So, I sit down to write this after listening to the longest Budget speech in Indian history. And, was I dazzled? Did it leave me filled with hope for India’s future? No. Let me explain why. As someone who believes India has remained poor only because we have allowed the state too much interference in the economy in the name of socialism, I have waited six years for Narendra Modi to deliver on the promises he made before he became prime minister. Remember how he talked then of how it was necessary for India to start dreaming of prosperity instead of just ‘alleviating poverty’? Remember how he used to say that he saw no reason for India to be a poor country? Remember how he said government had no business to be in business?
His words were music to my ears. When he talked of “parivartan”, I believed that he understood that socialism had failed the Indian people. I believed that during his long years as a chief minister he had noticed how officials (elected and otherwise) had created abysmal standards of educational and healthcare services for ‘the people’ while never deigning to send their own children to government schools or hospitals. I believed he had noticed that private enterprise had been crushed by licenses, quotas and taxes imposed by officials who strutted about like potentates because of the power they had to destroy the men and women who in fact create India’s wealth.
This column supported Modi as prime minister because of the hope that he meant what he said when he promised change. In economic terms, that change has never come. There has so far not been a single Budget that has brought real change like that one in 1991 that began the end of the licence raj. Having said this, it is important that I add that P V Narasimha Rao made this historic reform not from an ideological change of heart but because India was broke. He turned failure into an opportunity. So I hoped that at this time, when unemployment is higher than it has been in 45 years and when the economic slowdown is our biggest political problem, this Budget would deliver dramatic change.
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The Prime Minister likes to say that under him there have been rapid changes on the ‘ease of doing business’ front. He points to the number of notches India has jumped on international measures. Now that we are no longer the fastest growing major economy, he has stopped boasting about this and the truth is that since his second term began, he hardly mentions the economy. But it is time that he started paying it more attention or we could see more and more campuses erupt in protest because of the hopelessness young Indians feel at the absence of new jobs. The spectre of unemployment haunts our campuses.
Jobs should not be hard to create if it had really become easier to do business. It has actually become harder because in place of the old licence raj there is now a regulator raj with officials poking their nose into areas in the private sector where they have no business to. Important businessmen have gone on record to point out that regulators have such a long leash since Modi became prime minister that they come up with new regulations every other day. Big businessmen somehow manage to survive. Small businesses can simply not cope with the constant uncertainty.
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Modi’s ministers and officials behave just like those potentates of licence raj days. Their arrogance and threats have created the atmosphere of fear that Rahul Bajaj so eloquently described at that gathering in Mumbai over which the Home Minister presided. Instead of listening to him the BJP activated its trolls on Twitter to tear him to shreds. Rahul Bajaj is a powerful businessman and can fend for himself, it is smaller entrepreneurs who are truly vulnerable. They have been arrested at airports, fined for accepting more cash payments than allowed even when they have deposited their earnings in banks and paid tax on them. Many have been so defeated by the complexities of GST that they have shut shop. So the most urgent “parivartan” that we need is for regulators, tax inspectors and their brethren to be put back on a short leash.
The other urgent change that is needed is for government to honour its contracts. Fine Indian companies have been dragged to the verge of bankruptcy because government departments have embroiled them in court cases and arbitration proceedings just to avoid paying their bills. Has the Prime Minister noticed that on the security of contracts India continues to languish at the bottom on international measures for the ease of doing business?
From farm sector to personal finance, here’s The Indian Express’ full coverage of Budget 2020
The Finance Minister’s interminable Budget speech left me despondent because I see no signs of India dumping socialism and statism just yet.
This article first appeared in the print edition on February 2, 2020 under the title ‘No economic parivartan yet’.