And THIS is a balanced view? That Modi bit the bullet and introduced vitally necessary measures to put bank borrowings back onto a rational foundation, that this and the induction of large segments of the economy to the organised sector, the reform of the building and construction industry and introduction of GST will all be beneficial in the long term, but that these may hurt the implementing political grouping and allow the return of all those who contributed to the growth of the problem in the first place?
If this is balance, how is it not mentioned that the vast bulk of bank funds gone funny belongs to the business houses close to the Modi government? and that other business houses have generally backed the Modi government financially? That mention might have led readers to ponder if it is reasonable to believe that business organisations tend to nurse governments that are pledged to act against what is represented as their unfair advantage.
Or was this the Modi surgical strike against the business community? Delivered unexpectedly because it was essential?
On another aspect, what led to the unprecedented inefficiency of the implementation of all these? Right down from printing notes that could not fit into banks' ATMs? Coming to GST, there are many indicators of something less than the almost scriptural omniscience that is claimed There have been problems in implementing GST, because in the hurry to bring in a very impressive measure, there was little or no preparation done to equip trade and commerce to cope with the practicalities of the situation. The measure itself, as the report very carefully fails to mention, was sought to be introduced right through the UPA II, and the dogged opposition to it coming in was from <gasp!> the very people who are today seeking credit for bringing it in. Since it may not affect NRIs who are not currently planning to invest in housing, many of us may be unaware of the massive confusion due to the way that RERA is being interpreted and implemented by the states, each of which seem to have their own way of doing things. This, including the states ruled by the BJP.
The Economist is highly readable, and usually sound on economics, as sound as an institution devoted to the cause of IMF intervention can be. Its right wing slant on anything and everything has never been concealed, but this report is an example of how it does all right on the news, but screws up spectacularly on the views.
May the heavens protect us from such balance.
Sirjee I did qualify as balanced
regarding Gibbs specific queries (mostly intent based). I guess I should have been more specific regarding that....yes this article does avoid discussing some real problems so its not balanced overall.
Implementation wise, yes there will always be much hiccups and problems and issues. To analyse all those need much more data to come in for at least this remaining fiscal year....and probably next one too....in concert with the actual first true survey of indian labour market (rather than simply saying jobs are created only in formal sector and at more than 10 employee/enterprise level when the median number is 5 times lower).
I for one am astounded at logic some people use in saying the new GDP series is rubbish when the numbers are "high" and then use those same GDP series numbers to attack economic policy when they are low. They are not being consistent.
Either the growth numbers are rubbish (and thus lets focus on other consumption and production markers after we debate which are most important/worthy, esp high frequency ones, period) or they are not rubbish in which case lets dicuss their applicability to real (job creation + formalisation based + socioeconomic development) economic growth. But selectively using them is not doing justice to the argument being forwarded.
My major criticism of this administration is indeed its slow response to NPA situation and only one major liquidity bypass (MUDRA) during the protracted "surgery". NPA full charted resolution should have been the thing done first (rather than all the political capital expended on Land acquisition bill etc) along with few more bypasses past just MUDRA for recapitalisation at the base while the pipes higher up the pyramid are sorted out. However much of it is hindsight and hindsight is 20/20. If you feel it was deliberately addressed slowly because the prime business interests are pro-BJP pro Modi etc (and thus influenced the time line etc), why was the UPA-II so ham-fisted in supporting them with these wasteful, largely non-market driven loans (as some distorted Q-E as though India is a developed country with huge buffers of captive wealth and no deployed growth potential) to begin with...knowing such business interests are not inclined to them politically? Some kind of bribe by UPA?
The UPA also had plenty of time and means to start the cure (or prevention of the disease depending how you see it) during their tenure....even during UPA-I when the NPA started to first show signs of being a big problem (because the growth was largely foreign equity driven asset-based to begin with, hence few formal jobs created per dollar invested and "growth" generated...and that was crucially NEVER addressed even when the govt was not mostly paralysed by whatever corruption scandal was going on at the time). I am not excusing BJP and Modi here in some absolute way, but the fact they at least got to the meat of the issue in the 1st term eventually is lot better than their predecessors on the issue. I will judge as one complete finished term rather than judging everything in just one short term window where massive fog exists from 2 major shakes to the economy with no resolution on the new equilibrium/resettling. There are a number of valid reasons for optimism long term as the equilibrium settles, plenty of markers are already suggesting so, I say give it time and we can see who is right and wrong in the end or some varying shade of both:
http://economictimes.indiatimes.com...own-an-aberration-wb/articleshow/60960523.cms
A huge crux of the matter (structurally) also lies with State bureaucracy. Why does TN as atrocious as its state govts have been at the top, have much more industrialisation and development than say UP and northern interior? Those bureaucracy (basic delivery and realised transparency and velocity of resource re-allocation) issues are something that federal govt in centre has little to no control over. It is on the people of India to see which regions have done better and vote for people at their more local level immediately that do something as basic as carbon-copy it....and then judge the results. We all had the same federal govts all this time from independence...there is only so much we can assign to them given the current variation of development in India on state-level. To me thats the real issue for sustainable growth (i.e bringing whats worked to areas where nothing of the sort has really been done and thus are lagging big time - largely because of bureaucracy quality). I would wager thats about 2/3rds of the real "institutional" static problem in such regions...and only about 1/3rd federal based.
Anyways I digress, I will watch the quarters data for this Fiscal Year on all markers (not just GDP growth), I suggest you do the same. Lets revisit next year....if growth stays depressed and NPA resolution still huge problem, you will be largely right. If growth has rebounded (and looking to have better basis on real ground growth rather than asset inflation of previous admins), better jobs creation (esp based on better jobs data spectrum at all levels) and NPA is being curtailed (reversing the declining GFCF for example), then this govt stands largely vindicated in its approach. But the basic thing thats "balanced" I wanted to address with gibbs is that during the medicine time period, we cannot really comment and guarantee on the long term effects....that has to be realised on the ground to judge on.
