Why Narendra Modi was silent about his $5 trillion “Vision” at Houston?
It is ironic that “Howdy Modi” happens when foreign capital from countries like India and other emerging economies are going back to the US. This makes Donald Trump led US economy and its dollar strong but countries like India who actually need the money to take it to the next level are becoming weak.
For all the pride that Indians in US and in India took in the impressive US-India bonhomie at the Howdy Modi event at Houston, what really was missing at this extravaganza was the much expected invite that Prime Minister Naredra Modi should have extended to the Houston-based oil billionaires to invest in India’s potential oil reserves. Neither did the PM urge the rich Indian Americans to invest in Indian markets or in India’s growth story.
It was expected that Modi in the beginning of his second innings would, from this platform, make a beginning of the Global Infrastructure Summit that he had announced just after the victory of his second term. It is an entirely a different matter that he chose the Climate Action Summit in New York City as the platform to announce that India was launching a Coalition for Disaster Resilient Infrastructure.
In the past 100 plus days, Team Modi has been in a scramble to lift the fast sinking economy. The worst part is that they have not come to terms with the real and progressive damage being caused to the Indian economy on a continuous basis, let alone admitting or finding solutions for it.
If PM Modi wants India to become a $5 trillion economy then what are the actions on the ground? If the PM is serious about what he says, then there has to be a focus on getting private and public investments in every spehere – from industry (steel, coal, mining, power, railways, ports, highways etc), to the social sector, especially investments in rural India, for Government schools, hospitals, and nutrition for the millennials. Where is the plan and vision for these focused areas after four months of Modi’s second successive term in office.
Countries like China, Japan, Germany, South Korea, and Taiwan have invested heavily in industrialisation and human capital and with the profits and taxes, these countries have deployed the financial resources for creating infrastructure to become strong economies of today. Every citizen in these countries is educated up to a level, thereby giving a huge pool of human capital for the country to progress. For instance, China employs it’s rural ageing immobile citizens to manufacture goods like toothbrushes, shoes, and toys that are always in demand. We too have 60% India idle in hinterland. Why can’t we invest in training them to manufacture low cost items? It needs to be noted that China is moving out its low cost manufacturing to East Asian countries. Taking a cue from China, why can’t India also take a lead and move forward to solve its unemployment and economic problems? For this India needs a plan and a vision of what it wants to do with its demographic advantage. The Chinese, Germans, Japanese,Koreans, Taiwanese – all had a plan to take the economy to the next level. China had Deng’s vision, South Korea’s Miracle on the Han river, Germany’s Miracle on the Rhine, Japan Economic Miracle are all plans that took these countries from poverty and post-war destruction to become economic powerhouses of the world.
Today the time is ripe for India under Modi to create a plan, given that he has a massive mandate to his advantage. But does he have the vision and the capability beyond holding huge PR events is the point. Unfortunately India’s leadership today is not even ready to recognise that there is a slowdown let alone planning to take India to the next level. The only announcement persons at the level of the Union Finance Minister and Commerce Minister make when it comes to defending the government in public is that ‘we are the fastest growing economy’. Little do they realise that the top economies in the world are real big. According to IMF World Economic Outlook (April-2019), GDP (nominal) of India in 2019 at current prices is projected at $2,972 billion. India contributes 3.36% of total world’s GDP in exchange rate basis. But that’s way behind compared to the US (24.3%), China (15.04 %) Japan (6.1%) and Germany (4.6%).
The top economies, leading in terms of GDP, have a huge base and even if they grow at a rate of 2%, they would continue to be far ahead of India. It may be noted that the economy of US is $20 trillion, China $14 trillion, Japan $5.1 trillion, Germany $4 trillion, UK $3 trillion, but that of India is $2.5 trillion. It is also to be noted that the above economies now aspire to becoming the leaders in advanced technology and engineering like space sciences, genomics, advanced warfare weaponry, cyber warfare, super computing, chip manufacturing, oceanic sciences, advanced materials manufacturing, and unmanned vehicles. These countries are working in limited markets and compete only with each other for superiority in these products that are unique and give them near monopoly. We are tottering in an old fashioned brick and mortar economy.
Today if we fancy ourselves to be the Vishwa Guru then the Guru has to come up with a plan that the World will take a note of to invest in. Politically too this is the right time to lift the sagging spirit of India because to dislodge Nehruvian legacy needs more concrete ideas. Its a different matter that even Nehru had a plan. These Friday announcements of FM to revive growth and push up the sluggish stock markets are only like a band aid that is unlikely to have any long-term effect. Cutting taxes of individuals and corporates works wonders in countries where everyone pays taxes. In India of 135bn people roughly 30 lakh pay taxes. Even opening sectors like coal, mining are not likely to receive any investments because it is the ruling BJP that made sure all licenses of investors who were allocated mines in the past regime get cancelled. Today who will take the risk of investing when BJP is in power and there is a trust issue. Especially when there is no clear vision. In addition to this, there is no clear policy on environment till date. Public outcry for building Metro terminal near Mumbai, outcry against Nanar refinery in Ratnagiri, outcry against Vedanta’s Tuticorin project are recent examples of how unclear policies can hamper projects. So Modi and his team with such a huge mandate has the best possible chance to come up with a vision to take India to the $5 trillion economy. A vision to make India a miracle economy along the lines of other advanced economies is the need of the hour. If PM Modi thinks that Nehru’s work is what Next gen India should forget and take him seriously then he will have to do some serious planning. Otherwise “Howdy Modi” will soon become “What did Modi” (do)!!!
Postscript (updated 25 September 19:54 hrs IST): Delivering the keynote address at the Bloomberg Global Forum in New York City on Wednesday, the Prime Minister told the US CEOs to come and invest in India. If there is any gap, we will personally act as a bridge, the PM said adding investor trust has increased in India. We have recently reduced corporate tax and have also done away with archaic laws that impede ease of doing business in India, the PM said.
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