advertisement
“I am back in the USSR. You don’t know how lucky you are boy”
It was most uncanny that I woke up with this marvellous Beatles song, composed in Rishikesh, playing in my head. I guess dreams can be as predictive as they are based on premonition. Because the first newspaper headline l read that morning was from Reuters: “Modi’s office urges use of Indian products after rails controversy.”
I rubbed my eyes in disbelief. I pinched myself to check if I was still sleeping. Were we back in the 1970s? The era of protectionism in a state-controlled (nay, state-strangled) economy…
The facts are messy. The Modi government promulgated a Public Procurement (preference to ‘Make in India’) Order of 2017 which mandates that “each tender must be examined from the point of view of Indian manufacturers.”
It gives a straight (unconscionable?) 20 percent, yes t.w.e.n.t.y percent, price advantage to local manufacturers, damn efficiency and consumer interest! And if a foreign supplier still wins the bid, half of the order has to be given to an Indian manufacturer.
The latest makkhi swallower is Indian Railways, whose global tender for track modernisation steel could be struck down, unless it gives preference to SAIL and Indian companies like the JSPL, who may not have either the capacity or specialisation to do the job. And yet the railways have to pay 20 percent more, and waste time.
My mind jerked right back to April 2013, when I had hosted a Think India Dialogue with then Chief Minister (and PM-candidate) Narendra Modi. The theme was that exciting phrase ‘minimum government, maximum governance’ coined by him.
Unfortunately, 43 months out, Modi’s government carries the opprobrium of being Big State. It’s getting bigger, more intrusive and most discretionary, with every passing day. Its motto can be restated as ‘maximum government, maximum economic statism.’
But since a new year is always a kindler of hope, can the Modi government imbibe the “spirit of 18” in 2018?
I believe it can make a few key amends with just three new year resolutions. Here they are.
The goods and services tax (GST) is a MASSIVE reform. To have one tax in a diverse, federal country like India, removing all cascading infirmities and logistical friction, is a huge achievement, and kudos to M/s Modi & (Finance Minister) Arun Jaitley. Even some of the irritating compromises – like keeping petroleum, alcohol, real estate other provincial taxes alive in the interim – are acceptable. But three crippling measures are examples of state overreach which end up vitiating almost every Modi government initiative:
Just killing these three monstrously Statist measures will allow the Modi government to reapply for the tag of a business-friendly administration. Just do it in 2018, sir.
The Modi government has won tired accolades for its “bold reform” in announcing bank recapitalisation bonds. Frankly, this is such a statist, un-innovative and old-world move that I am left speechless by India’s cravenness. This instrument was deployed in 1991-92, when the country was bankrupt and the government was somewhat justified in using a sleight of hand to bail itself out – ie, transferring the liabilities on a bank’s books to the asset side, and shoving the contingent liability (which actually increases the government’s fiscal deficit “invisibly”) off the balance sheet.
If any private owner were to do this, he would be in jail for misappropriating public funds. But the government got away with this ploy in 1992 because of the financial emergency.
So what else could have been done? Well, there are a million possible structures, dictated by bright minds who understand equity dynamics – for example, how about a deep discount rights issue with attached warrants, underwritten by the government for the same amount of cash that it has committed to the bank recapitalisation scheme? With one stroke, you would have raised double the amount of equity capital with the same cash liability.
Just this decision can help the Modi government shake off tonnes of statist dust. Aadhaar was an outstanding innovation to give each Indian un-duplicate-able identity so that the welfare state could transfer benefits to him or her without leaking or wasting them away to theft and corruption. Brilliant, in idea, conception and execution!
But then, the Modi government thought up other tricks.
I have deliberately exaggerated the last two examples to ram home the dangers of putting people’s bio-metric identity “on sale.”
It’s a veritable bounty for criminals and the deep state.
The government must roll back Aadhaar’s overuse/misuse in 2018. This is an imperative.
Ultimately then, Prime Minister Modi may fail to redeem his 2013 pledge of ‘minimum government’ wholly, but paraphrasing his bete noire, Pandit Jawaharlal Nehru, he can still do it substantially by implementing the three resolutions above in 2018.
Else, many of us will be singing:
I am back in the USSR
You don’t know how UNLUCKY you are boy
(Breathe In, Breathe Out: Are you finding it tough to breathe polluted air? Join hands with FIT in partnership with #MyRightToBreathe to find a solution to pollution. Send in your suggestions to fit@thequint.com or WhatsApp @ +919999008335)
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)
Published: 30 Dec 2017,09:32 AM IST