AS PM OF IMAGINATION

by Harish Gupta, National Editor, Lokmat Group

Only two years are past since the installation of the NDA government led by Narendra Modi. It is therefore distinctly premature to pass a judgment. Some governments begin well but get miserably clogged up half way through, like it happened with the second UPA government piloted by Manmohan Singh. It dived headfirst into an unending cesspool of corruption charges, and got terminally tainted. On the other hand, the Rajiv Gandhi-led government began in 1985 amid great euphoria, until rumour of corruption in defence deals became so shrill that every attempt by the government to silence it seemed phoney and the prime minister’s name became mud.

Modi seems to have learnt lessons from the above example, and his promise of “Congress mukt” India is actually a commitment to keep his administration free from the stench of corruption. Unlike Manmohan Singh, Modi is a hands-on PM. Perhaps, this is the reason why there has been no charge of financial depravity in any of the ministries till now. To ensure that the clean image of his administration sustains, Modi has been particularly insistent on transparent e-auction of the natural resources, be it coal, oil or natural resources.

But a prime minister is not rated high simply if he keeps his nose clean. Modi has sparks of originality that marks him out from his contemporaries. Jan Dhan Yojana is an example. On the face of it, it is a simple plan to give a bank account to every unbanked poor. It is another matter that 21.43 crore such accounts have been created under the JDY scheme in less than two years, with the share of ‘zero-balance’ (therefore, nominal) being 27 per cent and falling. But the idea is not to turn the poor Indian into saver overnight. It is rather a financial architecture for direct transfer of all future state subsidies and grants, thus eliminating the pressure of middlemen that has plagued welfare since Independence.

In a sense, Modi is truly a Gujarati trader at heart and understands the importance of cost-cutting through disintermediation. His idea of Digital India and Smart City as well as Smart Village may sound nebulous. But, when completed, they are all about transforming Indian business from the old chaupal, and the gaggles of middlemen, to transparent and speedy transactions in real time. In India, Bengaluru, Hyderabad and Gurugram came up not due to any governmental thinking but because telecommunication became faster and cheaper so an opportunity arose for Indians to do offshore maintenance jobs. Modi, with his digital thrust, now wants to turn this opportunity into a bold new venture, with a programme like ‘Make in India’.  Samsung the Korean giant, is now setting up a unit in Noida near Delhi to make a line of its mobile phones. Recently, when Timothy Cook, chief of Apple, visited India and met Modi, he was clearly told that he could launch Apple Stores in India if only he used some (30%) made-in-India products. In fact, most foreign IT biggies, including Microsoft Corporation and Cisco Systems, have of late increased their manpower and investments in India. Huwaei, the Chinese telecoms major, has started a research & development centre in Bengaluru. That Modi puts his finger on the economy shows in his MUDRA scheme for financing six crore small vendors and businessmen, 61 per cent of whom are minorities, SC, ST or OBC. Maybe he could relate to their condition, being a tea seller at a railway station once.

Modi can think and dream big. He has persuaded Airbus Industries of France and the Tata Group to begin collaboration on design and manufacture of a military transport aircraft. Airbus has already begun manufacturing some of its parts in India. These are the first green shoots of high-tech industry in India, a sector in which India lags not only behind the Asian major powers like Japan, Korea and China but newcomers like Thailand and Vietnam. To facilitate entry of high technology, FDI cap on defence industries has been pushed up to 49 per cent and Indian firms like L&T, assigned to make nuclear submarines, are potential conduits for transfer of sophisticated technology.

Some of the things that outwardly appear to be Modi’s mere fads, like yoga, for that matter, are actually smart ideas to improve public health at low cost, and creating jobs. In this year so far the government of Haryana has given jobs to 25,000 persons as yoga instructors. Similarly, his Namami Ganga scheme for cleaning up North India’s arterial river, for which a budget of Rs 20,000 crore is allocated, should create a chain of municipal waste disposal projects along the river. It is a national renewal scheme on an unprecedented scale with a huge potential of creating jobs.

In his first two years, if his conduct seems somewhat puzzling, it is in his silence about the mindless outbursts of his party’s fringe elements. Their missiles are not always limited to a bigoted version of art and culture, or ancient history of their choice. Despite Modi, as it appears, Subramanian Swamy, a machinator par excellence and newly appointed BJP member of the Rajya Sabha, is firing salvos at RBI Governor Raghuram Rajan on trumped up charges. When Rajan was under attack from the finance ministry for his stubbornness and refusing to reduce interest rates, Modi had stepped in April last year saying he is a good teacher. But this time Modi has preferred to practically remain non-committal on the controversy. He may be upset with Rajan for not reducing interest rates for high growth despite low inflation. Modi cannot remain maun  like his predecessor Manmohan Singh and is nor an “accidental prime minister” either.  His has pressed the pause button in terms of launching new schemes and  fully focussed on implementing programs already launched as next coming two years are crucial for him to establish that he is not an accidental choice.

Start up & stand up

by Harish Gupta, National Editor, Lokmat Group

Living in India and being exposed to the Indian media, it is difficult to win over the cynicism that has become an integral part of the Indian psyche. The country has improved beyond recognition in the last two decades or so. The share of people living below $1.25 a day was nearly a half (49.4%) in 1994; it is about a quarter (24.7%) in 2011 and is supposedly around 23% now. Between 2005 and 2014, the prevalence of underweight children under the age of five fell from 43.5% to 30.7%. The trend-line is therefore towards optimism, but the urban middle class, from where opinions filter down, is not much swayed by statistics. It is the poor growth of jobs since 2011 that turned Narendra Modi's election into a tornado, running the Congress ship aground. But 20 months in power, Modi and his NDA government is still battling with poor industrial production, steeply falling labour-intensity of farming and negligible job growth. No wonder, therefore, that the Congress' new boss, vice president Rahul Gandhi, is out on the road in style, as he did last week in Mumbai. As he marched from Bandra to Dharavi, many young men and women disappointed with Modi government walked with him.

As some of the figures of poverty alleviation cited above will show, India hasn't done badly in the recent years. But a few epochal changes have taken place in global economy that have turned some old Indian notions on their head, one of these being that industry still has the potential to employ many workers. Both industry and agriculture need much fewer hands these days. But one million workers are joining the work force each month. It is an existential problem. Traditional industry cannot expand (and thus pick up new jobseekers) because firms are hugely debt-laden, with total corporate debt being seven times the companies' net profit. It is clear that the conventional narrative of industrial growth and job creation must change.

Interestingly, Modi is the first to begin scouting for a solution out of the box, in promoting start-ups. In his Independence Day speech last year, he promised to launch Start-Up India, a campaign to remove all obstructions for entrepreneurship to blossom. Last Saturday, he presided over a day-long programme at Delhi's Vigyan Bhavan for which the motto was 'start up India, stand up India' and the guests included, apart from many Indian entrepreneurs, about 50 of their counterparts from Silicon Valley. Modi shared the dais with Uber founder Travis Kalanick and CEO of Japan's Softbank Masayoshi Son. Modi was at his sarcastic best when he declared the state's arms-length policy to start-ups. " We have done a lot (of controlling industry) for 70 years. Where have we reached?"

Start-ups were visible for a decade but it is picking up speed now, the number going up from a mere 501 in 2010 to 4,500 last year. Start-ups like Flipkart, Snapdeal, Paytm or OLX employ thousands of workers who work not only on their computer desks but are engaged in delivery and other logistic functions. Softbank is going big on solar and wind power. Modi spoke of new start-ups that he'd like to see in education and health sectors. At present, about 90 per cent of start-up finance comes from abroad. The government has now laid before the young dreamers a Rs. 10,000-crore 'fund of funds' (last resort financier) and Rs 2,500 crore credit guarantee fund. Son has in an interview spoken about $10 billion funding of Indian start-ups.

As records go, about 90 per cent of start-ups nearing success invariably migrate to the US or other Western countries because of India's multiple problems, notably high taxation. Modi has announced a three-year tax exemption for start-ups and other benefits. It is good news for scions of the owners of thousands of failed industries who want to move on. He said there would be easier exit with the proposed new bankruptcy laws and, impishly, suggested that the entrepreneurs lobby with India's opposition leaders to facilitate early passage of these laws.

The Modi administration has often been criticised for betraying a lack of original thinking. In December, the Prime Minister headed a meeting of 80 senior bureaucrats and sought to pick their brain for new ideas. The exercise was mostly one-sided. 'Digital India', which too has Modi's imprimatur, is still iffy because of low availability of wireless frequency which pushed up the cost of wi-fi which, in its turn, has kept fully loaded smart-phones beyond ordinary people's reach. Swachh Bharat, the cleanliness mission, had the potential to be a magnet for unskilled and semi-skilled jobs, but its employment success calls for state governments' cooperation which Modi hasn't been fortunate to get. The Ganga Action mission too is lost in sand.

Modi's start-up experiment is a bright spot on India's political 

terrain which is unfortunately greying up all too soon with 

leaders who have reduced their objective to winning elections at any rate.

Shifting gear to Start-Up, Modi is clearly moving to a safe zone without political opposition. Interestingly, Rahul Gandhi is twenty years younger than Modi but his politics so far is focused on bitter opposition to Modi, as if he is a usurper, but he has shown no vision of where the country’s young adults will be employed. “ To have start-ups”, he said in his speech in Mumbai on the day Modi was spending with entrepreneurs, “one needs a society without intolerance”. The observation is particularly jejune in the context of India’s critical employment crisis and the jobless growth that began when Rahul’s own party was in power.

Modi’s start-up experiment is a bright spot on India’s political terrain which is unfortunately graying up all too soon with leaders who have reduced their objective to winning elections at any rate. Thinking of larger issues is alien to them. Delhi Chief Minister Arvind Kejriwal of AAP has nursed a “thinker” image, his masterstroke being the plan to reduce cars on Delhi roads by allowing odd numbers in one day and even numbers the next day. But the plan was only for 15 days, so the problem will be back soon though it did not go in the first 15 days either. As Kejriwal’s ambitious start-up, it is not sustainable 24x7. But Modi is seeking a lasting solution to the problem of unemployment.

How the West was won

by Harish Gupta, National Editor, Lokmat Group

Weeks before Prime Minister Narendra Modi's visit to the US, including Silicon Valley on its west coast, the sharp cleavage among US academics of Indian origin has brought into focus the depth of conflict within the intellectual class about India's current political leadership. A letter signed by over 120 Indian-American academics and addressed to IT industry leaders in the Bay Area and elsewhere brims with hatred and fear-mongering against Modi. It condemns the "uncritical fanfare" being generated for his visit to Silicon Valley to campaign for his Digital India project, and gives dark hints about its allegedly sinister features. The dons grouch about Digital India's "lack of safeguards about privacy of information, and thus its potential for abuse." The letter's refrain is that the digital system will be used to "enhance surveillance". The letter does not end here. In fact it is a laundry list of charges against the Prime Minister that are common between the Congress and left parties. It exceeds norms of civility as it rakes up the past record of US visa being denied to Modi in the 2005-14 period and the "powerful reasons" underlying the denial.