Economic Recovery : Can Modi Select and Bite The Correct Bullet ?

Economic Recovery : Can Modi Select and Bite The Correct Bullet
R.K.Upadhyay

The common perception and the hope is that with in six months of the Modi government formation , the stagnant Indian economy will head for quick recovery and in one and a half year we will be back on eight percent growth rate.
But how it it can be done ?
Modi has no Magic wand that the grand old master of economics Manmohan Singh did not have . What extra Modi has , is his famous will and speed of action .
Can Modi bite the bullet – yes off course , that is his strong point ,
But which bullet should he bite ?
Who will tell that ? , Adani , Ambani , Tata , CII or Baba Ram Dev or the know all Babus ?
Who will be Modi’s Manmohan or Shaukat Aziz of Musharraf ?
By instinct Modi will listen to industrialists on resuming the economic and industrial growth.They know best where the shoe is pinching .
The high inflation needs restriction on money supply for control but higher growth needs free money supply at low interest rates . Manmohan & Chidambaram could not manage this contradiction and we landed in almost negative industrial growth . MNREGA and other populist schemes were wasteful and created demand without any addition in supply thus leading to stagflation . To compensate for these wasteful schemes , the productive sectors of the economy were restrained with high interest rates and credit squeeze . Bad politics destroyed the economy but no one had courage to come out of it.
To add to our already full cup of economic woes , new land acquisition policy , food security bill , RTE, Minority Appeasement Schemes etc. were announced with no consideration about their affordability .
Outgoing government has virtually ensured that the new government cannot succeed , but succeed it must as the nation is expecting Modi to be the panacea for all its ills .
My magic formula for start is as below
1. Like Indira Gandhi once did to control hyper inflation , all salary hikes , DA / wage increase to be deposited in PF for two years for the entire organized sector in both government and private sector.
2. Allotment of funds for wasteful schemes like MNREGA , Food Security etc to be reduced to twenty five percent of present value , and restricted for the poorest amongst below poverty line people . All schemes to be linked to quantifiable , productive and income /asset creation in animal husbandry , fishery , poultary,rural irrigation , mining , housing , agriculture etc .
3. Commissioning of already constructed power plants on priority by importing coal , gold imports to be stopped for two years .
4. Interest rates on infrastructure , housing , cars and other stagnant sectors to be reduced to eight percent to boost demand .
5. Irrigation and animal husbandry to be given priority to boost income in rural areas . Amul type cooperatives to be launched in other states also.
6. Stopping the bank loans against food grain stocks which were started by Congress after twenty years ban and were really the first trigger to start hyperinflation .
7. Recreate confidence in Indian Industrialists destroyed by Witch Hunting retrospective tax , CBI inquiries etc.Flight of Indian capital abroad to be stopped on top priority by suitable incentives .
8. Restore credibility of government amongst Babus by emphasizing ing back on quality of decision making , increasing productivity and reducing the over hype on corruption . Stagnation and policy paralysis cannot go if every Babu has to watch over his shoulder before taking decision . Bonafide mistakes have to tolerated and a legal safe guard is essential to overcome the huge fear created . Similarly Judicial , Audit , Vigilance , NGOs excesses have to be restrained .
At present there is no reward for delivery but hundreds of punishments by watch dog bodies. Instead the few bad cases should be finalized and guilty be punished in an exemplary manner . Currently government has become a punch bag for all and sundry.

9. Restore POTA / TADA and stop harassment of Police in encounter and human right cases etc. The over emphasis on human rights has reduced the crime investigation . There is need to restore the balance .Terror has to be made a high risk activity . At present it is less risky than smuggling . Similarly morale of the armed forces to be restored on top priority . Predominance of Babus in Defence is primarily to abet ministerial corruption in Defence deals by using the Babu as the hatchetman and needs to be curbed.
10. Take up few national sentiment building big developmental projects at Delhi Metro speed .They could make India seemingly equal with China . But for the monumental corruption , CWG was quite well organized . High speed Railway linking Delhi with Mumbai , Kolkata , Chennai and Bangalore could be good starters . They should be completed in five years .
Once the growth momentum picks up Indian Industrialists will give a self sustaining growth .Industry has to be made an active partner in growth story . The ‘ माई बाप ‘ ( mother father) government has to be replaced by Partnership in the Japanese style . As demonstrated in the planted false army coup report , the current bureaucracy cannot be expected to change its stripes .
As in the Telecom sector its role needs to be minimized in economy .