Friday, May 15, 2020

We prefer a simple life on a dirt road.

The Finance Minister Nirmala Sitharaman required three sessions to explain the 'mother of all stimuli' of Rs 20 trillion announced by Prime Minister Narendra Modi. "Dubbed Atmanirbhar Bharat Abhiyan (Self-reliance campaign for India), this mother-of-all-incentives puts bold reforms at the heart of Modi's stated plan to make India self-reliant so that any other crisis that may emerge in the future could be efficiently tackled." "India as a country has maintained a trade deficit as it imports more goods than it exports," wrote Karan Bhasin. "There is a possibility of raising import duties on a wide range of final goods and services," to protect local industries. Unfortunately, others have the same idea. "President Donald Trump has threatened to slap new taxes on American companies like Apple to dissuade them from moving their manufacturing bases from China to countries like India and Ireland instead of the US amidst the Covid-19 pandemic." "I said we shouldn't have supply chains. We should have them all in the United States," said Trump. "Union Minister Nitin Gadkari on Tuesday said the government was considering introducing a policy on import substitution and urged India Inc to upgrade technologically and come with cost-effective substitutes to reduce the country's inward shipment." It is not clear why companies would want to waste money on upgrading when they are being urged to provide cheap products free from competition from foreign companies. "But the Indian economy needs to be wary of trying to gain domestic competitiveness in every sector of the economy," wrote Prof Amit Kapoor & Chirag Yadav. That would take us back to pre-1980 India. "Every political party, from the communists to the BJP, has always sworn by self-reliance," wrote Sanjaya Baru. "For India to be truly self-reliant and self-confident, public investment in education, human capability and research and development has to increase." Trouble is, there is no money. "We don't have money. Our people are poor. Our government is poor," wrote Chetan Bhagat. "Here's what we think is good: Living a simple life (and hence GDP contracting, consumption reducing behavior is great)," "letting the government regulate and take care of everything (particularly those business guys who are all bad and therefore sarkari babu needs to control them) and worshiping politicians like leaders of religious cults (and therefore not holding them accountable)." "Global smartphone, FMCG, electronics and apparel companies are confident that their customers in India will stay loyal to them even after Prime Minister Modi's call to support local businesses." What they are not saying is that Indians are willing to pay more to buy superior quality products. "Sadly, our current turn to import substitution threatens to return us from the turnpike on which we have been traveling all these years on to the dirt road," wrote Prof Arvind Panagariya in 2018. The poor cannot afford to complain, they bear every assault on them. Why change?

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