16 August 2019 16:43:42 IST

A long-time ‘deskie’, Baskar has spent much of his journalism career on the editorial desk. A keen follower of economic and political matters, he likes to view economic issues from a political economy lens as he believes the economic structure of a society is deeply embedded in its political and social ethos. Apart from writing the PolitEco column for BLoC, Baskar writes book reviews and articles on politics, economics and sports for the BL web edition. Reading and watching films are his other interests, though the choice of books and films are rather eclectic.  A keen follower of sports, especially his beloved Tottenham Hotspur FC, Baskar is an avid long-distance runner.  He hopes to learn music some day!

Industry's Independence Day blues

The PM’s diktat to respect wealth creators is at odds with the Centre’s trust deficit vis-à-vis industry

Right from the Balakot air strikes in late February to the abrogation of Article 370 in early August, Prime Minister Narendra Modi and the BJP party have been riding a wave. The scrapping of Article 370 and the cleaving of Jammu and Kashmir into two union territories was met with widespread applause across the country.

The way the ruling party adroitly divided the Opposition on this issue left even the BJP critics marvelling, albeit grudgingly, at the party’s slick political manouevering. Regional parties, such as the TRC, TDP, AIADMK and the Biju Janata Dal, gushing over the government’s ‘historic’ decision would have made the Modi-Shah duo share a quiet chuckle.

The scrapping of the Article 370 has also left the Congress, still the country’s principal Opposition party, in a curious bind. Younger leaders such as Jyotiraditya Scindia and Milind Deora were openly in favour of it, which was in complete contrast to the stand taken by senior leaders such as Ghulam Nabi Azad, P Chidambaram and Manish Tiwari.

Living on borrowed time

Among the people too, there seems to be a broad consensus that Article 370 was living on borrowed time, though there was criticism from certain quarters about the manner in which it was implemented. The TV media, not surprisingly, sang the government’s praises though opinion in the print media was, thankfully, more diverse and nuanced.

For the time being at least Modi and his government seem to be riding the crest of a popularity wave. With more than 300 MPs in the Lok Sabha the Prime Minister must have felt that this was the right time to scrap this Article, something that was on the party’s agenda since its inception. AB Vajpayee, when he was Prime Minister, frankly admitted that he couldn’t scrap Article 370 as he didn’t have the numbers.

For now the government seems to be more than happy in passing controversial Bills such as criminalising triple talaq and scrapping of Article 370 in Parliament. But there seems to be a curious silence, or even apathy, when it comes to economic issues. There is little doubt that the economy is going through a serious slowdown. All the numbers are pointing to that. The government itself, soon after the elections, admitted that the economy had hit a growth bump. Government data, an issue of major controversy a few months ago, showed that the economy grew only at 5.8 per cent in the fourth quarter of 2018-19.

What about the economy?

The Economic Survey and the Budget, and the Prime Minister himself, never tire of talking about making India a $5-trillion economy by 2025. For this the economy has to grow consistently over 8 per cent for the next few years, when current growth is barely at 6 per cent. The Budget itself had no stimulus measures with the Finance Minister pleading a cramped fiscal space.

The automobile sector’s crisis is so serious that it has long left the rarefied pages of the pink papers and is now a staple on the front pages of general dailies. The sector is staring at massive job losses and dealerships are closing down across the country.

The RBI on its part has cut rates but that is going to do little to revive lending and investments when the problem is anaemic consumer demand.

Given the serious economic situation, the Prime Minister’s exhortation to the people in his Independence Day speech that industrialists must be treated as ‘wealth creators’ was curious. Even more baffling was the bit on population explosion and the need to have smaller families.

When Modi was Gujarat Chief Minister for 13 long years he was feted as being the most business-friendly politician in the country. Industry captains flocked to his global investor summits in Gujarat, committing huge sums in investments. The alacrity with which Modi allotted land in Sanand to Ratan Tata’s Nano project after it had to exit West Bengal earned him massive praise from the business community. So it is ironical to see the massive trust deficit today between the Modi government and industry.

The government’s proposal to make non-compliance with CSR rules by industry a criminal offence led to a lot of hand-wringing across sectors though now the government is rethinking this issue.

Industry captains, at a recent meeting with the Finance Minister, had pleaded for a massive ‘quick-fix’ stimulus package.

After his Independence Day speech the Prime Minister went to the Finance Ministry to review the economic conditions with the Finance Minister and other officials. One hopes that some serious sector-specific initiatives will soon emerge. Because Modi’s massive political capital is not going to last forever.