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An open letter to PM-baiters: It's Modinomics, stupid!

| | in Agenda

I shall be failing in my national duty if I did not speak up even now against the vicious slander, by Prime Minister Narendra Modi's baiters including an issue-less Opposition and a former Finance Minister of the NDA infamous once upon a time as “Rollback Sinha”, a moniker given to him by that very bunch of debilitated Congressmen who are cheering for him today. Out of work critics who slam the rare feat of India's stupendous rise in the World Bank's “Ease of Doing Business” rankings, saying the survey was limited to only Mumbai and Delhi, are clearly rattled; Mumbai alone accounts for 6.2 per cent of India's GDP, 10 per cent of its factory employment and 25 per cent of its industrial output. Speaking of rankings, the erstwhile Congress-led UPA establishment's rancor is understandable given that India's outlook in 2012 was downgraded to “Negative” by credit rating giant, Standard and Poor. While downgrading India's outlook to barely a notch above junk status, S&P had lambasted the lethargy of the then finance minister P Chidambaram.

The confidence reposed by international rating agencies in the Modi Government has a lot to do with the excellent work done by it both on the fiscal and external fronts. While the fiscal deficit has been at sub-4 per cent in the last three years, what is even more commendable is the fact that the Current Account Deficit (CAD), which was a precarious 6.7 per cent for the December 2013 quarter, was only 0.7 per cent of GDP in 2016-17. It's worth mentioning that exports have grown for thirteen straight months with merchandise and engineering goods' exports growing by a huge 26 per cent and 44 per cent respectively in September 2017. That the fictitious “slowdown” is a figment of warped mindsets is again reflected in the fact that non-oil imports grew by a healthy 18 per cent in September 2017, reflecting buoyant local demand.

Driven by ignorance, the octogenarian former Finance Minister claimed the Modi Government was simply “lucky” given depressed global crude oil prices. While it is true oil prices had a steep fall from $114/barrel in mid-2014 to an alarmingly low $29/barrel in January 2016, that's only half the truth — oil prices have in fact risen by a whopping 117 per cent since January 2016, trading at roughly $63/barrel, in November 2017. Despite a consistent rise in oil prices for months now, it is to the Modi Government's credit that Consumer Price Inflation or retail inflation has been reined in at 3.2 per cent, with food inflation even lower at just 1.25 per cent. This is in sharp contrast to the scenario under the corrupt UPA regime in November 2013 when retail inflation was at 11.16 per cent and food inflation even higher at 14.72 per cent. What is surprising is the same cynics who have never wasted an opportunity to give all credit to low global oil prices for every single achievement of the Modi Government, have never bothered to even make a stray mention of the fact that India has been the world's fastest growing economy in the last three years despite commodity prices having skyrocketed in the past few years with Aluminium, Copper and Zinc touching 6-to-10-year highs in August 2017. The NDA regime has done a commendable job, despite rising global “Commodity Inflation” that could have easily spiraled out of control given that India is a net commodities' importer.

Coming back to the GDP debate, it is laughable that the former BJP Finance Minister should question the need for changing the base year for GDP calculation. Changing the base year, once every five years, is a globally accepted best practice to iron out abnormalities and seasonalities. Hence, “Rollback Sinha” and his ilk may be in need of “margdarshan” on this front. The Government changed the methodology of GDP calculation from GDP at factor cost, to GDP at market prices. Again, most world economies calculate GDP via the market prices method to capture the impact of indirect taxes and subsidies. Modi naysayers who say the Government frittered away the crude oil bonanza are clearly off the mark. Don't forget that infrastructure spending by the Modi dispensation has been far higher than the erstwhile UPA Government. Take Railways, for instance. The average annual budgetary outlay for Indian Railways is Rs 1.31 lakh crore for the year 2017-18 alone. This is in sharp contrast to an average annual budgetary allocation of less than Rs 60,000 crore under UPA-2 that left the Railways in tatters.

Also, road construction under the Pradhan Mantri Gram Sadak Yojana, at 133Km per day, has been the highest ever in post-Independence India. Construction of highways at the rate of 27-28km/day has also been way higher than the 9-11km per day average clocked by the inept Manmohan Singh regime. The recent fiscal stimulus package announced by the Government envisages building of 84,000kms of roads and highways with an investment of Rs 7.46 lakh crore. This alone should generate 14.2 crore mandays of employment going forward.

So, what is the picture of the Indian economy today? Well, critics would do well to note September's “Economic Activity Index” is up 8.2 per cent over last year. The IIP growth for August 2017 stands at a robust 4.3 per cent driven by a healthy manufacturing growth of 3.1 per cent and mining and electricity growth of 9.4 per cent and 8.3 per cent respectively. Core sector grew by a solid 5.2 per cent in September 2017. Much ado has been made about tepid credit growth, with no acknowledgement of the fact that Rs 5.5 lakh crore has been raised by corporates via private placement of bonds, Rs 57,000 crore through IPOs and another Rs 36,000 crore via Qualified Institutional Placements this year alone. Is the average Indian better off today than three years back? The answer is a resounding yes. Flipkart reported Rs 9,000 crore of festive season sales with 19 million smart-phones being ordered within the first few hours of the ‘sale' opening. A quick look at earnings reported by India Inc. for the September 2017 quarter corroborates the snowballing economic momentum that has taken shape. Hindustan Unilever, which sells everything from shampoos and soaps to toothpaste and coffee, reported a 16 per cent growth in profit, hailing the new GST regime. Similar sentiments were echoed by Maruti Suzuki's RC Bhargava; Maruti reported a stellar 21 per cent jump in revenues. Engineering conglomerate, Escorts Ltd. reported a 148 per cent jump in profit driven by a good 34 per cent jump in sales of tractors and construction equipment. Two-wheeler biggie Hero MotoCorp, which derives more than 40 per cent of its sales from rural areas, clocked sales of 2 million units for the September 2017 quarter.

Speaking of rural India, Congress made a mockery of the Minimum Support Price for farmers as 94 per cent of farmers never had any access to MSP benefits as was revealed by the Shanta Kumar Committee. The Modi Government changed that by ensuring fair price discovery for farmers via the trading platform e-NAM which covers more than 250 mandis in 10 States today with the aim of bringing under its fold all 585 regulated, wholesale mandis in the country to ensure farmers get the best price for their produce, MSP or no MSP. No discussion on Modinomics is complete without acknowledging the path breaking Insolvency and Bankruptcy Code that has already resolved 655 NPA cases under the aegis of the National Company Law Tribunal despite becoming operational only in December 2016. The Rs 2.11 lakh crore bank recapitalization measure has been hailed by Moody's and should undo the damage done to banks by the corrupt UPA establishment. No wonder crony capitalism as a percentage of GDP is down to 3 per cent under Modi from 18 per cent, in 2008, says The Economist.

My unsolicited advice to Modi naysayers, Rollback Sinha and wrongly ‘wired' critics is this: Unlearn Manmohanomics and Bury Nehruvian elitism; both looted us. Modinomics is here to stay. As Lord Keynes famously said: “Demonetization is the best way to pump prime the economy without raising inflation”. Demonetization is in effect that attitudinal stimulus which is far more potent than any monetary or fiscal stimulus in our march towards a New India.

(The writer is an economist and chief spokesperson for the BJP, Mumbai. Views expressed are personal)




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