Sunday, September 08, 2019

Everyone is at it. Modi is the best.

"Gloom surrounds the end of the decade of the 2010s," wrote SA Aiyer. "This is not just a cyclical slowdown. Something deeper has gone seriously wrong." "The main reason is our third-rate education system." "India produces millions of third-rate graduates from third-rate universities who are just unemployable." "All focus much more on creating ever more quotas in educational institutions and jobs." "China has overtaken the US as the largest producer of academic papers published in journals. No Indian political party campaigns for anything similar, and instead all clamor for more educational quotas and subsidies." "In Japan, Abe has presided over what's possibly the longest economic expansion in its post-World War II despite the burden of an aging population," wrote A Mukherjee. "Modi didn't become India's Abe, but he did preside over half a Japanese style lost decade." Japan is a rich country, whereas Prime Minister Modi is working for the poor. To help the poor Modi introduced price controls on drugs and medical devices but this is wrong, wrote Prof A Bose. "In any competitive market, producers are already driven by competition to sell at the lowest price point they can afford. If you set a price that is below this mark, they will have to stop manufacturing," wrote A Varma. To help create jobs for the poor the government increased customs duties on a range of imports in 2018. Duty hikes will do little to help local manufacturing or the rupee, wrote Jethmalani and Pengonda. Yet it was enough to anger the US whose Commerce Secretary Wilbur Ross said that India has "overly restrictive market access barriers". "We are looking at a variety of other unfair actions (by India) that may provoke us to take some other additional action," said US Trade Representative Robert Lighthizer. The US is the largest export market for India, so annoying the US is not our interest. We had a trade surplus of $24.2 billion with the US in 2018. Subsidies are the mainstay to help the poor. "Those who supported Modi prior to his election in 2014 imagining that he would lead India away from populist economics must be kicking themselves now that he's turned out to be an arch populist himself," wrote M Sharma. "In the absence of incentives to invest in implementation, during elections, the politics of welfare is inevitably reduced to a political competition for populist handouts and cash," wrote Yamini Aiyer. "This is what political scientists have termed 'vote buying'." Modi just happens to be the best at it. While loans to businesses have declined, with loans to developers down by 40% and loans for cars and two-wheelers down by 17%, loans to the poor increased by "26.1% between July 2018 and July 2019". And loan waivers encourage them not to repay. India lost a decade. Modi gained. 

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