kheru2006 (kheru2006) wrote,

Will India's next focus be economics?

POST-POLLS: Nation has no time to lose

ONCE the polls are over and politics of government-making is done with, assuming a clear mandate, one way or the other, and not a fractured verdict, will economics take over?

After the fatigue that nearly two months' exercise -- not to count several months of countdown and cacophony -- that the political discourse has generated, there is really no time to lose to mend the economy.

If some of the global financial institutions have predicted a slow recovery, there is also worrying news about a below-par monsoon, thanks to El Nino, that may or may not cause drought in large parts of the country.

In a similar post-polls situation in 1991, P.V. Narasimha Rao, although heading a minority government, had taken quick, drastic measures. Inducting Dr Manmohan Singh as his finance minister, he laid the foundation of economic reforms.

Hey you !

A Kashmiri woman belonging to the nomadic Gujjar tribe showing the indelible ink mark on her finger at a polling station in Baba Nagri, northeast of Srinagar, India. After the two-month ‘fatigue’ of political discourse, the country looks set to direct its attention on economic moves. AP pic

Singh has ruled himself out of the next government. Hence, the future of what is dubbed "Manmohanomics" -- a mix of market-friendly reforms with anti-poverty measures -- shall be decided by the political colour of the next government.

Opposition leader Narendra Modi is perceived as winning, if media reports and the poll surveys -- themselves subjects of a frenzied debate -- are any indication. As Modi campaigns, his confidence increasing by the day, he is already being hailed as the winner.

Unsurprisingly, with Modi's emphasis on economic development, speculation has begun about his likely team of economic advisers. That, at least, lowers the political ante and allows for a semblance of debate, amidst incessant name-calling.

The man most talked about, Columbia University don Jagdish N. Bhagwati, 79, happens to be Singh's friend and fellow student at Cambridge University in the 1950s.

The renowned economist belongs to the neo-classical school. Last week, he indicated to Reuters his readiness to chair an advisory council that Modi might constitute.

Bhagwati said Modi could appoint as chief economist Arvind Panagarhia, a fellow Columbian, 18 years his junior.

The Bharatiya Janata party (BJP), whose nominee Modi is, denied any discussion on the two posts because the elections are under way.

Bhagwati and Panagarhia have been openly critical of Singh's economic policies and promoted Modi's "Gujarat Model" of development.

There is an interesting angle to the debate that began long before the elections.

Bhagwati has had a public academic spat over India's welfare policies with another renowned economist, Nobel Laureate Amartya Sen, also a Cambridge contemporary of Singh, because Sen supports the government's welfare measures and poverty-alleviation programmes.

While agreeing on the need for social spending to fight poverty, Bhagwati has accused Sen of not backing reforms needed to stimulate growth, including in tax, labour, privatisation and foreign investment. Sen denies it.

Bhagwati said he would urge Modi to allow more foreign investment and trade to spur growth and curtail government spending.

"To enhance growth, he will need to promise that India will open more to trade and FDI (foreign direct investment)."

He wants the next government to position India as a trading power, seeking to enter, "on its own terms," regional pacts, such as the Trans-Pacific Partnership being negotiated between the United States and East Asian nations.

He also expects Modi to move decisively to attract foreign investment, and that he would eventually implement a policy opposed by his party -- to allow foreign retailers like Wal-Mart and Tesco free access to Indian markets.

He is conscious of the politics of it: while not opposed to economic reforms, BJP, whose support comes from the trading class, has opposed FDI in retail.

This is because of its reluctance to allow credit for the measure to the Manmohan government. Critics point out that Wal-Mart has Best Price Modern Wholesale brand outlets in Modi-led Gujarat and Punjab, governed by a BJP ally.

Modi's room for manoeuvre would depend on the size of his potential victory.

"He will do it, but he can't do it right away, because you can't go against your party," Bhagwati conceded.

"This time I know that ideas that correspond to mine are to be implemented, as they have been implemented over the years in Gujarat," said Bhagwati, born in British India in what is today Gujarat -- Modi's home-state and political bastion.

The "Gujarat Model" that Modi has been prompting for entire India has had vocal support of Bhagwati and Panagarhia. The latter has written extensively on it in theoretical terms, attracting attention of the Western governments and investors.

Indeed, the "Gujarat Model" has become a contentious poll issue. Other states claim they have done much better. Tamil Nadu Chief Minister Jayalalithaa says her "TN Model" is better. She finds instant support from Modi's rival, Congress' Rahul Gandhi.

Political semantics apart, actually, with Gujaratis, known for mercantile prowess globally, the state made tremendous strides long before Modi's advent.

In his book "The Gujaratis of India", Vijay Sanghvi says: "Gujarat has never achieved, before or after, the pace of economic development as it did in the 1980s under Congress Chief Minister Madhavsinh Solanki and Finance Minister Sanat Metha. For four consecutive years, the growth rate crossed 13 percent, touching 17 percent in 1983."

Gujarat's growth is rightly criticized for poor human development indicators. It ranks 16th among India's 25 states, behind Karnataka, Maharashtra and Tamil Nadu and even small States -- Sikkim, Mizoram, Goa, Punjab and Delhi -- in policy effectiveness, says the India Public Policy Report 2014 released this year.

Scholars Maitreesh Ghatak and Sanchari Roy, writing in Economic & Political Weekly published from Mumbai, say:

"Gujarat, one of the richest states in India, was always at par or ahead of the rest of India during the 1980s, and unambiguously ahead in the 1990s. There is no evidence of any differential acceleration in the 2000s, when Modi has been in power.

"Just the fact that Gujarat had a higher rate of growth than the whole country during the period Modi is chief minister is not considered good enough evidence in favour of a 'Modi effect' on growth,' say the scholars.


Mahendra Ved |  New Straits Times Columnist 03 May 2014
Tags: india

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