Sunday, May 19, 2019

No one is talking of the economy. That is reform.

The general elections ended yesterday and immediately there was an outburst of exit polls most of which give a clear majority to the National Democratic Alliance (NDA) which includes the Bharatiya Janata Party (BJP) of Prime Minister Narendra Modi. Except for one, all polls predict the NDA will get more than 272 seats required for majority in the Lok Sabha. Because elections are held in phases spread over 6 weeks the Elections Commission bans exit polls until completion of all the phases, so there is an explosion when poll booths close on the last day. When Modi won his first term in 2014, Prof V Dahejia predicted that he will shun 'big bang' economic reforms in favor of "relentless gradualism" like Canadian Prime Minister Stephen Harper. Modi gave up on reforms after "monogrammed bespoke suit debacle during President Barack Obama's Republic Day visit in January 2016" which invited the jibe of "suit boot ki sarkar", which meant a government of the elite, from Congress President Rahul Gandhi. "Gandhi's taunt, and his own flamboyant sartorial zeal, made the erstwhile common-man-turned-prime-minister  appear aloof and arrogant, he and his government having occupied with alacrity the Lutyens bungalows of departed Congress apparatchiks." "The Central Public Works Department (CPWD) has spent more than Rs 100 crore (Rs 1 billion) on the renovation and furnishing of the bungalows and offices of Union Ministers over the last five years," was the answer to a Right to Information (RTI) query. In 2014, Modi promised "minimum government, maximum governance" but has a total of 74 ministers in his cabinet. Foreign and domestic travel by ministers cost a total of Rs 3.94 billion while Modi's foreign visits cost a total of Rs 20.21 billion. As for maximum governance, Modi started new welfare schemes while continuing with all the old ones. "The deeper reason for the drift away from reforms (however fitfully attempted) toward an eventual U-turn to welfarism, is the lack of an ideological core -- of an idea, a theory of where Modi wanted the nation to go in terms of economic policy." High retail inflation was blamed for the election defeat of Congress in 2014 but persistent low inflation is the problem for the Modi government. Price pressures have fallen because of falling consumption levels, as shown by falling sales of cars and fast moving consumer goods (FMCG). There are two ways to manage bad news. One is to appoint lackeys as heads of government institutions who suppress key information, and the other is to spend $640 million on advertisements to glorify oneself. The country may have to pay a steep price if "the Overton window has shifted, or narrowed, and economic reform vanishes from acceptable public discourse for years to come". The most successful 'reform' is to win elections. Modi seems to have succeeded.

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