It has been about 15 months of Modi rule (we still call it RULE in India and not Administration!)
The first 6 months honeymoon period delivered a great return on equity markets buoyed by expectations and the mostly right noises and declaration of INTENT.
Has the intent translated into great new ideas or paradigm changing actions?
My assessment is a NO.
What are the big moves on the economic issues thus far?
An ill advised and doomed Amendment to the Land Bill which smacks of Partisan behaviour between the country's stakeholders
A diluted GST bill (diluted from the previous version - with less coverage) - Even if the half bill goes through, it is a start... Hope some aggressive posturing by BJP on other issues does not jeopardize this further!
Scrapping of the DTC Bill - A wasted opportunity to introduce rule based administration and reduce the dreaded AO discretion
No decisive move on MAT / Retrospective Taxes except making noises that have deferred the problem or referred the to committees which take time - So much for SPEED
No decisive move on Mauritius DTAA - Still figuring out impact on stakeholders - Many of whom maybe linked to Politicos & Babus...
No Movement on Retail FDI - Terrestrial or E-comm - BJP had opposed this earlier as they did
almost all other reforms! They can do a u turn on this too - they have chosen not to!
No willingness to bite the bullet on GAAR - Deferral is just postponement. No mandate to a Babu to crack this code - So much for Modi's decision making
Tampering with RBI autonomy - Less said the better. At least PC stopped with making noises.
Allocating measly capital to PSU Banks - feeding tadpoles to whales - When will PSU banks get capital to re-start serious lending?
Devolution of funds to states (14 FC) and a corresponding cut in plan and central scheme spends - This has incentivized the states with poorer governance (read BIMARU / Cow Belt) and penalizes the states with historically higher utilization on central schemes (Southern states). The cash given to states now would line the pockets of the powers that be in the states who typically are less efficient in deploying public monies for productive or social goals than the slightly better directed Central schemes.
Big announcements on industrial corridors, Smart Cities has not resulted in anything as yet.
Is everything bad? Not really!
Insurance passed through finally - Thanks to the U turn by BJP - Sense prevailed. Good for India.
Private and foreign participation in Defense was notified - Will this work at 49% - Clearly difficult - What is needed is 74% or 100% - Half measures are just that - Half measures!
Big corruption is not visible as yet. The small ones like Sushma and Vasundhara helping Lalit Modi seems paltry or giving adulterated food to Children in Maharashtra pale in comparison to the BIG UPA ones. Vyapam is an old one and there is a Vyapam in every state whether acknowledged or otherwise - nothing new except the seemingly sponsored killings.
Catchy Slogans like Make in India, Skill India, Digital India etc. have caught the imagination - Yet to see this translate to any action apart from some paper tie ups for the Adanis.
On balance, I am disappointed with what has happened thus far and more sceptical on what can happen quickly but however excited about what is POSSIBLE - the idea of RISING India.
The hope is still on - i possibly do not have a choice - I live here and continue to pump seriously taxes savings into Mutual funds which are fuelling the markets now.
GST - in a watered down version is still positive (even if exclusion of petroleum and liquor would make the composite rate high)
Corporates would someday start the capex cycle to cater to the large domestic hungry market
The few Cash rich PSUs would someday redeem their FDs and invest in industrial assets
Corporate India would someday seriously de-leverage (it has started) and realize that funding projects completely with Debt and public monies (aka.PSU Bank Write offs) cannot continue.
Hope is Life. Cheers to India Rising! With or without Modi! Do not get exuberant as yet - the markets are!
P.S: This is definitely a view coming out of disappointment and not entirely a well argued economist's view - lots of them are available in public domain.
P.S: This is definitely a view coming out of disappointment and not entirely a well argued economist's view - lots of them are available in public domain.
