Whether it took the corona crisis to bring about the transformation, or otherwise, the change ought to be welcome, notes Virendra Kapoor.
They say every crisis is an opportunity.
The coronavirus lockdown seems to have spurred the Modi government to undertake a comprehensive, all-embracing, reform of the economy.
The humongous Rs 20-lakh-crore economic revival package announced by the prime minister in his Tuesday evening broadcast had evoked genuine scepticism.
For, the mind-numbing number seemed to be a huge exaggeration. And, two, where will such a huge amount of money come from? Both were legitimate concerns. But both had valid official counters.
One, nowhere was it suggested that all Rs 20 lakh crores would be ‘new’ money in freshly minted currency notes. Post-pandemic packages in most other countries were a mix of new and old allocations — and some readjustments and pruning and paring of sectoral allocations.
Two, money is not the only thing you need to reform, especially in the Indian context. Policy reforms can often be far more important. Remember the 1991-Narasimha Rao reforms?
Those did not matter because of any fresh fund allocations they had made in the government budget. Those were important for removing artificial policy roadblocks in the path of growth, for dismantling, albeit only partially, the superstructure of controls and restrictions that the previous socialist governments had erected to stymie growth.
So, the big-bang economic revival plan that Modi announced on Tuesday and which on the consecutive five days beginning Wednesday Finance Minister Nirmala Sitharaman has valiantly tried to flesh out with some details is a mix of fresh allocations, reordering of a few old ones, and, above all, a new set of bold policy measures which should go a long way in clearing the path to faster growth.
The long-overdue factor market reforms of land, labour and capital, as also the dismantling of the monopoly Agriculture Produce Market Committees in selling farm produce, and opening of the coal and mining sectors to private parties, etc, are no less important than the reforms that might have been undertaken at any time before.
Should the government succeed in implementing them sincerely there is no reason why the economy cannot return to the path of double-digit growth in the next few years.
The government will have to ensure that the ossified mindsets of babudom, and the conduct of the vested interests in the private sector which have prospered exploiting a system of crony capitalism, do not obstruct change.
Everyone needs to be on the same page for these game-changer reforms for these to bear fruit for the common man and common woman.
Meanwhile, one wonders which is the real Modi? For, when he was first elected with great fanfare in May 2014 the captains of industry and business had pinned great hopes on him.
He was expected to open up the economy like no one else before him.
As a leader of the Jana Sangh-BJP, Modi was supposed to be a natural votary of an open and competitive economy, wasn’t he? But soon he dashed the hopes of the business classes, setting the income tax department, the CBI and ED against them on mere suspicion of wrong-doing.
The business class was not only disappointed, it felt let down and frightened. Of course, there was no sign of the widely hoped-for reforms.
To cut a long story short, in circa 2020, with the corona pandemic still tormenting the country, Modi seems to have metamorphosed into a Great Reformer, the one he was originally expected to be before his election as prime minister in May 2014.
Whether it took the corona crisis to bring about the transformation, or otherwise, the change ought to be welcome.
For this is a great opportunity for the economy to break free from the shackles successive Socialist governments had clamped these past seventy-plus years.
The challenge now will be for the entrepreneurial class to try and realize its full potential. It has a ready-made continent-sized domestic market alone of over 130 crore consumers to serve.
The reforms unveiled in the past couple of days, and, if implemented well, — and, mind you, that is a big if — hold the promise of transforming the face of the economy.
The business community can no longer excuse failure by blaming politicians.
The role of the government will be two-fold.
One, to put in place a strong regulatory mechanism to oversee private competition, and, two, to ensure a level playing-field in a fiercely competitive marketplace, with each player bringing his own productive and marketing skills to bring to bear on it to get ahead rather than relying on his proximity to the rulers to succeed, as had been the case under the malignant Socialist regimes.
Meanwhile, Modi will face resistance from the Sangh Parivar, especially from the Bharatiya Mazdoor Sangh and the Swadeshi Jagran Manch.
Given his position as the foremost leader of the country, he can easily brush aside their objections.
He can also dismiss proforma protests by the Opposition. Into his second five-year term, Modi remains in an unassailable position.
He had sought ten years to set the country on the right path in his maiden speech in the Lok Sabha in 2014.
In 2020, there is no credible challenger in sight from both within and without who can replace him.
Thus, he can dare to be tough and stand his ground in order to pull the economy out from the rut of artificial clamps and chains on expansion and growth.
Soon to enter into his seventh year as prime minister, he will have one eye fixed on his legacy.
For, without changing the face of the economy, without putting it on a path of fast growth, he would remain in danger of frittering away the opportunity a decade in office offers him.
Besides, given the ruling party’s natural antipathy towards anything associated with Nehru, dismantling the wasteful vestiges of Nehruvian controls and licenses on growth should be a cause of celebration for the Sangh Parivar.
Virendra Kapoor is a veteran political commentator.
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