Modi’s plan for economic revival changes the rules of the game: analysis
The first anniversary of the National Democratic Alliance government, popularly known as Modi-2, may have been somewhat subdued due to the blockade as a result of coronavirus disease (Covid-19). But the achievements of the past 12 months were succinctly summed up in Prime Minister Narendra Modi’s recent letter to the nation. Initially, he referred to the Rs 20 lakh crore economic package that he dedicated to the nation on May 12 and highlighted his desire to make India self-sufficient.
There comes a time in the life of a nation when far-reaching decisions are made in the interests not only of the current generation, but of subsequent generations.
1991 was a watershed moment for independent India, when then Prime Minister PV Narasimha Rao opened the country’s closely guarded doors to the world at large. It was a decision made by compulsion. India was impoverished, penniless and vulnerable. Fear and suspicion were deeply embedded in the Indian psyche. We suspected strong foreign forces that recollected us through giant multinational companies
A series of bold decisions and policy announcements in Modi’s speech to the nation on May 12 will go down in the nation’s history as more far-reaching than those made in 1991.
Modi’s strong political will to make India self-sufficient is as brave as it is visionary. Some of the powerful announcements included pushing for structural reforms in key areas such as agriculture, defense, coal, and public sector companies. Linking the benefits to the states with their actions was one of the highlights of the package. While its positive impact will take time to begin, there is no doubt that these structural reforms will drive growth.
Some in the country expected an instant fiscal stimulus beyond what the country could afford at the moment, or perhaps a reduction in the goods and services tax and income tax rates. They also wanted to see the government’s effort aimed exclusively at dealing with the emergency situation we find ourselves in. They gave us examples of the stimulus packages from the United States (United States) and the United Kingdom.
Modi’s ideas cover everything. The steps he took ensured that the supply side became robust. Immediately after the shutdown, the government announced a large relief package of Rs 1.7 lakh crore for the bottom 20% of the population. This was followed by a series of measures to provide aid to the poor and farmers. They included cash transfers of more than Rs 52,000 crore through Jan Dhan’s accounts and the allocation of additional Rs 40,000 crore under Mahatma Gandhi’s National Rural Employment Guarantee Scheme to create jobs for the marginalized of the society. The micro, small and medium-sized enterprises (MIPYMES) sector, the backbone of our economy that contributes significantly to Gross Domestic Product (GDP), is the most affected by the pandemic. The Modi government has taken specific measures to boost MSMEs, including with the support of a sovereign guaranteed loan of Rs 3 lakh crore through equity and subordinated loans. The government deserves recognition for the innovative step of changing the definition of MSMEs.
What is also commendable is that, despite a huge economic package, the government has not tried to overcome its weight. The Reserve Bank of India has also been proactive in supporting government initiatives and has taken many unconventional steps, such as the Long Term Repo Operation aimed at creating the adequate amount of liquidity available in the banking system , non-bank financial companies and industry. .
With the economy on the move again, we have the supply side in place. I am sure that more stimulus measures will be taken, within the limits of fiscal prudence, to boost demand, which will help accelerate the economy.
We have to remind ourselves that the pandemic continues to wreak havoc on the world. But surely a day will come when all this is behind us. That, many believe, will usher in a new world order built on the collapsed building of the international order that emerged after World War II.
Where will India be? This is the most important question on the minds of policy makers. Focusing on the pandemic alone would have been a populist but shortsighted movement. Modi has wisely recognized the gravity of the current situation and has made bold decisions that will help us maintain our position as a leading global player
The PM’s clear call for self-sufficiency is a game changer. Imagine the strength, energy, skills, and strength that a self-sufficient nation of 1.3 billion people will exert on world politics. If the goal of self-sufficiency is achieved, we will be in a position to perhaps even compete with China in the near future.
Modi’s call for self-sufficiency is in our national interest. In a post-pandemic world, many countries will seek to strengthen production and supply chains and promote homegrown products. Self-sufficiency will come only with a change of mind and a certain amount of sacrifice and patience. He argued that a self-sufficient India would be in a much better position to contribute to the world.
But self-sufficiency does not mean a complete reestablishment of the economy or a throwback to the swadeshi model. It is our own “India First” policy. When we become truly self-sufficient, we will be one of the world’s leading economic powers.
Syed Zafar Islam is National Spokesperson, BJP, and former Managing Director of Deutsche Bank, India.
The opinions expressed are personal.