I was yearning to hear these words from the Ramparts of the Red Fort. I wanted Prime Minister Modi to use his legendary oratory and hope-generating skills to assuage the economy. But alas, he did not even acknowledge that there is a severe slowdown of demand and investment. Instead his prescription was more of the same same, with an additional/unusual invocation to domestic tourists! After hearing today’s speech, I had almost resigned myself to an unchanged Modi-nomics 2.0 until my eyes fell on this quote (from The Economic Times, 12 August 2019). Tune in!
Learn more about your ad choices. Visit megaphone.fm/adchoices
[00:00:00] Rise Above The Din Unbox The News With Me Raghav Behl In the coming 5 years we can become 5 trillion Dollar Economy and this is a dream of every Indian. I know that today the country is in an arctic mine but I trust the 130 crore people
[00:00:24] are in an arctic mine. I was yearning to hear these words from the ramparts of the Red Fort. I wanted PM Modi to use his legendary oratory and his hope-generating skills to assuage the economy.
[00:00:44] But alas he did not even acknowledge that there is a severe slowdown of demand and investment. Instead his prescription was more of the same-same with of course an unusual sort of additional invocation to domestic tourists.
[00:01:21] After hearing today's speech I had almost resigned myself to an unchanged Modi-nomics 2.0 until my eyes fell on this court from an interview that he gave to the economic times on 12 August 2019, 3 days before Independence Day.
[00:01:39] It is a fact that some black sheep in the tax administration may have misused their powers and had his taxpayers either by targeting honest assessees or by taking excessive action for minor or procedural violations.
[00:01:52] Now this synced with his near-defication of wealth creators in his Red Fort speech, almost an admission that his regime may have been too harsh on them until now. So I dove deep into his three-page interview spread to make up for the deficit and the
[00:02:31] silence in the Independence Day speech. Now he had used many feel-good-walls treatisms, almost training to sound market friendly and he seemed to be liberally borrowing from MBA 1.0. Revive animal spirits make the private sector bullish and India an investment magnet.
[00:02:59] It is driven by the private sector but the government will do its bit to crowd in. It should be convenient for global firms to bring goods in a frictionless manner and all banking decisions taken in good faith with sound business rationale would not face a witch hunt.
[00:03:16] But alas, as I got into the weeds of the interview I began to encounter the familiar shibbolets that had kept Modi Nomics 1.0 moored to statism and incrementalism. I want to motivate our industrialists to believe in the India story and the long-term potential of the Indian market.
[00:03:38] Ah, the bureaucrats had used this red herring of India's long-term potential to cover up their abject failure in boing the economy through five years of PM Modi's first term. Despite that we have slipped into an even deeper funk right at the beginning of his second
[00:03:57] term, Prime Minister Modi should be thinking utterly short-term to fix the pervasive economic gloom. Just as one example, when the auto industry is in danger of regressing to production levels seen four years ago, you know it's the short-term stupid that you need to be paranoid about.
[00:04:18] Not some abstract dream in 2025. Let me take you back to November 2018 when the then President of the World Bank, Mr. Jim Yonking, commended India's historic rise in the ease of doing business rankings. He said that it was remarkable that a nation of over 1.25 billion people has achieved
[00:04:37] a rise of 65 ranks in a short period of four years. This kind of performance gives us further confidence in setting still higher goals. I know you extended it to a more general ease of living in your Independence Day address,
[00:04:55] but please do not begin to believe your own mythology. The World Bank's ease of doing business EODB index is an extremely narrow, it's almost misleading summation of just a few rules which matter to a tiny, a very, very tiny sliver less than 5% of India's vast population.
[00:05:16] Most of the improvement came from just four rules that were swiftly changed to, you know, well some people said to virtually game the system. And worse on three significant parameters that's paying taxes, resolving insolvency and enforcing contracts these three critical things we actually slipped.
[00:05:37] And there's hardly any improvement in what economists call rigid factor markets or installed projects or extortionary tax policies or in intrusive raids and inspections which believe me are creating a huge unease of doing business. With capacity utilization crossing 75% we would see growth in investment from the
[00:06:00] private sector in the coming months. Dear Prime Minister, do you know when we first heard this 75% explanation for the unusually weak amount of private investment in 2014, then in 2015, 2016, 2017, 2018 and now in 2019. Once again this is a bureaucratic fiddle to hide the two culprits which are the Modi
[00:06:31] regime's unusually hostile taxation of equity capital. And two, its unusual pension for keeping real interest rates the highest they've ever been. When for instance did you last see in any sane or mature economy that the central bank cut rates by 35 basis points?
[00:06:51] But, but look at this, but the tenure treasury bond gained 35 basis points in the next few days. That's perverse. But it just happened in India in the first week of August. Now I can go on and on but that would be just a lot of dense drivel.
[00:07:09] The fact is that Prime Minister Modi in his address from the ramparts of the Pink Fort that's the newspaper made a clarion call for a market friendly economy. But his Ryzena Hill bureaucrats continue to doggedly cling on to big government knows best policies. This must change.
[00:07:31] Thanks for listening. And then next week for another episode of Raghav's Tick.