Delhi CM morphed from anti-Modi crusader to a pro-Delhi one; Modi too needs to re-focus, to getting jobs & the economy going
Most Delhiites, indeed all Indians, would recall with horror Delhi chief minister Arvind Kejriwal, covered with a blue quilt, going to sleep on the road near the Rail Bhawan days before 2014 Republic Day in protest against the police refusing to follow his orders; his threat to fill Rajpath with lakhs of supporters made it likely that, for the first time in 55 years, India may not have had a Republic Day parade on Rajpath.
Kejriwal never considered himself just the chief minister of a half-state, he always felt he was India’s rightful prime minister and, at one point, even filed an FIR against central government ministers who raised gas prices; he alleged this was meant to benefit Mukesh Ambani and, since the decision was taken in Delhi, he was well within his rights to file the FIR! His behavior got worse once Modi came to power, and few days ended without the Delhi chief minister getting into a public squabble; while prime minister Narendra Modi was also to blame since Delhi’s LG made it difficult for Kejriwal to function, but Kejriwal took the fight to new lows and, even as late as March last year, he said that only parents who wanted their children to be chowkidaars would vote for Modi.
And then, all of a sudden, the constant protester turned a new leaf. He no longer felt he had to bait the PM all the time, he just put his head down and focused on Delhi’s education and water, he no longer demanded full-statehood for Delhi; he even refused to rise to the bait on Shaheen Bagh despite both the Congress and the BJP trying to draw him. And look at how it paid off! Despite both the home minister and the prime minister indulging in ugly religious polarisation, Kejriwal trounced both parties.
There’s a lesson here for Modi, to take stock of where his government is headed and to reinvent himself. While it is true that elections in Delhi aren’t anywhere near being an indicator of the future – the BJP swept Delhi in the 2014 parliamentary election, but AAP swept the Delhi assembly within a few months of this in 2015 – the big Delhi lesson is that middle classes (or those aspiring to be that) find it difficult to vote just for Hinduism; middle classes, by their definition, prefer stability, want jobs, etc. 24×7 on-edge threats of violence that make it look as if a second partition is something that is just around the corner frighten the middle class as well as investors. And while opinion is divided on whether schools or medical facilities actually improved under Kejriwal, there can be no doubt that this is something everyone wants for themselves, and their children. If all of this is delivered by a pro-Hindu government, so much the better; but being pro-Hindu is one thing, being anti-Muslim quite another.
That is why Modi has to switch tracks and strongly focus on the economy. In a business-as-usual scenario, India is unlikely to grow at more than 5-6% for quite a few years since none of the levers that can lift this growth up – consumption, investment or exports – are really working. And even if they were to pick up, with no credible solution found to fix banks/NBFCs, the credit crunch will keep dampening the growth impulse; and though moves have been made to ostensibly protect bankers while taking business decisions, till bankers don’t see this working, it is not clear they will even want to lend … And with the economy in trouble, Modi no longer has the tax cushion he had in his first term – once global oil prices crashed – to deliver much to the poor via increased government spending.
Such is the lack of faith in what India has to offer that, despite the US-China trade war, and now the coronavirus, you still don’t have companies running out of China to set up shop here. This is because, six months after the PMO first spoke of the need to offer incentives to bring these firms here, the package remains stuck; more important, firms are not even clear the government will remain as committed to fixing their problems; this column has, over the years, documented how in far too many cases, the government – and not just this one – has failed to address legitimate issues faced by firms. Indeed, new problems got created with, for instance, the retrospective tax or, now, the AGR case for telecom firms.
A small thought experiment may not be out of place here: if the world is alarmed about the coronavirus, it is not only because of the deaths it can cause, it is also because the global supply chain will go for a toss since a very large part of the production takes place in China; several big firms have already announced suspension of output and prices will soon start rising as critical supplies start falling short across industry after industry. With China accounting for 16% of global GDP versus 4% at the time of the SARS outbreak in 2003, the world will be badly hit if China is hit. Were something similar to happen in India, it would matter far less; most would not even care.
Fixing things is not easy since India is inhospitable for investors at so many levels; that is why even the massive cut in corporate tax rates didn’t spur investments, so not only does Modi need to make dramatic changes in most areas – much like the 1991 reforms – he needs to be aware the impact won’t be seen in a hurry. To give one example, you can lower tax rates, but mining firms – 55% of India’s imports comprise minerals including oil – won’t come here till getting environment and other clearances is quicker (remember Niyamgiri?); even if that is done, and that is a big if, mining firms won’t come in till the government levies are as high as they are. To put this in perspective, while the first step of allowing commercial coal mining has already taken several years, the first mine has not even been auctioned as yet.
Comparing India with India, as most governments do, is easy and lulls you into complacence. The number of patents filings, to cite one example, rose 33.8% in 2014-2018, the patents granted by 90.9% and those in force by 23.5%. That looks impressive, but China’s filings rose 74.3%, patents granted by 87.8% and those in force by 97.8%. And this is when China is so far ahead: 1.5 million patents filed in 2018 versus India’s 30,036 and 2.4 million patents in force versus India’s 60,865! India is so far behind, not just in conventional manufacturing but even in preparing for the future; even in terms of military might, China’s massive GDP growth has ensured that while India defence budget is $66.5 billion, China’s is $250 billion.
To the extent the coronavirus slows China down, India will get some breathing room, but that’s about all. India’s economic challenges are so huge, focusing on Hindutva is just distracting us from what needs to be done. And getting reelected when the economy is doing badly isn’t a sure shot either.