And as usually happens in an acute crisis, everybody and her aunt is offering solutions. Fix this, increase that, cut here… If anything, Prime Minister Modi is getting buried under a million “miracle ideas”. But sadly, too many good fixes also become a bad thing, because only a bit of this and a bit of that gets done, and the problem never goes away.
So let’s answer a small quiz. I will throw ten options at you. All of these are critical actions required to pull India’s economy out of its current funk. At the end, I will ask you one final question. Check if you’ve really got it figured out in your head.
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[00:00:00] Rise Above The Din Unbox The News With Me, Raghav Behal India's economy can be described by a four-letter word which begins with the letter F. Come on, come on. It's not what you're thinking. Why? Even the Sarkari, that's the government-owned state-mango of India says that GDP grows
[00:00:20] could fall to around 4%. That's the four-letter word, 4%, when the July to September number is revealed. That's what I was talking about. So let's answer a small quiz. I will throw 10 options at you. All of these are critical actions required to pull India's economy out of the current funk.
[00:00:43] At the end, I will ask you one final question. Okay? So here goes. Point one, restart the flow of credit which has shrunk to inhuman levels. Its growth has down to 2.7% for industry. That's the lowest in 12 months. And credit growth to services has plummeted to 7.3%.
[00:01:05] That's the lowest in 24 months. NBFC disbursements are down a gut-wrenching over 30%. Over 30%. Option number two, stop celebrating the growth in nominal foreign direct investment from $42 billion to $62 billion over the 2009 to 2019 decade because why you should stop celebrating is because as a share of the GDP,
[00:01:34] which is really the correct way to measure it, it's fallen from 3.4% to 2.3%. Therefore, the question you need to ask is, why has it not crossed $100 billion this year? Why is it still over $60 billion? Option number three, do everything possible to ensure that Vodafone and Airtel
[00:01:58] continue to remain solvent. They should not pile for bankruptcy. Option four, try to understand why our exports have collapsed. Yes, I used that word responsibly. Collapsed. Look at this. In the naughties, the decade of the naughties, we ranked a healthy 10th in global exports growing at 20% every year.
[00:02:18] That's nearly twice the rate at which world exports were growing. But over the last five years or so, we've slipped to almost, you know what? Almost the 33rd spot. Even as annual exports, they've stayed flat. They've stayed flat at about 320, 25, 30 billion for the last five years. Just flat.
[00:02:41] Option number five, let's not get blindsided by what we love to call our spectacular rise in the world bank's ease of doing business. That's the EODB index. Yes, of course, the Modi government needs to be patted for pulling India up by 79 places.
[00:03:00] That's great. By 79 places from 142nd in 2014 to 63rd in 2019. And that Prime Minister Modi has done on his watch. But you know, on the meteor issues of protecting minority investors and the critical one, the most critical one, enforcing contracts on these meaty issues.
[00:03:22] We've either slipped or we've stayed stagnant. So we shouldn't be celebrating so much. Option number six, never forget that we've slipped. Yes, we've slipped 10 spots on the Global Competitiveness Index. Here's option number seven. We must acknowledge that we've copped out. We've just copped out of the RCEP.
[00:03:44] That's the Regional Comprehensive Economic Partnership. The harsh, the harsh truth is that our manufacturing sector is simply too trust up and too uncompetitive to survive in this very dynamic trade block of three billion people producing a fifth of the global GDP.
[00:04:03] So we simply must dare to reform our high bound economy and we must join RCEP sooner than later. Option number eight, we must arrest this rising tide of protectionism, which in turn is riding on this, you know, bogey we hear all the time of economic nationalism.
[00:04:26] It's a bogey. Remember, next to President Donald Trump's whimsical and I can even call them quasi-literate tariff wars, India. Next to President Donald Trump, India has the maximum number of trade restrictions. That's what we have done in the past three years. Now this is regressing.
[00:04:48] Let's not regress into this high-cost, inefficient or tachic 1970s, 80s. Remember, remember that's how bad our economy was and that's where we could regress if we continue to have this rising trend of protectionism. Here's option number nine. Don't kill the messenger when Moody's investor services
[00:05:11] cuts India's sovereign outlook to negative. We must square up to that brutal truth. Option number 10, finally, let's learn from that, you know, stark from that quite unprecedented. Actually I would even say it's never occurred before, duality, you know, that has today become a reality.
[00:05:31] I for one never thought it would happen in my lifetime, but see what's happened. See this duality. Business confidence has dipped to its lowest point in six years. Six years. It was, it's at 103 now compared to the earlier low of 100. That was recorded.
[00:05:47] You know what everyone loves to call that abysmal UPA year, which was circa 2013. It's about as low as that. And this has happened while the stock markets are at a lifetime high. Have you ever seen this duality before? You wouldn't have. And why has this happened?
[00:06:06] You know, the answer to India's economic conundrum perhaps lies here. Lies here in unraveling this duality. So as I promised you after the 10 options, here's my one final question. Imagine that Prime Minister Modi summons you and asks, I need to concentrate all my energies on one,
[00:06:29] just one option. It should be the most powerful stimulant, one that could heal several other ills. Tell me, which one out of the 10 options should I, that's Prime Minister Modi saying, should I pick? Of course you dear viewer will have your call,
[00:06:48] but I have no hesitation in picking number 10 because today India's entrepreneurs, they feel othered. They feel that their mistakes are being criminalized. Their failures are being magnified and their resources are being circumscribed. But you know, they should be fated as wealth creators.
[00:07:12] And that's what Prime Minister Modi's own clarion call was from the ramparts of the Red Fort on the 15th of August this year. If they are fated as wealth creators, their self-esteem shall get reignited. The wealth creators who create wealth, the wealth creators who contribute to wealth creation,
[00:07:34] they are all serving the country. We don't see wealth creators as a threat to the eyes of the world. Honestly, therefore if Prime Minister Modi can genuinely pull this mindset change, if he can pull this mindset change off within his regime, India's economic gloom will dissipate.
[00:07:56] I guarantee that. Thanks for listening. Tune in next week for another episode of Raghav's Tick.