PM Modi driving Finance Ministry will be game changer for Economy
India is at an inflection point in its post-Independence history and how it shapes up from here will not only determine its economic future but its role in the 21st century and how it copes up with a belligerent China which has been seeking to alter the status in border areas. India is in a corona virus-induced crisis and its challenges are much steeper than other countries given its large population and its economy under some squeeze.
History has shown that a man of vision, clear thinking and determination does turn a crisis into an opportunity. If it was Franklin D. Roosevelt for the US and Deng Xiaoping for China in the last century, it has to be Prime Minister Narendra Modi for India who has taken steps to make the country more secure and prosperous.
There is an imperative need for Narendra Modi to take charge of Finance Ministry to make the economy fire on all cylinders. The Corona lockdown has brought the GDP to the extent of -23.9% and the current GDP expected to be in negative. It is generally believed that he is the only leader at the moment who can do make it happen. His record as an administrator and as a leader speaks for itself, but more than anything else, it is the trust and faith of common man in him that is his abiding political capital and which can help turn the economy around in short time.
His thoughts stir people into action and his words leave a deep impact. He galvanizes citizens and inspires them. No other Prime Minister would have been able to carry out demonetization which was aimed at striking at deep-seated problems of black money, parallel economy and corruption. He rallied countrymen with a surprise address in November 2016. People stood in queues in the initial days of note ban and happily faced temporary difficulties to make the dishonest leave their ways.
Modi's excellent rapport with people was also in evidence during the battle against corona virus when people willingly endured the harshest lockdown in the world. Whether it was his call for Janata Curfew or lighting diyas, candles and torches, the response of people showed their immense faith in him.
What impact PM Modi will have if he handles economy and finance portfolio directly can be judged from the fact that when the world is staring at its most difficult economic crisis because of COVID-19, the global digital giant Google announced its biggest investment plans in recent times only for India. It happened immediately after the interaction of PM Modi with Google CEO Sundar Pichai. He announced Rs 75000 crore investment in India through Google for India Digitization Fund which will be spread of next 5-7 years and will take place through a mix of partnerships and equity, operational, infrastructure and ecosystem investments reflecting the company's confidence in the future of India's digital economy.
Prime Minister has unleashed some key reforms, including the recent land mark agricultural reforms bill and labour reforms bill in the Parliament mansoon session amidst opposition parties protest. PM must be complimented for it as successive governments baulked at implementing them for various reasons. Much like the New Deal of Roosevelt, these bold reforms are expected to have a decisive impact on the country's future.
Like Roosevelt's First New Deal (1933-34) and the Second New Deal (1935-38) which together created agencies for relief, recovery and reform and laid groundwork for a modern social welfare state, the Prime Minister has followed a similar path even before coronavirus pandemic struck. There has been universal praise for the social welfare schemes of the BJP-led government and its goal of "Sabka Saath, Sabka Vikas".
India has nursed a long-cherished goal of achieving a sustained double-digit growth and it is unlikely to be achieved unless the Prime Minister takes charge of Finance Ministry and directly steers the growth engine in the present circumstances.
Modi enjoys high credibility among business leaders across the world as a performer and keen reformer and they are keen to engage with him. If he is also at the helm of Finance Ministry, it will lead in a big boost to long-term investment in areas such as infrastructure which are critical for faster growth.
With its demographic dividend and a large market, India has potential to outpace China which has achieved a remarkable economic success since Deng Xiaoping unleashed reforms in 1978. The economic growth in China has been accompanied by rapid urbanization."To uphold socialism we must eliminate poverty. Poverty is not socialism," Deng had said to a Japanese delegation in 1984.
The global situation is less favourable for India now due to rise in protectionist tendencies. The global trade is also getting impaired due to trade war between the US and China.
India's economy faced steep challenges before the coronavirus crisis emerged and the dimension and magnitude of problems has only increased in the past five months. Each day brings new issues and the deepening worry now is the surging coronavirus cases. Economic growth revival, which is a desperate emergency for India, is not getting any easier.
The Prime Minister has been largely successful in delivering on BJP's social and political agenda but it is on economy that he faces his steepest challenge. If not adequately and resolutely addressed, it will have huge costs for the country and political costs for him as the election cycle kicks in.
A man of ambition, action and vision who has strived to convert challenges into opportunities, Modi's taking over the Finance portfolio at least for a reasonable time can be a game changer for the economy. It will give heft to the Finance Ministry that has a lot of heavy lifting to do in the coming weeks and months and act as a fulcrum for growth engine to give it speed and momentum. Modi's presence will bring more efficiency in the working of bureaucracy and various schemes and proposals being implemented to meet the adverse impact.
It has been noticed in the past that reforms pickup pace if there has been a focus from the PMO and if Modi is in the saddle at the helm of Finance Ministry, the swathe of reforms that the government has announced to make the corona virus crisis an opportunity, will gather steam. The confidence expressed by the top industry leaders, bankers and economic policy makers after their recent interactions with Modi again testifies to this popular belief.
There is hardly any doubt that his direct presence in finance ministry will tremendously boost investor sentiment, both of domestic and overseas investors, and give confidence to people that the difficulties that they are enduring at various levels due to the pandemic will eventually ease out as the country regains its growth momentum. In COVID era economy when there can be some hard landings for companies, the Indian entrepreneurs require direct motivation and patting from PM Modi like he did to ISRO chief after Chandrayaan Mission could not achieve its objective of landing Vikram lander on the lunar surface in the last few minutes.
Three Prime Ministers in the past have held finance portfolio for relatively short periods – Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi - and if Modi were to do take the role, he will be the first non-Congress Prime Minister to do so. Morarji Desai also presented union budgets but not when he was Prime Minister. Modi's words resonate with people and his remarks and actions will have salutary impact on meeting constraints in the economy including the urgent need of boosting demand. Remember how his advocacy of Khadi helped boost sales of its products and spurred it to branch into new areas.
Modi steered Gujarat for nearly 13 years as Chief Minister with the state witnessing an agricultural boom and its GDP better than the national average. He made the state power surplus and strengthened its manufacturing base.
As Prime Minister, Modi has brought greater efficiency to the working of government and his meticulously executed redistribution schemes including Ujjawala, PM-Kisan, construction of toilets and urban and rural housing helped him get a bigger mandate in the second mandate.
While his foreign policy initiatives in which he broke with the past for a more pragmatic approach came to be described as Modi doctrine, the efforts to reduce disparity between the rich and the poor, reduce corruption and accelerate human development through economic growth, came to be identified as `Modinomics'. The 2018 Seoul Peace Prize committee referred to 'Modinomics' in its citation.
The second term of Modi government is witnessing unprecedented challenges. Apart from the difficulties created by corona virus, China's actions in Eastern Ladakh has accentuated problems and there is no other option to hard, determined and resolute efforts to boost economy to meet short and long term challenges.
The silver lining for the government is that there are no immediate elections except in Bihar, where the opposition is weak, and it can take some tough and politically unpalatable decisions which can start giving beneficial results in three-four years.
John Maynard Keynes, the influential economist of 20th century, had also said that economic transformation should be a gradual process.
"The economic transition of a society is a thing to be accomplished slowly. ..The policy of an increased national self-sufficiency is to be considered not an ideal in itself but as directed to creation of an environment in which other ideals can be safely and conveniently purused," Keynes had said.
In the middle of COVID, India has attracted foreign investment of more than $ 20 billion between April and July reflecting inherent strengths of its economy.If the Prime Minister takes charge of the Finance Ministry, the economic transition will become easier, faster, stronger and indeed historic.
(G.V.Anshuman Rao is a political analysts and former Chairman, Andhra Pradesh Electronics Development Corporation, views is personal)