Thursday, May 23, 2019

Modi's Second And Bigger Victory






No matter which way you look at it, it is just plain remarkable. Modi has managed to take his tally to almost 350. I have a feeling, by 2024, that tally might inch towards 400. The Congress Party needed a sympathy wave in 1984 to be in that 400 range. Modi is depending on his work, his organization, the electorate's intelligence.

India 2019: Looks Like A TsuNAMO

The terror attack in Kashmir and the Indian response to go deep inside Pakistani territory to wipe out a camp of terrorists sure played a role. That created a sympathy wave. But that was the icing on the cake. This dude has been doing the work.

He is a risktaker. 2014-2019 was the hard part. The next phase is not necessarily easier. But I would argue it is relatively easier. He does not need to give the Indian economy another shock therapy like demonetization.

Modi is an excellent communicator. He has a full agenda. I think he would be smart to co-opt Rahul Gandhi's Universal Basic Income idea for the bottom 20% and make his own. It is a sound idea. Automation will only accelerate. That has to be allowed. The productivity gains have to pay in the form of Value Added Tax. And that VAT has to fund the UBI.

Indira Gandhi nationalized the banks. Indian banks are state-owned. In that way India is China. But when you have as much corruption as there has been in India, and for such a long time, you end up with a huge pileup of non-performing loans, which drags down the economy's prospects. Some clean-up has been done. Much more remains to be done. Funneling credit to the small and medium enterprises, and the mom and pop stores, that are the dynamo of the economy is where job creation is. That has to be a top priority.

Sometime in the next few years, Modi has to take India to double-digit growth rates. That is the only way it can someday catch up to China. China growing at 5-6% and India growing at 10-11% is how. At this stage, 5-6% is excellent for China. But India can only truly reap its demographic dividend by growing at double-digit growth rates.

India is such a vast and diverse country. And it is a vibrant democracy. Everybody has an opinion. When Indians go grocery shopping, they haggle. It is free speech in action. To take major steps of reform while also dancing to the tunes of the electoral rhythms is a challenge. Modi is excellent at it. He is gifted. He is hard working. (The guy does not sleep.)

Overall I am optimistic that Modi will keep delivering. But the political path is bound to be full of surprises.

Adjusted for Purchasing Power Parity (PPP), India is projected to have become a larger economy than the US by 2030. It is befitting that that happens on Modi's watch. That is the projection. Modi has the option to accelerate it. The projection puts India at number two, and China at number one.

Chandrababu Naidu's move a few years ago to walk out of the NDA, in hindsight, looks like was a bad move. He has been wiped out, in his own state, and at the national level. One worries for the city of Amaravati.

West Bengal will fall. It will fall into the BJP's lap. That is the trend.

Modi basically repeated his 2014 performance in the Hindi heartland. That is quite a statement.

The BJP is the largest political party in the world.








Make in India should be aligned with a revamped Foreign Trade Policy to capture export market share amid ongoing dislocations in production base on the back of geopolitical uncertainty like trade wars and Brexit

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