% this year.

The COVID-19 crisis has hastened the shift of global supply chains out of China actively a move, which gathered momentum in the height of US-China trade war last year and increasing labour costs in China over the last few years.  As we saw in reports, the Japanese government has announced support to companies shifting production from China back to Japan. Korean companies are reportedly exploring options with India to expand their capacities. The US and EU will eventually follow suit.

For India, this is a great opportunity to tap into this shift out of China.

It is good to see the Indian government sensing the opportunity and looking to further the cause of Make in India. Just recently, we saw a package of incentives being announced for the Electronics manufacturing industry with a focus not just on finished goods production but also developing downstream production units. Similarly package was cleared by the cabinet on the 21st March for incentivising production of chemicals and raw materials that go into bulk drugs production.  Initially these moves may help in softening our own dependence on China for imports of electronics and pharma goods but over a period of time will give a boost for exports once the ecosystem in put in place. So far so good. But these are not enough. Making India a part of global supply chains requires a well-co-ordinated (between Centre and states) 360 degree action plan to launch Make in India 2.0 in the light of COVID-19 that covers diplomatic, economic, commercial, human resources and even marketing front. This also requires changes in some of our laws (for example land acquisition) that can make ease of doing business a reality on the ground.

COVID-19 crisis is panning out in front of us as we speak. While we fight the health and immediate economic after effects of the same, it’s time to work on re-launching “Swachh Bharat Abhiyan 2.0” and “Make in India 2.0” in a couple of months and not let this crisis go waste.

Dear India, make 2021 the next 1991!