THERE are no issues. But there is an issue. And the issue is a question. And the question is the issue. Will Narendra Modi be able to snatch victory from the claws of looming defeat?
That this question has arisen at all is a reflection of the PM’s increasing inability to sway the dynamics of power in his favour. This is in sharp contrast to the period before the 2014 national election and the voters’ consensus in his favour.
But Modi has shown himself as a great survivor. Remember the Tsunami like 12-year long political campaign against him post those tragic Godhra events. Even after he came out clean from a detailed and comprehensive Supreme Court mandated inquiry, his political adversaries continued to hound him and called him names. All kind of forces rallied against him at home and lobbied abroad to make him a persona non grata. And yet he sliced through their ranks to snatch the first-ever BJP majority in the country’s electoral history.
In the Gujarat assembly elections a year ago, he showed the same survival skill. What looked like a defeat turned into a slender victory. And in the 2018 assembly elections in Rajasthan and MP, he turned the tide and made BJP’s defeat a minor one— with the victor Congress’ fort looking extremely vulnerable.
The PM has apparently stolen a lead over the opposition by announcing a 10% reservation for economically weaker sections of the so-called upper castes and by announcing a direct transfer of `6,000 in the Aadhar-linked accounts of all small and marginal farmers holding less than five acres of land
So the question is whether Modi will be able to outflank and cut through the opposition phalanx again in the national election. His job seems to have been made easier by an opposition that has no solution to the country’s myriad problems except the elitist top-down agenda which essentially focuses on distributing nominal freebies—nominal because there is not enough wealth in this country. In this game, the PM has apparently stolen a lead over the opposition by announcing a 10% reservation for economically weaker sections of the so-called upper castes and by announcing a direct transfer of Rs. 6,000 in the Aadhar-linked accounts of all small and marginal farmers holding less than five acres of land.
Further, reports from all over India indicate that Rahul’s Rafale campaign might be turning as much against him as his mother Sonia Gandhi’s campaign against Modi in the post-Godhra years. People all over the country have reportedly not only rejected Rahul’s charge of ‘Chowkidar chor hai’ but have also been dismayed, if not angered, by his repeated charges even after the Supreme Court cleared the doubts over, and charges against, the Rafale deal.
In this magazine, we addressed in an earlier issue the specious questions surrounding the deal. We are happy to report that the SC subsequently while dealing with petitions filed by Modi’s opponents, followed the same rigorous logic that we had adopted in analysing the merits/demerits of Rafale.
Sadly enough, lost in the drumbeats of the election are vital questions of national security, economics, trade, and finances. Insinuations are being made and insinuations are being propagated. Everyone is attributing malicious motives to everyone.
LOOK at it. There is no debate on the issue of Rahul Gandhi’s relationship with China’s communist leaders, much less on the bankruptcy of PM Narendra Modi’s China trade policy that has been transferring US$50-60 billion a year to Beijing’s coffers. The self-damaging policy, which actually originated during the UPA-1 regime and sped up from 2006 onward, has funded and emboldened China to engage us in a show of strength in the Indian Ocean, in Sri Lanka, and in the Western region of Pakistan— up North from the Makran coast, let alone Doklam and other spots in the Himalayan region.
Aware of India’s vulnerabilities in the global supply chain, China has been exploiting them to the hilt. Troubled by America’s trade war that has slowed down its economic growth to a 30-year low of less than six per cent, China may be looking to compensate for its losses in the American market through expanded trade relations with India. To achieve Beijing’s objective, Xi Jinping may be visiting India shortly. Already, Chinese newspapers like Global Times, which are the platform for China’s Foreign Ministry, have been on pontificating how China could help India create more jobs by setting up its shops here and thus brightening Modi’s electoral prospects. Before that happens, New Delhi has to ensure that China agrees to remove all the tariff and non-tariff barriers against the import of Indian pharma and agri products as well as IT products.
The Wuhan summit between Modi and Xi was claimed to have paved the way for managing India-China differences over several issues. One test for this claim will be China’s stand on the import of Indian goods and services during the forthcoming Modi-Xi summit in New Delhi. Considering Beijing’s enviable and extraordinary diplomatic and trade ability, the PM’s ability to push India’s trade interests in one of the biggest global markets will be wholesomely tested during his negotiations with Xi. If he is able to secure a verifiable deal that may lead to a more balanced trade regime between the two countries, there is no doubt that his candidacy for another term as PM may allure a lot of voters from both urban and rural India who might be entertaining other thoughts.
MEANWHILE, another trouble is brewing for Modi. The same Polar vortex that triggered western disturbances causing untimely heavy rains in the winter of 2015 that destroyed a lot of standing Rabi crops in the North and North Western India, is again looming large. Let alone the Himalayan region which has seen heavy snowfall, certain regions in Rajasthan and Punjab have recorded below freezing temperatures. Winter 2019 has been colder than usual and what its impact on Rabi crops—wheat, barley, gram, mustard, some varieties of pulses, beans, and lentils—would be has not yet been worked out. If it gets as bad as the early months of 2015, India may face a political vortex in the scheduled April-May 2019 national election as the prices of a lot of daily food items may shoot through the roof like in 2015. Where that vortex will take the country politically in 2019 may be known only after the election results are out and a new government is sworn in.
Aware of India’s vulnerabilities in the global supply chain, China has been exploiting them to the hilt. Troubled by America’s trade war that has slowed down its economic growth to a 30-year low of less than six per cent, China may be looking to compensate for its losses in the American market through expanded trade relations with India
Before that happens, everyone is smoking their pipe, least bothered about another looming threat—of a debt trap. For the last several decades, revenue deficits of the Union Budget have always been in the positive territory, necessitating raising debts to meet the daily requirements of the government. According to Dr Subramanian Swamy, one of the finest global economists, the situation is so bad that of every rupee earned, the central government spends 98 paise on the payment of debts—interest plus principal amount. This, effectively, leaves barely two paise for developmental purposes, he has pointed out while commenting on the FY20 interim budget. The NDA government has not earned any laurels by keeping the revenue deficit consistently high in all the previous five years.
The only logical solution to overcoming the consistently high rate of revenue deficit is what Swamy has been advocating for a long time: abolition of income tax. This, argues Swamy, will increase savings and thus investment. Further, more money in the hands of the people may also raise consumption. Both will yield higher indirect taxes, more than compensating for the loss of income tax, thus bridging the revenue deficit or even creating a revenue surplus.
But India’s socialist leaders, including Modi, have no heart for it. They can’t be seen or perceived as capitalist in their approach to the national budget. Such is the disproportionate terror of the left, liberal elite who have been fattening upon the miseries of the people.
IN the last four-and-a-half years, Modi has not shown any inclination to be pragmatic in financial matters, whether it be demonetisation or GST introduction. Instead of taking cat steps towards a target, he has displayed a fatal tendency to jump without thinking—a tendency that disappointed the BJP’s traditional vote bank and lurched a huge section of it towards the Congress Party as well as AAP.
But PM Narendra Modi believes otherwise—or has been rather made to believe otherwise by his unending numbers of flatterers and sycophants. He claimed his FY 20 interim budget was a ‘trailer’ of what will take India ‘towards prosperity.’ Really! Never mind that statement has made him a laughing stock even among his supporters, who increasingly find it difficult to justify his acts or statements.
Not unsurprisingly, his chief political adversary, RaGa, had an easy go at him and described the NDA’s budget as an ‘insult to farmers.’ Not to be left behind, Behen Mayawati called the budget ‘jumlebaazi’, while Akhilesh Yadav felt it was targeted at vote grabbing. Interestingly, none of them is a practicing farmer though they may hold large patches of agricultural land. For a long time now, investment in agricultural land has been the best cover for tax rebates.
Anyway, the best attack came from the learned Sitaram Yechury. In a series of tweets, the CPI(M) general secretary who, unknown to many, is an economist by education, opined that a farmer’s family of five being given Rs. 3 per day as largesse makes it evident how “disconnected” the government is from the “rural crisis of its making”.
Infosys Chair Professor for Agriculture at ICRIER, Ashok Gulati, added: “The proposed Rs. 6,000 annual direct income support to small and marginal farmers is a drop in the ocean…It must be seen that this Rs. 72,000 crore as direct income support to farmers is nowhere near the annual loss of about Rs. 2,65,000 crore that farmers have been suffering in recent years because of the low prices they have received due to restrictive marketing and trade policies.”
Bharat Krishak Samaj chairman Ajay Vir Jakhar points out that “ever since the grandiose announcement in 2016 of doubling farmers’ incomes, the real incomes of farmers have actually fallen. The data confirms this. It rarely happens that the growth of gross value added for agriculture at current prices is not more than what it is at constant prices. Agriculture prices have remained below the rate of inflation of between three and four percent. This is possibly the third time that this has happened since India became independent”.
While Yechury, Gulati, and Jakhar have made valid points based on the current scenario, economists have also underlined the urgency to begin the process of Direct Benefit Transfer (DBT) for farmers. So the transfer of Rs. 6,000 to the accounts of farmers owning less than five acres of land could be considered a good experimental start. However, there is a huge problem: how do you identify and recognise a small farmer in view of the disreputable status of land records with state governments?
YET, Surjit S Bhalla, who till recently was a member of the PM’s Economic Advisory Council (PMEAC), has argued that, “By introducing Direct Benefit Transfer (DBT) to the poor farmer, the government appears to have taken the first steps towards dismantling the 40-year-old corrupt policy of food procurement and distribution. And a highly inequitable one as well. By raising the minimum support prices (MSP) like this and as previous governments have done, only the rich, upper-class farmers are really helped. The Narendra Modi government bought into the false policy of raising the MSP to farmers as a way of solving the farmer income problem. They (the policy-makers) have been taught the first important lesson of Econ 001—supply and demand determine the price, not the diktat of a bureaucrat or a left-intellectual, however well-intentioned she might be” (for the sake of lay readers, it may be explained that Econ 001 means the Principles of Microeconomics).
The only logical solution to overcoming the consistently high rate of revenue deficit is what Swamy has been advocating for a long time: abolition of income tax. This, argues Swamy, will increase savings and thus investment. Further, more money in the hands of the people may also raise consumption
On DBT to poor farmers, Gulati shares Bhalla’s viewpoint. He states: “Even if one thinks that roughly one-fifth of India needs income support—say Rs. 5,000 per month—the bill will amount to about Rs. 3.5 lakh crore. It is doable if the food subsidies and MGNREG are drastically pruned and targeted to this bottom 20 per cent of the population. Food subsidies and MGNREGA are costing the government more than 2.2 lakh crore, and a sizeable part of this is either lost in leakages or is not utilised productively”.
As pointed out earlier, the DBT for farmers is not an idea that can be easily implemented on the ground. Consider what happened to the DBT scheme for toilet construction: as much as 30 per cent of the allocated amount was taken as the commission by the village and town ward representatives for registering a person for the scheme. Many people who already had toilets in their houses used their connections with, and influence over, ward representatives and got the scheme money for themselves. Considering these facts, there is no reason to believe that the same may not happen with the DBT scheme for small and marginal farmers.
Possibly, the calculation of the PM and his advisers behind providing Rs. 12,000 for toilet construction and Rs. 6,000 for farmers as direct income might be the same as those of the UPA chairperson and her associates in introducing the right to food, right to education, and limited right to work under MGNREG. Like the UPA calculation misfired, there is every chance that NDA’s calculation, too, may fall flat.
Over several elections, Indian people have shown guile matching their political masters. They take the goodies and vote for someone else. As the veteran politician Raj Narain told the people of Rai Bareilly in his own inimitable style after defeating Indira Gandhi: “You can’t be loyal to me, when you couldn’t be loyal to Indira who did everything for you. Damn you!” So, dear PM, be warned of what awaits you.
HOWEVER, it’s also likely that the young voters Modi is counting on may finally give him one more chance because they believe that he is personally incorruptible and unimpeachable. That doesn’t mean their support can be taken for granted. If the PM makes that mistake, he may soon realise at his own peril that if he does not keep his part of the social contract with these boys and girls—of creating opportunities for their growth, they may unleash the same power against him that destroyed and threw out the late VP Singh from politics when he played foul with them and Mandalised politics. As the one who fought against the Emergency, he should remember and respect the power of the youth which dethroned the invincible Indira Gandhi.
Since it’s never too late to do the right thing, it may still not be too late for the PM to change the gathering perception about him—that he is steeped deep in cow and buffalo politics. To do that, he is required to apologise to the people and rededicate himself to reforming the economy with a bottom-up approach, instead of the top-down approach that he picked up from the intellectually arrogant and rootless opinion-makers on the left and center of the political spectrum.