Let us not claim that the more things change, the more they remain the same. India is structurally better today.
There is an ill wind blowing. And its tune is something like this. No matter where you look, India, under Modi, is not much different than India under the last years of the Sonia Gandhi-led UPA regime.
How credible is this appraisal? Not very. I will document 10 reasons—yes, count them—where the India of today is substantially different than the
India of yesterday. But before I do that, let me document two important areas in which the BJP performance is actually worse than even Sonia Gandhi could manage. Note the deliberate mention of Sonia Gandhi as the policy maker of UPA, not its prime minister Manmohan Singh. History will soon document—this has already started—that the previous 10 years had precious little to do with the intellectual qualities or policy direction of the economist Manmohan Singh or for that matter the lawyer P Chidambaram, but had everything to do with the welfare state and populist ideas of Sonia Gandhi. Further confirmation of this is received by the fact that undeterred by the humiliating and extraordinary loss of the Congress in the May 2014 elections, the heir-apparent, Rahul Gandhi, not only continues in the same vein as his mother, but is trying to outdo her with demagogic populism.
Where the BJP is possibly worse than UPA is in its pursuit of tax terrorism. I have yet to find anyone—anyone—with an adequate explanation of why the BJP pursued tax terrorism via MAT tax notices to FIIs. Chidambaram is absolutely right when he states that with a simple majority in the Lok Sabha, the Modi government can easily repeal this obnoxious law.
The second important area in which life is worse under BJP is in the non-economic arena. Apart from the unwarranted proclamation that all Indians must be Hindus until death do us part, there is the barrage of negative vibes, emanating mostly from Maharashtra and Madhya Pradesh. Recommending that the best place for women is on the delivery bed, banning of comedy, banning beef-consumption, preservation of cows at all costs (how holy is it to starve cows to death?)—what is going on? Two explanations: first, there is the BJP Cow Party (all correlations with the US Republican Tea party is not co-incidental) whose sole purpose is to take revenge on Modi for being the BJP leader, rather than one of their own. The second explanation is that the two chief ministers, Shivraj Singh Chouhan (MP) and Devendra Fadnavis (Maharashtra), maybe planning a long-run (cow) campaign to be the alternative to Modi. In this regard, they are no different than Rahul Gandhi in completely misjudging history and the mood of the electorate.
Otherwise, India has substantially changed. The biggest lie in the no-change demagoguery is that the BJP had little role in bringing down inflation—that it was all because of the fortuitous decline in the price of oil. A simple empirical fact disproves this conjecture. Even the most die-hard apologist for the Congress will concede that price behaviour before September 2014 had nothing to do with the decline in the price of oil (subsequent to September 2014). For the first nine months of 2014, consumer price inflation was at only 5% per annum; for the first nine months of 2013, CPI inflation was 9.3%. But, the smartest girl in the Congress class states that this is on the basis of seasonally-adjusted data and you know, such data are tricky.
A conventional and not-tricky data is inflation as measured by the GDP data for the agricultural sector, the source of considerable inflation in India over the last decade. For the first nine months in 2013, agricultural inflation (read food inflation) in India was 9.7%; in 2014, this figure had dropped to 5.1%!
The 2014 election campaign was fought on issues of inflation, corruption, and growth. Again, even the most rabid Congressman will admit that corruption at the highest levels (ministers) has been substantially reduced, if not eliminated. There are no financial scams today, just scams which have to do with politicians overstating their education. That in itself is progress because it reveals the worth our society is placing on education.
Regarding growth, most indicators are showing improvement. Conventionally measured year-on-year IIP growth registered 2.1% in March 2015, somewhat better than the minus 0.5% growth registered in March 2013. New GDP data has growth accelerating by at least 0.5 percentage points over the previous year.
But the Modi government’s greatest credit, and the greatest change brought about by it, is the beginning of the change in the mind-set of the Indian electorate. Making profit and creating jobs are no longer considered the work of the devil; labour laws are set to be changed in a big way; and the Neanderthal land acquisition law passed by the Congress is set to be dumped in the dustbin of history.
All these changes have to do with economic freedom. There is no example in history where an increased dose of economic freedom does not lead to accelerating growth. We are just witnessing the beginning of major positive change in India. So please, let us not lie and claim that the more things change, the more they remain the same. This time it is different.
Bhalla is contributing editor, The Financial Express, and co-author, with Ankur Choudhary, of Criconomics, now available on Kindle.