Despite demonetisation and GST, India will storm back as the fastest-growing major economy

Mockery comes easy to India’s politicians. It’s a weapon in their arsenal that is at once defensive as well as offensive. That it also exposes their own failures, as individuals, politicians and ministers, is a fact that often eludes them. That it diminishes their stature and brings to the fore their assumed differentness from the masses they claim to serve is lost on them, too.

Old guard

Desperately seeking relevance in a Congress led by Rahul Gandhi, who is not enamoured of the old guard and would like to put old family retainers out to pasture, has chosen to tread the path taken by the likes of Mani Shankar Aiyar with disastrous consequences. Last Sunday he mocked Prime Minister Narendra Modi while acidly commenting that if selling pakodas was a job, so was begging.

In a recent interview to a Hindi news channel, Modi had seemingly sought to deflect a question on jobs, or the lack of them, by citing the example of a person who sells pakodas. “Would you say that he is unemployed? Isn’t that a job?” he had asked rhetorically. On the face of it, the Prime Minister was trying to expand the meaning of gainful employment by bringing self-employment within the ambit of jobs. In retrospect, he was setting up a trap for his adversaries.

P Chidambaram did not disappoint him. Just as Aiyar has resolutely kept stepping into traps laid by Modi. Classists who look down upon those who have been less fortunate than them would no doubt cheer Chidambaram’s contemptuous dismissal of the marginalised eking out a living without taking recourse to plundering the public exchequer.

But the masses would take a diametrically opposite view, as they have done. Chidambaram’s disdain for hard-working individuals who see themselves as entrepreneurs and dream of striking gold one day has left ordinary people with extraordinary aspirations fuming. That’s where Modi wins and his adversaries fail.

Not everybody has heard of Ganga Bhisen Agarwal whose poky little shop in Bikaner is now known as Haldiram, a super brand with a turnover of more than Rs 5,000 crore. But deep within every entrepreneur, from a pakoda seller to a cobbler to a bicycle repair mechanic to a vegetable vendor to a corner shop owner, are hopes to make it big.

If Chidambaram’s purpose was to poke fun at Modi for the faltering economy, then that too appears to be misplaced. The Economic Survey presented to Parliament on Monday provides some interesting insights that fly in the face of the cant by Cassandras. No, the economy is not on a roll, but it’s not down and out either.

Demonetisation

Here are some interesting facts that merit mention. For all the criticism heaped on demonetisation for the disruption it caused, the impact has not been as adverse as was made out by "renowned" economists. Digital payments are steadily increasing, thus squeezing out the cash economy. More important, perhaps, is that there is an irreversible shift towards formalising the economy which benefits both employers and employees.

Similarly, the much maligned and admittedly poorly designed, badly implemented and hugely disruptive GST has had its upside too. An estimated 3.4 million enterprises are now paying indirect taxes — that’s a whopping 50 per cent increase. A third of 240 million non-farm workers now have access to some form of social security cover and half of them are employed by firms that pay taxes.

The other post-demonetisation trend that stands out is savings are up by way of bank deposits and mutual fund investments with the markets booming. It would seem gold and real estate are no longer fashionable, though resurrecting the building industry is important to generate jobs and demand.

High growth

Last, but not the least, growth is back on rail: GDP will be restricted to 6.75 per cent in 2017-18 and thereafter increase to a projected 7-7.5 per cent in 2018-19, if not more. India is all set to storm back to centre stage as the fastest-growing major economy.

All this, no doubt, is good news, irrespective of which side of the political divide you are on, or even if you are politically agnostic. It essentially reflects India’s entrepreneurial spirit.

But there remains that elephant in the room called jobs. The BJP promised to meet the demand for jobs during the 2014 election campaign. That promise did not quite factor in unforeseen realities — that the manufacturing sector would not take off due to a variety of reasons; that private investment would founder on the rock of excess capacity; that it would take time to put in place a new regime of stable laws and predictable taxes.

Truth be told tax collectors and North Block babus continue to undermine the economy. Modi may try to calm the apprehensions of investors, babus in the finance ministry are in no mood to give up their past practises. Whether or not they have been tamed will be known in Thursday’s Budget.

(Courtesy of Mail Today)

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