Narendra Modi has always been good at making speeches to which his audience swoons, but his performance at the Airtel Economic Times Global Business Summit last Friday was a class apart. Eloquence was not the main thing. He dreamed big, envisioning an Indian economy 10 times as large as today’s. He presented a cogent economic philosophy, radiated the confidence that he would be able to execute the strategy flowing from this vision and called upon everyone, particularly businessmen and entrepreneurs, to join a mass movement of development that would embrace everyone and enrich everyone, while the government provides succour to empower the poor and the vulnerable. Most notably, he called for social peace and cohesion, calling them prerequisites of growth, almost as if responding to his critics on this score.
Vaulting Reasonableness on Growth
Modi’s invocation of a $20-trillion Indian economy might sound like ambition gone berserk: the figure is 25 per cent bigger than the world’s biggest economy today, while the Indian economy is less than $2 trillion. But consider: a real growth of 9 per cent, which India had reached comfortably before the crisis, along with inflation of 5 per cent, means a 14 per cent rate of nominal growth. At that pace, the economy would double in five years, quadruple in 10, be eight times as large in 15, and be more than 10 times as large in less than 18 years. At high income levels, economies tend to slow down, but India’s demographic dividend would sustain for two decades more and productivity gains would more than offset inflation differentials with the US. A $20-trillion economy is, thus, quite a reasonable target. But no leader has till now shown the gumption to articulate such vaulting reasonableness, to fire the ambition of the country’s youth.
Modi elaborated, for the first time, what precisely he means by minimum government, maximum governance. The government has no business to be in business, he said, but should do five things: provide public goods, manage externalities — whether negative ones like pollution or positive ones such as the productivity gains from mass education and skilling — control market power of companies, fill information gaps and provide welfare to those on the margins. Technology would enable the government to be competent, non-corrupt and efficient. Digital India would also advance education, healthcare and financial inclusion.
Growth for Jobs, Welfare
The objective of reform is welfare. Some reform would be driven from the top, others from below, through popular adoption of innovation. Both are important. The state can incentivise an additional 20,000 MW of generation capacity, but an equal impact can be made by people willingly saving power. Cleaning the Ganga, Swachh Bharat and a vibrant tourism industry are campaigns that feed into one another, and can succeed only with mass participation that lives out the principle that Small is Beautiful. The state has to abandon its mindset of command and control and empower the people.
Talk is cheap, and walking the talk is the tough part. It is indeed welcome that PM Modi has committed himself to nurturing education and healthcare, uplift of the downtrodden and social cohesion. This would address concerns that his big business orientation would hurt social development and welfare. Most vitally, identifying social peace as a precondition for prosperity offers a foil to the spirit of schism embodied in the words and deeds of the larger Sangh Parivar on whose shoulders Modi rode to Raisina Hill. They have to heed the PM’s call for social cohesion, if India is to attain its potential as an economy and civilisation. The point is to uphold, not vitiate, India’s tradition of unity in diversity.
(Source: The Economic Times, dated 19-01-2015)
