Reviving The High Industrial and Economic Growth With Controlled Inflation : The New Approach
Rajiv Upadhyay 
The Modi government inherited a Low Growth and high inflation economy in 2014 . With the tight money policy and budgetary control the inflation got controlled by 2015 but no major change was 
made in the economic or monetary policy. So the Industrial and Agricultural growth continued plummeting . Politics usurped the driving seat from economy after the Delhi and Bihar defeat and the government was forced to pursue the populist economic policies for political gains . The all round slowdown of economy including exports hardly received any attention and could not be corrected . Every one chose to get the comfort from fudged GDP growth statistics and kept pursuing the populist economic agenda . It ultimately lead to the the highest unemployment rate and poorest performance of manufacturing and other industrial sectors by the time the five year term of the government ended.
This needs to be rectified immediately .
Reviving The Demand From Top , Better For Growth With Controlled Inflation :
If we want industrial development with controlled inflation, the causes for its decline and inflation have to be first understood.
The campaign against black money was based on totally misunderstood Economics . Economy does not distinguish between black or white money and killing black economy killed the white economy too . In reality black money unearthing campaign became a tool for harassing industrialists and businessmen and even political opponents . It lead to exodus of rich men out of country as media as well as every single government agency from income tax to police to municipality started harassing the industries. Even courts joined in this popular tirade as witnessed on ill considered ban on more than ten year old diesel vehicles by green courts or stoppage of iron ore mining etc . We forgot that like the government and bureaucracy , a nation gets the industrialists it deserves .Indian industrialists are as good as Indian sportsman , Netas , Babus or academicians and none of them is world class
There has been an extreme slowdown in private sector investment . The earlier capacity expansion due to real rapid growth in 2004 – 9 was never fully utilized . Some of it was based on false assumptions like amount of gas discovered in Ambani’s gas field . It lead to a large investment wasted as in gas based power projects .The increase in demand has been very slow. On top we entered many multilateral free trade agreements like with ASEAN which gave much larger inroads to these countries into the Indian market . China was the worst example . It kept dumping its steel in our market for many years . Small scale industry like Dehradun small lamps or Ferozabad glass work virtually got closed by cheap chinese imports . Big Indian industrialists started investing abroad rather than in India due to lack of opportunities for profit . Exports came down from $312 billion to $ 270 billion and no one stirred .
Ignorant babus failed to see the decline and those who cannot run a kirana shop gleefully lectured industrialists on facing global competition and like Nero played flute as our industry and economic growth rate went down . Now that the elections are over , demonetization should not be glorified any further but studied scientifically because it has suppressed demand in all fields while fatally hitting the construction business with huge unsold houses and resultant unemployment . Its full impact should be carefully evaluated to avoid such misadventure again . Economy recognizes no colour of money. Along with taxes , government should also worry about the profitability and competitiveness of our industry. It is not just a milching cow for babus and politicians . Wealth creators are the biggest asset of our nation and deserve our open and not clandestine support . 
Pushing the demand for consumer goods including luxury goods is the best first step . It will not fan inflation . Unlike MNREGA it will not directly increase the demand for primary articles but will increase employment and profitability. MNREGA should be used for construction of houses as well as solar energy and irrigation schemes . Industrial sickness and closure should be avoided . If it was due to reasons beyond control, old NPAs should be settled if the primary loan amount is returned with token interest. Income tax slabs should be revised upward by five to ten lakh rupees and long term capital gain tax on mutual funds should be levied after indexation. Government should promote sale of unsold houses by giving two percent cheaper loans for five years for service class which was the recommendation of sixth pay commission also for government servants . In the third year after first launching the modern irrigation schemes the crop MSPs need to be increased by six percent for two years consecutively to keep up the profitability in agriculture. But buffer stock of all primary food articles must be built in advance including import of vegetables like onion and potato if needed . The drive to improve infrastructure should continue but inflation control measures have to be adopted too .
Drip and other water saving Irrigation schemes have to made popular be giving incentive just the way it was done so successfully for tubewels earlier in sixties. Agricultural productivity has to be improved with foreign assistance for Lentils and edible oil as Indian researchers have failed in these two areas .
The land and labour price in India cannot be higher than the neighboring countries . Very large SEZs where land , labour , electricity and transport is made available at competitive rates by government for exporters , need to be extensively created. The laws need to be modified .The experiment of auctioning spectrum has killed the communication industry. In retrospect it appears that it was not a bad idea to give cheap spectrum , ore , coal etc . . Auctioning has killed our communication industry. The power or coal industry has also not benefitted from auctioning . 
Nation may lose much more by NPAs thus created .
Similarly deficit financing for highly productive economic activities and growth is not bad . But it must not be misused for social sectors for next three years atleast . Like China India may have to increase public debt or money supply for funding growth .
There is a very pressing need of fresh and informed thinking in Finance Ministry . The old junk of Babus and populism and politicization needs to be set aside. A new breed of young officials who can team up with industry without partisanship or losing integrity are required .The ‘Mai Baap Era ‘ senior Babus must not be kept in finance ministry any more and new Shaukat Azizs, Monteks and Manmohans need to take charge in the new government .
It is possible to grow like China in our democratic set up but we need a new approach and faith in our ability to beat china with greater innovation like USA . But bold policy makers should be able to act without the fear of the overactive watch dog bodies and courts. Well intended mistakes need to be tolerated as failures are the integral part of success .
