Dear Members,
It was a beautiful Sunday morning with some light drizzle, while enjoying masala chai I was trying to catch up with the news. Alas! My enjoyment disappeared with the immensely distressing news…Eighteen Indian soldiers were martyred by Pakistani infiltrators using grenades and AK 47 rifles. Uri, the picturesque garrison town at the border had plumes of smoke emanating from the site where our Indian soldiers sleeping in tents were killed. The four militants were promptly neutralized in a shoot-out with the Indian army, but the dreams and happiness of eighteen families were irrevocably shattered.
Over the past few decades, Pakistan has been ravaged by its stupidity and short-sightedness. It allowed religious fundamentalism to proliferate unfettered and today it is repeatedly bitten by the monster it nurtured. Its economy is in a downturn; exports are negligible and remittances are contracting drastically. Hardliner Army Chief calls the shots while Prime Minister has been effectively reduced to a puppet. In an attempt to distract its suffering and disgruntled population, it is desperately raking up the Kashmir issue.
Pakistan appears to be spoiling for a fight; from Kargil to Pathankot Air Station and now the army camp in Uri. India has always exercised restraint, but now India has gone on the offensive! Moving quietly but decisively it responded with a campaign of prudent and well-timed initiatives.
First off the block was a stinging rejoinder to Nawaz Sharif’s vitriolic speech at the UN. First Secretary Eenam Gambir minced no words no words as she dubbed Pakistan as the epicenter of terrorism, adding that the effects of its toxic curriculum (imbibed in its extremist madrassas) is felt across the world. She boldly accused Pakistan of channelizing billions of dollars of international aid to training and financing terrorist groups.
International condemnation of the Uri terror attack put Pakistan in a spot. With Nawaz Sharif’s plan in shambles, India pulled out yet another ace as it brought the Indus Water Treaty up for review, with Prime Minister Modi saying “blood and water can’t flow together”. It followed this diversion with External Affairs Minister Sushma Swaraj lambasting Pakistan at the UN for nurturing and harbouring terrorists responsible for attacks worldwide. She bluntly underlined the fact that “Jammu and Kashmir is an integral part of India and will always remain so.”
With Pakistan clearly on a back foot, it was time for a master stroke. On a moonless night, two hundred Indian para commandos crossed the Line of Control and destroyed seven terror launch pads. The surgical strikes are believed to have killed at least fifty terrorists and more importantly sent an unequivocal message to Pakistan…that India will not remain complacent any more.
Having gained traction in the diplomatic arena, India needs to be more proactive than reactive. India must continue a concerted and sustained diplomatic campaign to isolate Pakistan. The US, EU and Middle East countries need to be consistently addressed to severely limit aid and trade support to Pakistan in order to force it to give up cross border terrorism.
“A day will come when people of Pakistan will go against its own government to fight terrorism,”
PM Modi.
Bright Spot? – Modi vs Moody
The silver lining through all the dastardly acts discussed earlier and international economic turbulence is that India’s economy is growing at over 7%. The Prime Minister, Shri Narendra Modi, speaking at a global summit took pains to reiterate the many achievements of his government. He showcased, increase in FDI, reining inflation, lowest balance of payment deficit and fiscal discipline as achievements, so far, of the Government. Another strong factor of fiscal discipline to be considered is the Debt/GDP (%). India had Debt/GDP in C.Y.2015 of 140 as against the Global Average of 235. This would be more glaringly appreciative when considered against this ratio of some of the Developed Markets(DMs). US – 251, Euro Area – 291, Japan – 481 and UK – 279. This is despite having a growth momentum of more than 7% in GDP.
Jan Dhan Yojana, one of the key initiatives of the government has been hailed as the world’s largest and most successful financial inclusion plan. Two hundred million people have been introduced to the advantages of banking and their accounts today have a balance exceeding a phenomenal $4 billion! It’s relatively new Startup India, Stand-Up India and MUDRA programs are a step in the right direction as they are designed to empower youth, women, SC/ST and OBCs.
In the sphere of good governance, the government has already identified 1,877 old and unnecessary laws. 125 of these have already been repealed, while 758 are in an advanced process of being pulled out of the system. The government’s focus on good governance is highly visible in the passing of the Goods and Services Tax too. Cleared in both houses in the first week of August, the government is now working overtime to ensure its smooth rollout on 1st April 2017.
All these concerted efforts of the government seem to be bearing fruit. Some big global financial institutions have applauded India’s growth rates; and the string of reforms that have been implemented and are already transforming lives.
To take one example, Morgan Stanley Research, in its latest Global Macro Briefing, while dealing with India in Country Highlights has stated that the growth recovery is becoming more broad based, driven by public capex, FDI and consumption. Improved macro-stability conditions should minimize the impact from external uncertainties.
These global financial institutions believe India is “on the cusp of a major growth phase” and “looks to be firing at last”. With the global growth rates inching along, India’s enormous market potential appears to be an oasis for international investors.
The makeover of India is happening due to tone at the Top – Mr. Narendra Modi’s approach of working like a Rock Star for the progress of India. He has been walking on the stage for momentous days of India and playing his heart out. He is delivering the performance of his life. He has instilled a sense of confidence and urgency in his team and also in each and every Indian to deliver the best.
Here I would like to quote Henry David Thoureau, an American Poet – “I know of no more encouraging fact than the unquestiobale ability of a human being to elevate their life by conscious endeavor.”
However, not all share this gung-ho sentiment. International credit rating giant Moody’s has not been swayed by all the hype and gloss of a media-savvy government. India continues to languish with a ‘Baa3’ rating – the lowest grade of investment rating. India’s pitch for an upgrade has been firmly dashed by a plethora of serious issues; which range from spiraling debt, stagnant revenue, massive NPAs in public sector banks, the slow pace of policy reforms, corruption in some sectors, geopolitical risks and the reluctance of private sector investments.
So is the Indian growth story, economy and prospects all hunky dory? You have heard it from the well informed, Shri “Modi” and got a nutshell analysis from “Moody’s”, the no-nonsense global credit rating agency and now it’s time for you to give India your very own rating!
“In economics there are no miracles, there are only consequences-ruthless and inescapable consequences. Inflation is the invisible tax which has never been passed by Parliament”.
Nani Palkhivala
After the busy ‘extended’ tax season, this Diwali let us take an opportunity to take a break from the routine of multi-tasking and rushing from one deadline to another and instead spend quality time with our loved ones. Let us embrace these celebrations with open hearts and relearn how to enjoy life.
Wishing you all a happy and joyous Deepavali!
With warm regards,
Chetan Shah
