Public path for economy

Indian economy by all accounts has entered self-limiting bind. That the specter of slowdown is looming with cascading effect on unemployment is sharply visible. Economy isn't panting for breath all of a sudden. That the journey down the hill began from policy mishaps since 2008 is told to death. The Narendra Modi government took to "curing" ills of the economy with a number of eventful interventions, which had mighty side effects. Now, the Modi government must look inwardly to kick-start engines of the economy. 

THE North block mandarins are searching for clues to steer economy to eight per cent GDP growth trajectory. Flurry of outreach has come on the back of the growth knocking five per cent figure in the last quarter of the current fiscal. Essentially, the North Block policy wizards are asking for clues from those who're tired and fatigued, largely on account of excesses of the government. Nirmala Sitharaman and Anurag Thakur, ministers with principal mandate to steady the economy, with bureaucrats in tow, should, therefore, stay put in their respective holes and indulge in genuine economic crisis-management. 

The golden decade of the economic growth (1999-2009) was left on auto-pilot mode somewhere along the journey. The golden touch of former Prime Minister Atal Bihari Vajpayee and his aides spurted the economy to glorious highs. The mantra was simple -- structural reforms along with aggressive disinvestment programme to spur the consumption demands, which in turn put industries on expansionist path. The Congress, true to its nature of a status quoist outfit, led the UPA, with Left parties keeping hawks' eye in the first term, squandered the opportunity offered by the firm ground work done by the Vajpayee government. The second term of the Manmohan Singh government was comatose.

The Modi government should revisit the Vajpayee mantra. Besides structural reforms and aggressive disinvestment programme, Modi should work with state governments to not just fix economy's self-limiting glitches, but also lay ground for the next golden decade of growth.

Barring western and a few southern regions, finances of majority of the states  are in shambles. They are barely surviving, struggling to pay salaries and pensions to their employees. Their scopes of fiscal expansions are limited. Consequently, law and order, education and health have, arguably, taken sever blows in such states.

The Centre should work with states to fix their finances and work within a timeline to expand fiscal strength by 50 per cent with the help of disinvestment programme. The enhanced fiscal capacity must be put to work to spurt the economy. 

United Nations mandate 222 police personnel for 1,00,000 population. If all the police vacancies in India are filled, the country would come to the ratio of 185 per lakh population. 

Gujarat, Rajasthan, Uttar Pradesh, Bihar, West Bengal, Odishra, Andhra Pradesh are among the states with police-population ratio in 65-123 range. The police personnel are overworked and stressed. Various police reform recommendations are gathering dusts. That the decades' old weaponry of the state police requires immediate overhauling needs no further arguments. 

One year timeline to fill all police vacancies in states could add muscles to the consumption demands.

Ironically, public employment was turned into a policy curse at a time when India under the instructions of IMF (International Monetary Fund) charted on the path of reforms in early 1990s under the stewardship of P V Narsimha Rao and Manmohan Singh.  This has outlived its utility. Public employments essential to meet basic norms must be revived. 

A developing nation can leave education and health infrastructure space to individual enterprises at its own peril. A large number of states have taken recourse to recruiting contractual teachers, with some of them even sub-letting such employments. That the education sector should firmly remain in the public funded domain is, indeed, basic requirement for a developing nation. And, hence, the expanded fiscal strength of states should fuel expansion of teachers' strength along with expanded schools' networks. 

Additionally, Panchayati Raj unveiled in 1980s has become infested with unbridled corruption, exhibited by SUV riding Sarpanch and local bodies' representatives. Institutionalizing, financial and performance audits by Comptroller and Auditor General (CAG) is crying need of the hour. This along with institutional capacity building of local bodies, with men and machines, could put India on the path of faster and sustainable growth pedestal. 

The three booster doses would require financial infusions of high scales beyond fiscal capacities of state governments. Here, the Centre should deploy resources gained from aggressive disinvestment programme to fund the public employment and curing fiscal health of states. 

But the Centre, sadly, has no institutional framework currently to work with state governments to guide them to sound fiscal health. NITI Aayog is beset with policy dwarfs to rise to the occasion. This gaping hole in sound fiscal policy architecture is, indeed, worrisome.  

The Modi government has sought to pump prime the economy with infrastructure spending in the first term. The public employment to meet basic minimum strength in various spheres could give fresh legs to the economy for the next decade. This could be the lasting legacy of the Modi government in the second term.

Narendra Modi: Messiah mirage

Prime Minister Narendra Modi is piqued that his government is not yet hailed as messiah of the poor. That the poor have availed benefits of Rs 1400 crores so far from just two schemes of accidental and life insurance should have led to any other government hailed as a messiah, but not his, lamented Modi recently. Exuberant tone and tenor of Modi of the past is indeed betraying whining signs with 2019 date with people approaching quick enough.

INDIAN economy in the last quarter clocked a 6.3 per cent growth. It was on the back of 5.7 per cent shocker of the first quarter of the current fiscal. Within minutes of flash of the number, the Modi Cabinet dawned in full force to force awaken people about the dream run of the economy under the leadership of the Prime Minister.  There is no break from the pattern. 

National gloom arguably in the last years of the Manmohan Singh led government had been also on account of the economy ebbing, with last growth number registering 4.7 per cent. A few months in power, a prescient Modi government had revised the GDP calculation method in the fag end of 2014. That helped the last UPA growth number swell from 4.7 per cent to 6.5 per cent. If we just forget the prescient revision of norms, the last GDP growth number would come to about 4.5 per cent, which would be lower than the worst of the UPA's. About four and a half years ago, the reason for national gloom is now indeed a cause for national celebrations if the spin doctors of the Modi dispensation are to be believed.

"More than 15 crore poor have benefited from just two schemes of the government, which insure life and accident for 90 paisa a day and Rs 1 a month contributions. The poor have benefited with Rs 1400 crores so far. If any other government had done so much, it would have been hailed as a messiah," Modi gushed at the HT Leadership summit recently.

The media certainly seems at fault to have missed out from hailing Modi as a messiah ! This is the way the BJP looks at the media, that it should blow trumpet and sing paean. But that will be too much for asking, as contemporary history bears an undeniable proof.

Modi had cashed in on the aspirational dreams of the poor to break free from their existing conditions. He sought to pursue Make in India and Skill India with vigour. Both have gone adrift on a high sea now. If dream jobs were not created by the industrialists following the command of Modi, he sought to smoke out the rats sitting on mounds of black money. Demonetisation was unveiled. The Modi managers argue that demonetisation helped informal economy become formal. And, thus, all talks of job loss are hogwash.

"I have a report of the CMIE (Centre for monitoring Indian economy). I can bet you on your claims of job loss," PM's Economic Advisory Council (PM-EAC) chairman Bibek Debroy had blurted out when asked after the first meeting of the panel on concerns of employment loss in the country due to demonetisation. The CMIE within a month came up with its latest data, stating that 15 lakh people lost jobs in immediate months after demonetisation. The NSSO (National Sample Survey Organisation) data would come in after a long time to give an actual picture of employment. Since then the PM-EAC has held two more meetings, but Debroy has not yet come out to face the media. He obviously lost the bet hands down.

FORMER Finance Minister Yashwant Sinha, who is wrecker-in-chief of dream world of Modi

government, argues that the only way to find the extent of damage done to the economy on account of demonetisation is to look at anecdotal data in the absence of NSSO statistics. "Post-demonetisation, the small and medium enterprises in the unorganised sector bore the brunt of demonetisation. Those who lost jobs went back to their villages. That becomes evident from the Modi government making additional provision of Rs 11,000 crore under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Since the MGNREGS is an employment avenue of the last resort, it 's evident that there had been extensive job loss," Sinha told this blogger.

By all accounts, the Modi government in its tenure will not be touching eight per cent GDP growth. Economists agree that India needs to grow at eight per cent growth for 21 years in a row to lift its people out of poverty. By forcing India to a six-seven per cent growth path, Modi has arguably condemned the poor to remain poorer for far long time.   

There's, indeed, reason for Modi not yet been declared a messiah.