I am a nationalist. I am a patriot. Nothing is wrong. I am a born Hindu. Nothing is wrong.So you can say I am a Hindu nationalist because I am a born Hindu. Nothing is wrong in it- Narendra modi
Liberalisation ,globalization,privatization
By the year 1990 the Indian economy was in a bad shape. There was massive macroeconomic instability and inflation. The partial liberalisation by Rajiv Gandhi had led to massive foreign loans and a balance of payment crisis. In the meantime the soviet model had collapsed and global capital was entering everywhere backed by American dollarisation. The congress government of Narasimha Rao took the crisis as an opportunity and abolished the entire license permit raj,reduced customs duty,abolished reservation in small scale labour intensive manufacturing. These had an immediate effect on private industry and investment and economy started growing by 7%.
However the rapid expansion of labour intensive industries or their export and consequent employment of the youth did not occur as the government kept on supporting the archaic labour and land laws existing from the Indira Gandhi period. India unlike china could not take part in globalization through export of labour intensive manufacturing.In the 1980s labour intensive textile manufacturing received a lot of investment in Mumbai and Kanpur. But taking advantage of the strict labour laws trade unions went for massive strikes crippling the sector. This has led to a permanent scar and private firms indulge today as far as possible in capital intensive sectors.
The congress government led by Manmohan singh however did improve the social sector. It invested in Right to education and primary education and public health for mother and child,both of which led to good results. The food for work programme provided employment to the rural poor .It started the UIADI process which provided digital identification to every Indian. Without this the subsequent JAN dhan scheme or Direct benefit transfer and digital payments by Narendra Modi’s government would not have been possible.
Manmohan singh’s government did not have a majority in parliament and had to depend on corrupt regional parties for survival. Moreover within congress itself his hands were tied as the vote gatherer in elections for the congress party remained Sonia Gandhi ,the widow of Rajiv Gandhi, and her caucas constantly questioned his actions. This led to massive indiscipline in party and beaurocracy and there were multiple scams like in 2G spectrum sales or corruption during commonwealth games. An agitation started all over the country against massive corruption and in next elections BJP led by Narendra Modi came to power.
Liberalisation and economic growth : Vajpayee years
BJP was coming to power in centre for second time. Earlier In1999 the BJP had come to power under PM Atal Bihari Vajpayee. Vaypayee initiated a massive infrastructural project called golden quadrilateral to improve road connectivity. It also initiated privatisation of many public sector firms which were chronically sick and this increased efficiency of these industries. However he faced a number of external challenges from Pakistan in the form of terrorism. Thus armed terrorists killed hundreds indiscriminately after entering Mumbai from the sea in boats in September 1999. Indian airlines plane was hijacked by Islamic terrorists and landed in Kabul. The passengers were released only after release of three terrorists from Indian jails. Lastly terrorists attacked Indian parliament after entering it secretly but could not carry out mass killings. Terrorism also lead to numerous Bomb blasts killing thousands in Indian cities , orchestrated by an Indian Muslim youth organization SIMI supported by Pakistan.
Another communal incident was the burning of two compartments of Sabarmati express at Godhra station in Gujrat. The incident was carried out by a Muslim mob which stopped the train by pulling the chain. The compartment was locked from outside and petrol was thrown inside to kill and burn 59 passengers who were burnt alive. This led to riots by mobs led by local Hindu leaders in Gujrat killing thousands of innocent Muslims.At the time of Gujrat riots Narendra Modi was the CM of Gujrat and he failed in stopping the riots.
Demographic dividend and Narendra modi
When Narendra Modi returned as PM of India in 2014 he faced a rundown economy.The demographic dividend that India had started to enjoy since 2005 would lead to rapid economic growth provided the right economic policies were implemented. China had grown earlier from 1980’s rapidly for 30 years based on demographic dividend achieved through one child family implemented rigorously there. But now its population was aging and a shift to technology induced growth was required as other nations now have advantage in labour intensive growth due to lower wage rates.
Narendra Modi immediately after his victory brought new labour and land laws both of which faced opposition from congress and regional parties championing organised labour and rich farmers.This most important reform has thus got stalled. He however managed to reform the financial sector and banks which is the basis of finance. This sector had stalled due to bad loans given to private companies in infrastructure projects encouraged by previous congress government. Due to massive delay in government clearance of environment laws ,purchase of land and beauracratic apathy these projects had stalled and become unviable.The insolvency and bankruptcy act penalised fraudulent industrialists who refused to repay bank loans citing bankruptcy. Demonetisation and GST acts formalized the economy to a large extent leading to a single market and use of digital money by informal sector.Both these measures help in creation of a formal economy which allows government to target informal sector with loans and technology after their digital identification The formal sector has much higher productivity and formalisation is a step in the direction to increase productivity .However the short term effects of formalisation is negative as small firms cannot handle extensive regulations. Moreover demonetisation led to demand and supply contraction simultaneously. This led to massive unemployment in small scale industries and reduced GDPfor three years following their implementation.
Apart from labour intensive manufacturing and exports helped by demographic dividend which provided a massive labour force ,China had benefitted by investment led growth due to massive saving rate of over 50%, again a consequence of demographic dividend. Working age population is maximum during demographic dividend and family savings also increase due less expenditure on children and aged dependants. The Modi government has accordingly spent massively in infrastructure of roads,railways, digital highways. It has also increased research in defence through DRDO and space through ISRO. It has provided the PLI scheme which supports hightech manufacturing like computerchips ,clean energy through subsidies.A key sector for China was electronics sector manufacturing. This is a labour intensive sector and today China dominates it , Fortunately manufacturing of this labour intensive sector is shifting to India (Tamil Naidu) apart from Vietnam and Thailand .
In the social sector there has been landmark achievements. Provision of subsidy for cooking gas,electricity and toilets to every poor household, guaranteed wheat and rice to every poor family has been a boon to the poor. The opening of model schools in every district has aimed at improving quality of education while health insurance through Ayushman Bharat has helped many overcome costly treatment and financial bankruptcy. The DBT of Monetary support to bank accounts of poor has eliminated corruption . The effort to simplify numerous tedious unnessesary laws regarding business is being steadily removed in central government. However the same laws existing at state level are still persisting especially in opposition governed states. Through competition for central funds these states are goaded to reform their laws.
Foreign policy has seen massive improvement under PM Modi. Terrorist attacks carried out by Islamic terrorists from Pakistan have led to a strong military response by the Army and Airforce through surgical strikes. Pakistan ,an unstable state was helped earlier by America to develop nuclear weapons. Pakistan constantly threatens to use them faced with increasing Indian military capabilities.While western nations cry themselves hoarse about aggression in Ukraine and place sanctions on third countries who have nothing to do with the war ,they have done nothing to sanction terrorism in Pakistan ,rather have supplied it with advanced weapons and financial aid throughout history. As EAM Jaishankar told a western audience ‘ Europe’s problems become the world’s problems,but the world’sproblems are not Europe’s problems’
In spite of economic progress the Indian state is still dominated by the political mafia ,especially at the state level. At the central level withholding of laws passed by states by not getting governors consent or delaying states share in revenues have been used against opposition ruled states. Again CBI,ED IT raids have been used against political opponents or even to silence business leaders.Unless rapid economic growth and per capita incomes rise and government tax surplus results in welfare state the army of unemployed ,poor and destitute, will continue to be employed by political parties to intimidate honest citizens.Morever the top 10% of population in India own 67 to 70% of total wealth of India. Rapid economic growth through labour intensive manufacturing can provide quality jobs to urban youth. It will shift underemployed youth from agriculture to high productivity jobs in urban areas.Both will decrease wealth disparity .
Ack:New India,reclaiming the lost glory.Economic development and reforms in India and China,a comparative perspective.Large countries development path ,experience and theory.
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