On Saturday Dec 31, 2016, it was expected that Modi will give details of success of demonetization and declare further big steps on eliminating black money & corruption. But he went in for some avuncular moralizing and then proceeded to announce a slew of welfarist measures, ostensibly as a balm for the pains that his government’s demonetization has caused thus confirming the disastrous failure of demonetization in achieving its stated objectives viz. elimination of black money, corruption, fake currency and terrorism financing.
Modi’s welfarism is a full U-turn from the promised “minimum government”, but the measures themselves would do little to address the ill-effects of demonetization but deceptively doing some help the citizens in their time of need. In all of these small sops one thing that stood out was that...nothing stood out. A plan to build more houses or a lower rate of tax for some small businesses were so banal that they were worthy of nothing. Few schemes were already part of the government’s policy matrix: the maternity benefit exists as a part of the National Food Security Act, and the RuPay card is hardly a new idea. Other than the optics of managing anger due to demonetization and making a show of the government caring, it is unclear how these small schemes will help India get over the shocks of demonetization.
It is clear that Modi has given up on his 'minimum government' programme. Sops is what the prime minister turns to as a crutch in times of need. The fact that Modi had to now pull out a provision of the UPA’s Food Security Act – which both the UPA and his government had denied to women – is telling. It is unlikely that these small sops will do anything to ease the pain of demonetization. As India steps into the new year, mitron, it’s clear that the pain will continue.
With mounting costs of demonetization for government & nation, loss of millions of livelihoods in informal sector resulting in 60% spurt in MNREGA beneficiries, banks financial condition precarious with unbearable NPA's, GDP & growth rate shrinking and other effects of demonetization will leave Modi without any money to do anything. On the contrary, taxes will go up, welfare expenditure will skyrocket, fiscal deficit gets widened from 3% to 3.5% or even 4% and above all crude oil prices are likely to double in coming months will result in runaway inflation leaving Modi and economic pundits stare helplessly. Worst is that our rating might get downgraded to 'junk status' signalling capital flight to foreign countries.
Nation will be paying dearly for Modi's quack advised economic adventures which are mainly aimed at striking headlines and disarming opposition political parties rather than doing any good to country.
It is necessary to restrict executive taking whimsical decisions like demonetization with wide ranging ramifications, in future, by strengthening institutions with much greater autonomy and teeth and reducing or minimizing discretionary decision making powers at all levels and replacing them with robust procedures. That is the only way our democracy can survive and ensure unity & integrity of India.
Modi’s welfarism is a full U-turn from the promised “minimum government”, but the measures themselves would do little to address the ill-effects of demonetization but deceptively doing some help the citizens in their time of need. In all of these small sops one thing that stood out was that...nothing stood out. A plan to build more houses or a lower rate of tax for some small businesses were so banal that they were worthy of nothing. Few schemes were already part of the government’s policy matrix: the maternity benefit exists as a part of the National Food Security Act, and the RuPay card is hardly a new idea. Other than the optics of managing anger due to demonetization and making a show of the government caring, it is unclear how these small schemes will help India get over the shocks of demonetization.
It is clear that Modi has given up on his 'minimum government' programme. Sops is what the prime minister turns to as a crutch in times of need. The fact that Modi had to now pull out a provision of the UPA’s Food Security Act – which both the UPA and his government had denied to women – is telling. It is unlikely that these small sops will do anything to ease the pain of demonetization. As India steps into the new year, mitron, it’s clear that the pain will continue.
With mounting costs of demonetization for government & nation, loss of millions of livelihoods in informal sector resulting in 60% spurt in MNREGA beneficiries, banks financial condition precarious with unbearable NPA's, GDP & growth rate shrinking and other effects of demonetization will leave Modi without any money to do anything. On the contrary, taxes will go up, welfare expenditure will skyrocket, fiscal deficit gets widened from 3% to 3.5% or even 4% and above all crude oil prices are likely to double in coming months will result in runaway inflation leaving Modi and economic pundits stare helplessly. Worst is that our rating might get downgraded to 'junk status' signalling capital flight to foreign countries.
Nation will be paying dearly for Modi's quack advised economic adventures which are mainly aimed at striking headlines and disarming opposition political parties rather than doing any good to country.
It is necessary to restrict executive taking whimsical decisions like demonetization with wide ranging ramifications, in future, by strengthening institutions with much greater autonomy and teeth and reducing or minimizing discretionary decision making powers at all levels and replacing them with robust procedures. That is the only way our democracy can survive and ensure unity & integrity of India.
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