On the eve of Prime Minister Narendra Modi’s hardsell visit to the World Economic Forum in Davos, Switzerland, where he will meet US president Donald Trump, the government on Wednesday opened up Air India for divestment upto 49 per cent and approved 100 per cent FDI in single-brand retail through the automatic route.
The PM is a keynote speaker at the Davos inaugural on January 23. Only hours before the FDI announcement, the World Bank patted India on the back, saying that despite setbacks from GST and demonetization, the economy in 2017 had touched 6.7 per cent and would rise to 7.3 per cent in 2018. India, the Bank said, has “enormous potential,” in what seems to be as much a political as an economic assessment of the country.
No matter that Central Statistical Organisation (CSO) estimates have said that the GDP will only touch 6.5 per cent this year, which is even lower than what the RBI had estimated, at 6.7 per cent. If CSO figures are correct, then this will be the worst year since the Modi government came to power – 8 per cent in 2015-16, 7.1 per cent in 2016-17 and 6.5 per cent in 2017-18.
The prime minister, clearly, realizes that he has to change both perception as well as ground reality if he has to win the 2019 election – today’s economic reforms, long overdue, are an effort to reverse the perception that the Modi government has lost the plot through its devastating decision to demonetize, which was followed up by not having properly thought through GST.
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“It’s the economy, stupid”, will definitely be the slogan of 2019 – a fore-runner of which could be seen in the recent Gujarat election. The prime minister realizes that something must be done to contain unemployment and give jobs to the one million or so youths seeking jobs every month (about 12 million a year).
As the Modi government presents its last full-fledged Budget in a few weeks, the PM knows that this is his last chance to showcase himself as an enthusiastic reformer, eager to embrace the world. What better way to do this than to rub shoulders with some of the wealthiest people in the world who are coming to Davos? Trump will be there – despite the ‘New York Times’ having panned him for going – and it is more than likely that the US president will push India hard to “buy American”.
Modi’s top-heavy delegation to Davos includes Finance minister Arun Jaitley, Commerce minister Suresh Prabhu, Railways Minister Piyush Goyal, Oil Minister Dharmendra Pradhan, Minister of State for External Affairs MJ Akbar and Minister of State (Independent Charge) in the PMO Jitendra Singh.
Andhra Pradesh chief minister Chandrababu Naidu and Maharashtra chief minister Devendra Fadnavis are also travelling with him. Certainly, the Modi government will play into American fears of the Chinese “subjugating” Asian-Pacific markets – notwithstanding the fact that the insular Trump has withdrawn from the Trans-Pacific Partnership trade network that linked democracies across the region.
Watch out for the Modi-Trump embraces, then, on the frozen ski slopes of Davos. Apart from thanking the PM for personally welcoming his daughter, Ivanka, in Hyderabad a couple of months ago, Trump will hope that Modi lays out the red carpet for everything from iPhones to aircrafts.
But Davos already has a competitor and the show is playing out in Shanghai and Beijing, even as we speak – alternatively, The China Factor will certainly be the elephant in the room in Davos, especially because Xi Jinping was the keynote last year and comparisons with Modi this year will be natural.
French president Emmanuel Macron is being wooed by Beijing, praising free trade, advocating joint action against climate change and criticizing protectionism – no prizes for guessing that the unspoken target of Macron and Xi’s ire is Trump. Meanwhile, former British prime minister David Cameron is in Shanghai, charging 12,000 pounds for a place at the Shanghai International Ball and Leader’s Forum and a selfie.