India and the Global Attention Surplus Disorder!

Jan 17^th, 2023: BBC releases the first part of the documentary on Modi titled “India: The Modi Question”. Among other things, the documentary goes on to levy charges on Modi for his role during the Gujarat riots back in 2002 when he was the Chief Minister of the state. It is another matter that the courts and different committees have delved into the same matter for so many years and have exonerated Modi for his involvement in inciting the riots as claimed by the documentary.

Jan 24^th, 2023: Hindenburg, an American short seller, publishes a report on the Adani group in which it accuses Adani group of “brazen stock manipulation and accounting fraud scheme over the course of decades.” This was just three days before the opening of Adani’s FPO in the market. The ensuing brouhaha led eventually to the withdrawal of the FPO only after a massive evaporation of its market capitalisation.

Feb 6^th, 2023: In the US, the Deputy Secretary of State briefed that “The surveillance balloon effort, which has operated for several years partly out of Hainan province off China’s south coast, has collected information on military assets in countries and areas of emerging strategic interest to China including Japan, India, Vietnam, Taiwan and the Philippines,”

Feb 17^th, 2023: At the Munich security summit, an annual conference on global security issues, George Soros, an American business magnate and philanthropist launched a scathing tirade on the Indian Prime Minister Narendra Modi. In his speech, he also referred to the Hindenburg report and said that Modi and Adani were close allies and that their fate was intertwined.

If you look at all these stories, a few things are strikingly common – the stories are about India, they are damning in design and emanating from outside India.

Welcome to India’s “Global Attention Surplus Disorder” ^TM (GASD) era. At the outset, let me clarify that this has got nothing to do with Attention Deficit Disorder which is a mental condition. Global Attention Surplus Disorder is when a country is subjected to excessive attention globally because of which stories mostly of the critical type about the country keep coming out at regular intervals.

It is important to note that all countries are not automatically subjected to this syndrome. In the evolution of any country, there comes a time when the country becomes in a way eligible for excessive attention. Once eligible, it becomes a part of this privileged league of nations. I believe that for India, this started last year (2022), though we have often threatened to get into this league but slipped back in the last minute. Why did India become part of this league and is getting subjected to GASD?

When a sportsperson starts doing well in mega events, she starts becoming the cynosure of all eyes. She also comes under scrutiny not just for her sports feats but also for her conduct in her personal life (Think Sania Mirza). Among all the film stars, if you are a top star like one of the Khans, obviously you are at the centre of all attention and scrutiny. You will receive your regular dose of bouquets but when the brickbats come, they will be heavy and bitter. Ask Aamir Khan. If you are the among the richest and most famous you cannot escape the attention of the prying news reporters. Look at the Ambanis. A dominant and globally successful company is always under media scrutiny not just for its success but also for its omissions and commissions. Search Google. A very quick upstart, which was initially the darling of the one and all could face the bile of the same media and regulators worldwide when it becomes over-successful. What happened to Facebook (Meta)? Even when a politician becomes extremely popular with the public and becomes a darling of the masses, he becomes a victim of excessive and continuous scrutiny. Even if it’s a Modi.

This has what has changed for India in the past few months. For a populous country like India, it weathered the Covid storm pretty well. In the past few years, the fundamentals of the economy are getting stronger because of which the country’s resilience to external shocks has improved drastically. Despite global headwinds like Covid, the Ukraine war and now the global economic slowdown, India continues to grow at a faster clip than all major economies. For the future, the world is now predicting that this could be India’s decade. There is a visible transformation of infrastructure in the country. Highways, Railways, Airports, Metros, sea links are all finally moving toward completion in the next five years after being in a permanent Work In Progress phase. The adoption of digital solutions to solve the country’s public issues seem real and this holds a lot of “hard” promise for the future. In the past, our promises remained “soft”. As we saw in the recent mega order of the aircrafts, big powers are looking to India to help them.

In Marketing it is said that for a market leader apart from doing routine things to increase its share, and expand the market, the bigger challenge is to ring-fence itself from some “Public Relations (PR) storm” or other that it is subjected to now and then. For example, a successful brand and a leader in its category like McDonald’s has to spend extra marketing resources for challenging litigations and Class action suits by say, Vegans. A vigilante group will never waste time and resources on going after say a Biggies Burger or a Burger Singh (yes these are Burger brands and competitors to McDonald’s in India)

My point is, getting subjected to Global Attention Surplus Disorder is a sign of India’s success. It means that India has arrived. In my opinion, China started suffering from this around the mid-2000s when its economy started firing on all cylinders and China became the so-called factory of the world. But that’s when coverage of its record on Human rights, Freedom of expression, Public Data accuracy, Transparency Index, Corruption, etc. also started finding its way into the global media regularly. There is not a single day when there is no negative story on China these days in reputed publications like The Economist, The Washington Post, The New York Times and so on. China has been suffering from GASD for many years; India has just started.

In the coming days, weeks, months and years, you will see India being in the eye of the storm frequently and more often. We have to get used to this excessive attention from the world. As a country, and as a government we should put processes in place to handle PR storms of varied nature from here on that will ensure less Governmental time on such issues. At the same time, we should pick the right battles to fight. Otherwise, we could get into a vicious distractive cycle. India is at the cusp of making history. Focus on the job at hand is more important than getting waylaid by distractions.

As Cricket experts would say, in seaming conditions and turning tracks, a batsman should know which ball or bowler to attack and more importantly which to be “well left”!

Image courtesy: Hans India

Abki Baar Amrit Kaal!

In the political calendar of India, the Annual Budget presentation is a key event. So, last week was consumed by the budget event and by now we are also done with the surfeit of analyses and opinions on the same. However, this year the finance minister’s thunder was stolen by the Adani story thanks to the Hindenburg report culminating with the cancellation of the Adani FPO, the announcement of which came late at night on the budget day. What could have ended up as a great budget day for the FM and the government, turned out to be a fifty–fifty day. Even otherwise, I have been feeling that Finance Ministry in the Modi Sarkar has always been treated uncharitably by commentators.

The budget presented by the finance minister last week was the Modi government’s 10^th and Nirmala Sitharaman’s 5^th in a row. If she presents the budget in 2024, which in most likelihood she would, Sitharaman will become the 1^st full-time woman Finance Minister to complete her full term. Truth be told, back in 2019, when Sitharaman was anointed as the FM, even among BJP supporters, there were raised eyebrows. That she was a political lightweight unlike her predecessors and came across as a haughty, headstrong lady, an image which she continues to live with even today, were some of the reasons attributed to the scepticism around her appointment.

I had opined then that making Sitharaman the FM was an inspired choice by Narendra Modi and that she may end up being a surprise pack. My take was based on the following reasons. She hailed from a middle-class background with a grounded upbringing and therefore would bring in a sense of earnestness and commitment to whatever she does. She had a squeaky-clean image which I thought is important for any minister, more so for an FM. For the same reason that she was a political lightweight, she didn’t carry any past baggage and was not seen close to industrial groups or lobbies in India Inc or abroad – a point that can’t be said of earlier FMs of India. As a spokesperson of the BJP when UPA was in power, she did a fantastic job of articulating the opposition’s point of view through logical and measured viewpoints for which she would come meticulously prepared. This aspect demonstrated her diligence and seriousness in the job given. And finally, she did have an educational background in Economics and therefore was not completely alien to grasping macroeconomics, which I think is an important requisite for an FM.

On the flip side, I did feel that Sitharaman may not be a very creative or out-of-the-box FM but may just be an FM who would execute BJP’s manifesto and Modi’s vision diligently. In this sense, her priorities will be driven by what is the ideological framework of the party and its manifesto. Five years since her appointment and five budgets hence, even her sharp critics admit that Sitharaman has done a fairly commendable job as the FM particularly navigating the country through a global crisis. This can be borne out of the fact that there was hardly any material criticism of the latest budget. By and large, the criticisms came out of people’s compulsive and competitive positions rather than constructive prognoses.

Nirmala Sitharaman took over from Arun Jaitley (though Piyush Goyal was an interim FM for a brief while stepping in due to Jaitley’s ill health in 2019), who had a huge political heft in the Modi Sarkar. Sitharaman herself considers Jaitley as her Guru and mentor in politics. Jaitley’s balance sheet as an FM has GST introduction, the Bankruptcy Code and Banking clean up on the credit side and Demonetisation on the debit side. Though to be fair, Demonetisation was a purely political decision that had economic ramifications and so it should feature more on Modi’s balance sheet than on the FM’s. But for Jaitley’s way with people of all fronts, consensus building on GST and its eventual introduction, GST would still be a Work In Progress now. But one of the major issues of Jaitley’s period was the slipping of India’s economic growth since 2017 which didn’t get the attention it deserved back then. I vividly remember that in 2017, it was taken for granted that India will grow at 8% come what may and the question was what the government will do to touch double-digit growth consistently for a long period. But in the last 2 years of Modi Sarkar’s first term, the economy slipped considerably.

It was in the background of this dull growth that Sitharaman took over as FM in 2019. To be fair to her, just within one year into her tenure, she had to contend with the Covid pandemic which brought the entire world to a grinding halt in 2020. Navigating the country’s economy fairly smoothly through the pandemic must count as Sitharaman’s biggest achievement of her tenure. Even during the last three years of the pandemic, as a country, we have managed to be fiscally prudent and come out relatively unscathed.

Back in 2020 in the midst of the pandemic, most of the developed nations were doling out cash to their people to pump prime the demand. There were clarion calls from reputed economists on India too, to do the same. However, the Indian government decided on providing targeted support like free grains to the poor, MSME credit, etc rather than cash transfers to the people though the government through the now famed “India stack” could have done it easily and scored brownie points. Toeing the line of these economists, the opposition leaders too were clamouring for cash transfers. Looking back at the way the pandemic played out through uncertain crests and troughs, keeping the powder dry for the rainy day turned out to be a prudent strategy.

Identifying the issues in hand correctly which were a) No visibility on the endpoint of Covid with repeated waves, b) Supply-side problem due to lockdowns c) Less consumer confidence which means even if money was given, people were less prone to spending, the Indian government took a calibrated approach to handle Covid. If you remember, we used to have the FM announcing a slew of measures according to the developing situation almost every other month. While all this was happening, the government’s focus was also to provide monetary support to the vaccination program which in itself was a humungous task for a populous country like ours.

The result of this “drip” approach to handling Covid and its aftermath is that today we are in a far better situation to fiscally get back to the growth path even while being caught in the midst of another external crisis like the Ukraine war.

The 8% + growth which we were taking for granted in the last decade may be eluding us today and we may be in the 6-7 % range. Yet, in so many years, India has not been seen with the kind of optimism like it is being seen today. India has an uncanny knack of flattering to deceive as we have seen in the past many times. But the way the finance minister and her team handled the economy during Covid in a composed manner without taking a misstep and now re-wiring for growth with very high spending on infrastructure etc… is giving a sense of confidence that this time, India will live up to the hype.

There is still a lot to do and waving the victory sign too early is not a wise thing to do. But, for reaching up here, it is only fair that due credit is given to the FM and the teams in the Finance/related ministries and PM’s Economic Council.

Prime Minister Narendra Modi might have first used the term “Amrit Kaal” during his Independence Day speech in August 2021 in terms of a vision for New India for 25 years. But it is now I feel – Abki Baar Amrit Kaal.

India in 2023: Heads or Tails?

2022 just got over and as I sit to pen this blog on the 1^st day of 2023, I am trying to recall the mood that was prevailing at the same time last year. For all practical purposes, the stand-out sentiment at the beginning of 2022 was that of “Relief and Hope”. Covid was just receding. Right through the last quarter of 2021, lockdowns were relaxed in the country, festivals were celebrated with gusto and normalcy was returning by and large. Almost the entire country was covered by the vaccination program by December. There was relief and hope that things in the new year could only get better.

At that time, nobody thought that a war would actually break out and pour water on the collective hopes of the entire world. Russia invaded Ukraine and as we speak, the war is still on. What was expected as a swift and big recovery of the global economy post-Covid didn’t happen. In today’s situation, a war between two nations doesn’t affect only those two nations. It pilfers to other nations as well, with a result we had the after-effects of the war being felt by nations across the globe. Inflation has hit never seen high and with the US exporting inflation, the dollar has strengthened against most of the currencies worldwide. The result was there to be seen in the last three months. Economic growth has substantially slowed down and the expected post-Covid Uptick has evaporated into thin air. In summary, what was touted to be a year of recovery and swift growth, ended up being one of the worst years for the world. “Permacrisis” – meaning an extended period of instability and insecurity is the term being conferred upon the year 2022. Who would have expected this back then in January 2022?

I am now trying to recall what the mood was at the beginning of the year 2021. Coming at the back of a full year ravaged by Covid and lockdowns, it was expected that with the rollout of vaccination, the ebbing of the virus and countries attaining herd immunity we will soon see the back of the Corona Virus and get back to an Off line living from a completely Online living. However, that was not to be. We soon started facing the virus in its different variants, the effect of which was more lethal. 2021 also continued to be a year of woes except for some improvement in the last quarter of the year. Again, what started as a year where the dark clouds were seen to be disappearing ended up being an extremely challenging year for the world.

With these beginning-of-the-year scenarios of 2021 and 2022 in perspective, I am trying to look around what’s the mood like as we start 2023. The Economist in its 2023 outlook article says that a recession in 2023 is inevitable with the world reeling from shocks in geopolitics, energy and economy. There seems to be no end to the Russia – Ukraine war at this point in time. While other countries have seemingly shrugged off Covid, China is going through one of its biggest Covid waves now. This has once again put global supply chains in a dizzy which is expected to have a telling impact on Manufacturing worldwide. Now, will this wave from China trigger a similar wave in other countries that have all opened up, is the big elephant in the 2023 room! The lingering war and the lingering Covid with their aftereffects are what are keeping global leaders and policymakers anxious and awake as we ring in 2023.

GDP growth projections for most countries, in particular, the developed ones are muted for this year. Among all this bad news, there are bright spots on the horizon. India is expected to be one such. Even in 2022, though we didn’t do as projected at the beginning of the year thanks to the war-induced uncertainties, India came off much better than most other countries. As per World Bank, the Indian economy has shown higher resilience to global shocks of late. Therefore, for India, as per experts, the outlook for 2023 is a mixed bag. It is expected to grow faster than most countries of significance, yet slower than what is expected of it if there are no external headwinds.

2023, therefore, is being ushered in with cautious pessimism, unlike the previous few years. If the previous years proved the pundits wrong about their positive outlooks, can we have the pundits wrong again in 2023? Can the headwinds as we see now, become tailwinds when we close the year? If the reality tends to be different than what the pundits have forecasted at the beginning of the year, there are reasons for us to be hopeful as far as 2023 is concerned.

For India though, we seem to be in an interesting place. If the trend of pundits getting wrong continues i.e., the global economy gets over its problems and does well, we in India too stand to gain. If the pundits actually get it right, India is expected to be a lone bright star anyway.

We seem to be in a “Heads we win, Tails we win” situation. On that positive note, here’s wishing all my readers a new year filled with happiness and peace.

Postscript: If you are looking at forecast for investing in the stock market, here’s one from Mark Twain.

“October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”

Pic courtesy: avepoint.com

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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.

Annual Budgets and Annual Reactions!

In the days following the Annual budget last week, I saw a clip going viral on WhatsApp which had Uddhav Thackeray, the Shiv Sena Chief and Chief Minister of Maharashtra speaking in a CNBC function to felicitate Finance Minister Nirmala Sitharaman. This clip (watch here) must be couple of years old. In the clip, Thackeray in a very self-deprecating manner, talks about his tryst with giving budget reactions. He says that for few years he tried to understand what’s in a budget but by the time he could do so, it was time for the next budget! But, since as the party chief he had to give some reaction to the budget, he developed a template response which was “This is a budget which will make poor poorer and rich richer” and more often this response for every budget landed well with his constituency. You would notice that even today, this response has a lot of owners among politicians! In today’s article in the Times of India, columnist and now a MP Swapan Das Gupta has mentioned that Vajpayee while in opposition had a stock reaction to any budget which was “Garib ke pet lat” (Kick in the stomach for the poor)!

If there are Annual budgets, there are equal and opposite Annual reactions! It’s therefore clear that one cannot go by the reactions of politicians on the budget to conclude how the budget has been. If leaders of parties and politicians cannot figure out what’s there in the budget how can we expect the common man to understand how it is going to impact him? While we all know that provisions in the budget have a huge impact on the livelihood of millions of people in the country who remain below the poverty line, during the budget week what we hear is only responses of people to whom budgets don’t matter. Those who are impacted by the budget are not in a position to comment because it is beyond their comprehension.

Here’s where I feel that the Budget presentation and the speech needs to be simplified if we want the common man to fully appreciate the implications of announcements being made by the FM on behalf of the government of the day. And here is my wish list on some of the changes I would like to see in my lifetime (I might have articulated some of this before also):

Articulation of what matters: In the run up to this year’s budget, the buzz was on jobs. We all know that in the last two years of the pandemic jobs got hit badly. In a double whammy, the pandemic led to a cut in existing jobs and slow addition of new jobs. Human/Contact facing service industry faced the worst hit. So, the expectation was that there will be clear actions to revive the job market. However in the budget speech, there was no explicit mention of job creation. In the post budget interactions, the FM and her team took pains to explain that the government has taken the route of propping up growth by spending which will lead to job creation. For example, they said that the huge 35% increase in outlay towards infrastructure and capital expenditure is a step towards reviving consumption in sectors like steel, cement etc. and jobs. This is logical. Yet commentators continue to mention about the lack of focus on jobs in the budget. And Aam Admi obviously feels the same.
- Now considering that there was an overall anxiety and expectations about jobs among common people particularly those below the poverty line, what if the speech mentioned the estimated number of jobs that would be created due to the outlay? For example, “National Highways network to be expanded by 25000 km in 22-23 resulting in an estimated number of “X” jobs during the year”! 100 PM Gati Shakti Cargo terminals for multimodal logistics facilities which is expected to create “Y” number of jobs!
- The same outlay but with a clear articulation of what matters like “jobs” this year, I think would generate a lot of confidence and comfort to the people for whom these announcements matter.
Putting out Outcomes of last year outlay before announcement of new outlays: During the entire budget speech the FM keeps announcing crores and lakhs of Rupees as outlays for different initiatives much to the loud cheers of the party MPs. But as public, we don’t get to know what was achieved with previous year outlays for the same initiatives to appreciate the new outlay.
- For example, the health sector has been allocated a 16% higher outlay of Rs. 86200 Crore in this budget compared to last year outlay of Rs. 72931 crores. Now we don’t get to understand details of how the outlay of RS 72931 crores was spent and what was achieved. Another example – During the UPA regime, after the horrific Nirbhaya incident, an announcement was made of a “Nirbhaya fund”. I have no idea if that fund still exists and how the same is being put to use.
- If we understand that, then we will be in a better position to appreciate the increased outlay for the next year.
Articulation of what went wrong: In the budget speech we never get to hear of anything that went wrong on the outlays or the outcomes in the previous year.
- For example, the targets for disinvestment have been missed for few years now. But we don’t get to understand what went wrong and why those numbers were missed. It could be the procedural delays or timing issues (Bull Vs Bear market) or it could be pandemic related delays. This could be a very utopian thought but if the government of the day articulates the reasons for the miss, it will go in a long way building credibility in the budget process.
Articulation of how taxes work: Present a summary of how the taxes that have been collected have been put to use in the current year.
- Many years ago, on a trip to Colombo, I saw at the heart of the city, some major repair work was going on with the roads and traffic was diverted. There I saw a board which said “Take Diversion. Your Tax money at work”! This was in the early 90’s. The fact that I still remember it and recall it here says about the impact of such earnest disclosures from the government side. What if at the beginning of the speech the FM says, “With the taxes collected last year, we could lay X kms. of roads, build Y number of new hospitals, open Z number of Colleges and schools and so on just focussing on the physical assets created with the taxes this year? Don’t you think that this kind of commentary will once for all remove the clamour for income tax reduction or slab changes or rants for paying taxes year after year?
- I firmly believe that the common people who earn and can afford to pay the taxes must be co-opted in the nation building process. Such small gestures of earnest disclosures, I believe will go a long way in this.
Keep the jargons for The Economic Survey: The speech and announcements are supposed to pick up threads from the Annual Economic Survey. My suggestion is that Economic Survey being a reference document prepared by economists can and should use jargons like “Crowding in”, “Virtuous cycle”, “Animal Spirits of the economy” and “JAM Trinity” etc. while the budget speech should be left simple free of lofty jargons and acronyms.

This is the ace cartoonist R.K.Laxman’s cartoon way back in 1989 post the budget!

This could very well play out the same way even today. The only way to change the same is to simplify the budget speech and ensure that the common people are co-opted into the budget comprehension process.

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 (1^st 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 2^nd 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:

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.
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.
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.
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.
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

Tata…, Air India!

The last time I flew Air India was before the pandemic to Shanghai from Delhi and return. The reason to fly Air India was obvious. There were no direct flights from Mumbai to Shanghai (Yes, surprise of surprise, after Jet Airways stopped flying this sector) and to save time on transit, it made better sense to fly to Delhi and take the direct flight to Shanghai. For most of us, the reason to opt for Air India for international flights, particularly when travelling for business/work would be this. In the absence of a better option and not necessarily being the first choice.

The other set of non-business travelers from India (Students, Senior Citizens, vacationers) opt for Air India for cheaper fares or the extra baggage allowance which comes handy. In the past one or two decades, rarely I have seen or heard anyone opting to fly Air India for its superior service or for the flying experience. And herein lies the sad and sordid tale of Air India as a National carrier of India. If this is the situation with Indians, one can imagine where Air India would stack up in the minds of foreigners.

The situation was not so bad all along for Air India. During my MBA days, way back in 1990, we did a survey of air travelers in Mumbai as part of a marketing project. International travel was not common those days as it is now. I vividly remember that Air India fared very well in terms of perception and I guess those were the heady days for the Maharaja. But in the subsequent years as International air travel picked up and when the market was actually exploding in India post liberalisation, Air India was imploding.

The reasons for the rot in Air India have been chronicled well in Jitender Bhargava’s (Former Executive Director of Air India) book – The Descent of Air India. In a deadly cocktail of an indifferent and unaccountable Top management, political interference and string pulling and a demotivated and tired staff, there was only one direction the airline was heading – southwards. Of course, he argues that the descent was accelerated by ill-timed and ill-advised decisions including purchase of new fleet at uncompetitive prices and signing of non-profitable bilateral agreements during the UPA regime. Irrespective of the political regime, it is a known fact that PSUs like Air India and ITDC were treated like personal fiefdoms by both the executive and the bureaucracy to further their own personal interests.

Now and then, different governments have tried to revive Air India by blowing money on marketing campaigns and taking advantage of exclusive route agreements. The Air India marketing campaigns have always been top notch. But as I have said before, the best marketing campaigns cannot save a floundering product. Some of the attractive routes, Delhi-San Francisco for example, are profitable and well sought after by Indians but such far and few successes in between cannot sustain a full airline.

The present sad state of affairs at Air India, the losses it has accumulated, the capital it guzzles on a monthly basis, the struggles of the staff in getting salaries on time etc. have been documented well overall and hence not repeating those points here. Enough to say that if there was any company which the Government of India should disinvest and exit in a hurry, it was Air India. So after a few attempts in that direction right from the first time under the Vajpayee’s regime to Modi’s current run, finally the disinvestment of Air India is a reality.

Air India is Ghar Wapsi for the Tatas. The story of how Tata Airlines became Air India by a forced nationalisation is also well documented. It will be interesting to observe how the Tatas embrace Air India and more importantly turn it around quickly. For Ratan Tata, there is an emotional connect with Air India. But then, we know how just having emotional connect doesn’t help in business. It calls for a Himalayan effort to start from scratch, change the culture, compete and build a world class airline. Tatas of course is not new to the airline business. They have been running Vistara in a joint venture with Singapore Airlines for some time now. Tatas also have investments going in Air Asia – a regional airline. But then, taking over a fledgling Airline like Air India and turning it around is another cup of Tetley tea!

Airline business is one business which is CAPEX intensive and OPEX intensive at the same time. There are businesses which are highly CAPEX intensive but once done, do not incur high operational costs (Like the mobile telephony business). There are businesses that don’t require high CAPEX investments but need working capital and operational efficiencies to remain afloat and profitable (Like trading businesses). Airline business is one which demands very high CAPEX investments (Planes, slots, infrastructure etc…), high operational costs on a daily basis (fuel, high salaries, marketing etc.) and require operational efficiencies of the highest order in order to be profitable. The moving parts are so many that with one wrong move, the business can get into a crisis mode. Ask Vijay Mallya or Naresh Goyal. This is one of the reasons why we have seen so many airlines folding up in India itself ever since the skies were opened up to private players.

In Airline parlance, there are this headwinds and tailwinds. Tailwinds propel the flights and headwinds have the opposite effect. In he history of Air India as a business though, it has seen only headwinds.

I am certain that Tatas would have obviously done their homework that too extensively, before bidding for Air India. Now that they have won, they have their task cut out. There are many things going for them, on top being the good will of Indians in general towards Tatas. That’s why we didn’t see much of opposition to the announcement of Air India being sold to the Tatas. With “revenge travel” post Covid expected to take off, the timing is just right for Tatas to soar into the Indian skies with Air India N.0! I am personally looking forward to the day when I would opt for Tata-Air India as my first and only choice when I fly abroad. For now, it’s Tata, Air India from GOI and as Amul says, a “Good Buy for Tata”!

Post Script: Interestingly, the Air India Staff Union expressed its happiness over Tatas winning the Air India bid! When was the last time a staff union was happy over privatisation in India? And when was the last time we saw no noise from the Left over privatisation? Acche Din are here, guys!

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 1^st 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 1^st 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 1^st 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 1^st 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!

anandkumarrs

Random expressions of a Wannabe

Economy