India Shining

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.

Blame it on “India Shining”!!!

Indians or should I say Middle Class Indians were ushered into the new year of 2004 with a feel good factor spread by the “India Shining” campaign launched by the then ruling front – the National Democratic Alliance ( NDA ) or rather its anchor constituent the Bharatiya Janata Party ( BJP ).  The reasoning was quite simple.  The NDA, whose term was to end in Oct 2004, thought that the time was ripe to call in early elections to cash in on the overall positive political climate.  (It is said that the then PM Atal Bihari Vajpayee was not keen on this move and felt that there was still work to be done but eventually had to give in to the more vocal party strategists).  The economy was booming, stocks markets were on a high, state election results were favourable, external affairs particularly relations with Pakistan was stable and more than everything the principal opposition the Congress was in a dilapidated state – reasons enough for this early calling of elections.   So, if I remember correct from Jan in that year onwards for a few months we were inundated with the “India Shining” campaign across all media.

1991, when India was in the verge of bankruptcy was when we were introduced to “Reforms” – both Economic and Structural.  While credit must be given to the architects of the Reforms 1.0 – Dr. Narasimha Rao, Dr. Manmohan Singh and their team, it is also not a secret that many of the items in that Reforms 1.0 were mandated by the IMF.  In the period of 1999 – 2004 during the NDA regime, we saw what I would call as Reforms 2.0.  Independent India for the 1st time had a full time minister for Disinvestment (Arun Shourie) who spiritedly fought his detractors to disinvest and unlock value in many of the Public Sector Units (PSUs) including the likes of Maruti Udyog, IPCL, VSNL,.. Petroleum Minister Ram Naik ventured into the now very sensitive area of dismantling the Administered Price Mechanism for Petrol whereby price of petrol will be decided by market forces rather than by the ministry. It was also the time when the Telecom read as Mobile revolution was slowly sweeping the hinterlands of the country.  With the benefit of hindsight one can say that from governance point of view the NDA regime didn’t do a bad job and if one realizes that it was also a cobbled up opportunistic alliance with its own compulsions, Vajpayee did manage to do a great job.

To the shock of all pundits, NDA lost and UPA came to power.  It was easy for all to blame NDA’s “India Shining” campaign for the defeat.  However there was a larger issue – far reaching conclusions were arrived by the stake holders. Some of them were – ‘India Shining campaign’ is a metaphor for reforms.  So that means if people rejected “India Shining” campaign, they rejected Reforms. Period. The political conclusion across the board was that the NDA was defeated because of the misleading “India Shining” campaign where the aam admi felt that he was not benefitted by the NDA rule while somebody else has.  The fact of the matter is NDA lost not because of their “India Shining” campaign or the reforms which they pursued but in spite of them.  While they swept the Hindi belt except Delhi, they lost the 2 important states in the South – AP and TN.  AP because Chandrababu Naidu in his obsession with the IT and the chatter class hype was completely oblivious of the strides Y.S.Rajasekhar Reddy (YSR) was making with his “Padyatra’ in the interiors of AP.  In TN, BJP made the strategic error of listening to wrong advisors and allied with Jayalalitha and let DMK go off their alliance.  These 3 states were enough to upset the electoral arithmetic.

This made the political class in both sides of the divide to firm up that reforms were never benefitting the poor.   Since then reforms in India is not a 7 letter word but a four letter one for the entire political class whether the ruling front or the opposition.

The immediate fallout was that UPA –I with the Left supporting them outside decided to “Spend” for growth rather than “Invest” for growth.  The govt. itself had a very limited reform agenda and even that was opposed by the Left.

One thought that in UPA-II without the Left and with a renewed mandate, the PM and his party-the Congress would be in a firmer wicket to push through reforms. However in UPA-II we see the spectre of Mamata who is blocking any supposedly reform initiative of the beleaguered government.  The Left is having a last laugh today because Mamata is espousing what all they believe in and in that in a much more effective way!  While Dr. Manmohan Singh risked his govt. while taking on the Left on the issue of the Civil Nuclear deal with the US during UPA-I, there is nothing of that steely nerve seen in pushing through reforms now.

And on the other side the situation is worse.   The BJP still smarting under that defeat in 2004 opposes the same reforms which they introduced in their time whether it is the GST or FDI in retail or even dismantling the APM completely.  Today while in the opposition it is clear that they are paying lip service to reforms!

I am glad that there is serious debate in the country regarding reforms today. However the political leadership across the board is not on board the Reforms bus. Under the scenario we need articulate political leaders to drive home the economical and therefore the political advantages of Reforms to their party men.  Recently I saw Dr. Shashi Tharoor using the online medium to build consensus on reforms which should be commended. Similarly Yashwant Sinha though doesn’t speak well of the reforms in the parliament has been vocally articulating the need for reforms in his columns.  Let more of this tribe emerge!

In spite of all this if “Reforms” still remains a bad word – blame it on that “India Shining”!

While on this, this piece from The Economist is a relevant read :

http://www.economist.com/node/21556576?fsrc=nlw|hig|6-7-2012|2049894|73958874|AP

P.S: In a recent article in the Economic times, N.K.Singh, Ex Finance Secretary and now Rajyasabha MP wrote, “When I walked into the room of finance minister Manmohan Singh shortly after June 21, 1991, to congratulate him, he told me that “we will change India”.

Dr. Singh – India is waiting to see that change you promised Sir!