What I Wish PM Modi Had Said But Didn’t In Independence Day Speech

In his I-Day speech PM Modi did not even acknowledge that there is a severe slowdown of demand and investment.

PM Modi’s independence day speech 

(Photo: The Quint/Shruti Mathur)

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Main jaanta hoon ki aaj desh ek aarthik mandhi main hai; lekin main 130 crore desh vaasiyon ko yeh vishwaas deta hoon ki hum jald hi isko aarthik josh main badal dengey! (I know that we are currently in the grip of an economic slowdown; but I want to assure my 130 cr fellow Indians that we shall soon convert this gloom into economic optimism!)

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)

It is a fact that some black sheep in the tax administration may have misused their powers and harassed taxpayers, either by targeting honest assesses or by taking excessive action for minor or procedural violations.

PM Modi’s Wall Street-isms

This synched with his near-deification 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 3-page-interview-spread to make up for the deficit/silence in the Independence Day speech, sort of from the “ramparts of a pink paper”. He had used many feel-good Wall Street-isms, almost straining to sound market-friendly, liberally borrowed from MBA 1.0:

Revive animal spirits, make the private sector bullish and India an investment magnet …Investment 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 friction-less manner … All banking decisions taken in good faith with sound business rationale would not face a witch-hunt …

But alas, as I got into the weeds, I began to encounter the familiar shibboleths that had kept Modi-nomics 1.0 moored to statism/incrementalism:

PM Narendra Modi: I want to motivate our industrialists to believe in the India story and the long-term potential (emphasis mine) of the Indian market.

Me (counter): The bureaucrats had used this red herring of India’s “long-term potential” to cover up their abject failure in buoying the economy through five years of his first term. And now that we have slipped into a deeper funk right at the beginning of his second term, 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, not some abstract dream in 2025.

PM Narendra Modi: India’s“historic” rise in the “ease of doing business” … “remarkable that a nation of over 1.25 billion has achieved a rise of 65 ranks in a short period of 4 years”.

Me (counter): Dear prime minister, I know you extended it to a more general “ease of living” today, but please do not begin to believe your own mythology. The World Bank’s EODB Index is an extremely narrow, even misleading, summation of a few rules which matter to a tiny, very tiny, sliver – less than five percent of India’s vast population. Most of the improvement came from just four rules that were swiftly changed to virtually “gaming the system”. Worse, on three significant parameters – paying taxes, resolving insolvency and enforcing contracts – we actually slipped. And there’s hardly any improvement in rigid factor markets, or stalled projects, or extortionary tax policies, or intrusive raids/inspections, creating a huge unease of doing business.

PM Narendra Modi: With capacity utilisation crossing 75 percent, we would see growth in investment from (the) private sector in the coming months.

Me (counter): Do you know when we first heard this “75-percent 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 true culprits, which are: (1) the Modi regime’s unusually hostile taxation of equity capital; and (2) its unusual penchant for keeping real interest rates the highest they’ve ever been. When, for instance, did you last see, in any sane/mature economy, that the central bank cut rates by 35 basis points, but the 10-year treasury bond gained 35 basis points in the next few days!? It’s perverse, but it just happened in India in the first week of August.

I can go on and on, but that would be just a lot of dense drivel. The fact is that Prime Minister Modi, in his address from the Ramparts of the “Pink” Fort, made a clarion call for a market-friendly economy; but his Raisina Hill bureaucrats continue to doggedly cling on to big-government-knows-best policies. This must change.

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