Modi transforms from reforms to welfarism

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 sops to soothen demonetization fiasco

Modi announced on Television, on Dec 31, 2017, a day after demonetization closed, several sops to farmers & poor virtually to neutralize demonetization fiasco's negative effects. While demonetization achieved nothing, the long list of sops contained nothing which created havoc for everyone for two months and normalization is some more months away. Everyone one knows that neither Modi nor BJP are taint less and their past & present are full of scars. Today BJP is the most cash funded party. The worst is that his address is stoically silent about 100+ bank queue deaths of aged and women indicating his remorselessness.

Lack of preparation results in mistakes. The best way to handle mistake is (1) to realize, (2) don't dwell on it, (3) to admit the mistake, (4) to apologize and (5) never repeat it. Modi attempting to dwell on quack advised demonetization policy and shabbily implemented as a great achievement and attempting to project it as a battle between the “honest and dishonest“ reflects his hypocrisy and dishonesty.

Opposition parties are so much divided, Modi is politically safe now. But in coming months elections in UP, Punjab, Uttakhand, Manipur & Goa will become acid test for Modi. The present indications are that at least 30% of people effected by demonetization are disgusted with Modinomics & Jalebinomics and that would be too much for BJP & Modi to overcome.

While Congress was certainly bad in the past, BJP is no better in the present. Time and again BJP following Congress model mismanagement & corruption and in addition meddling with lives and livelihoods of poorer sections has proved that they are worse than Congress. I will not be surprised if Congress returns to power in 2019 and the credit goes to Modi alone and BJP for its lack of inner party democracy.

Ironically, no one including his cabinet ministers have any guts to tell Modi about truth and realities. They are worse than Indira Gandhi cabinet in 1975. At least four heads must roll, for this national fiasco. In my view they are Modi, Jaitley, Urjit Patel and Shaktinath Das.

My View:
You don't have to be an economist to advice to live with in your means, keep debt minimum, save something for winter months etc while managing home. The same thing is more or less applicable even for nation. Modi instead of touring entire world and projecting that India is an investment haven while ratings are just a notch above junk status, would have focused on clean administration, managing national priorities aligning with people's aspirations, especially that of poorer sections. Modi hobnobbing with rich & famous and working just for them is unpardonable. Demonetization is a quack advised, politically motivated economic disaster. Modi lobbying with rating agencies for credit rating upgrading and their blunt rejection is an insult to us. Modi's bullet train project between Ahmadabad & Mumbai at an expenditure of Rs.100,000 crores (despite 70% soft loan) is an immediate drain of Rs.30,000 crores for exchequer and when completed, who will travel by that train with ticket of Rs.3,000 equivalent to air ticket? A well maintained and well managed house or nation will definitely attract foreigners and their investments.