India’s own gradual ascendancy into a leading economy has sharpened rivalries.
Money, money, money/Always sunny/In the rich man’s world
ABBA
The aspirational aspects unleashed by the Modi government from the start, need large funding. More so because the approach is holistic and spread over all sectors. All being awakened to their potential, perhaps for the first time. We have stopped calling ourselves poor, as if to excuse all shortcomings. There is massive welfarism still, but it has been shorn of corruption and has developed a reformist sheen. However, “povertarianism” as a pornographic Marxist glory is gone.
Today there is every attempt to try and balance the books. Revenue generation is important. That is why the NHAI, furiously building expensive and world class highways, targets income from tolls to rise from Rs 40,000 crores to Rs 1.5 million crore a year.
What we must aim at though, is surplus revenue in all our productive endeavours, that can be directed in any direction necessary. And the best money, as “borrow and spend” disasters from across the world remind us, is earned money. So far, seven years in, the GDP is far less than in the Vajpayee years. But public spending on modernisation, infrastructure, welfare, the military machine, the railways, ports, airports, education, health, culture, has blossomed. These things, essentially investments, have a way of paying handsomely in the medium term.
There is a steady increase in Foreign Direct Investment (FDI). But we need the Chinese rate of growth of the three decades from 1980. Fuelled, not so much by exports as theirs was, but pumped up domestic demand. Exports today are hampered by low growth in the buyer countries and pressure on margins. Still, lateral shifts of manufacturing are promising. The opportunity from global disenchantment with China can do much for us if we work with a will.
A sharpening bipolarity between America and China is now an established reality. As they duke it out, the challenger China has subverted or ignored most existing institutional mechanisms, the UN, G7, G20, many other fora, various protocols and agreements, international law. China, particularly with regard to the East and South China Seas, various territorial and boundary disputes in its vicinity, says I don’t accept international laws and positions. It seeks further to dominate the world with forward military bases and a growing blue water navy supported by its other military arms. Till recently, it was proud of its “wolf warrior” diplomacy to counter all objections, though this is somewhat muted post-Covid.
America under Biden has been surprisingly decisive too. It has already removed missiles from Saudi Arabia, pulled out of Afghanistan, and turned Australia into its forward base in the Pacific looking squarely at China.
India’s own gradual ascendancy into a leading economy has sharpened rivalries. There are serious military threats from China and Pakistan and fomented internal security concerns. These are making fresh demands on its purse that cannot wait. The march to a $5 trillion economy has become urgent. This, not only to lift most Indians towards first world levels of prosperity and well-being, but to keep the country safe.
Post Covid, or the most of it, as we approach the end of 2021, the Modi government seems determined to aim for double-digit growth in 2022. In preparation, a series of economic reforms has been unfolding. The bold step of the three new farm laws has started yielding good results. The long-awaited repeal of the retrospective taxation that hit oil player Cairn and telecom’s Vodafone has taken place. In the aftermath, reforms to financially unburden the telecom sector have been so practical and dramatic that a near collapse has turned into green shoot optimism.
The much-postponed bad banks have come, even as the non-performing assets ballooned to Rs 10 lakh crore. Some Rs 3-4 lakh crore of it, mainly due to badly structured infrastructure loans, have happily been recovered by the lender banks themselves. The rest may involve partial recovery from asset-light borrowers. But all of it leaves the books of the high street private and PSU banks, some of which have changed ownership or been merged. This sets up a new lending cycle towards better results in the near future.
Exports, supported by government incentives and facilitation, have shown a great upswing of late—rice, mobile phones, vehicles, bullet-proof vests, software, data storage, components, engines, textiles, other raw materials and finished goods. We are emerging as the pharmacy to the world as the multiplicity of India-made vaccines for Covid-19 have demonstrated. There is a lot of money in this area too.
Breaking through the tentacles of a powerful import lobby in military procurement, a host of joint ventures in the armaments space are gaining momentum. There are others, involving making parts of civil and military aircraft for US and European majors. The replacement for the superannuated Avros, with Airbus transports, will, for the most part be made by the Tata Group in JV here. Air India too is about to be privatised at long last and returned to the Tata Group. The second generation Mk2 Tejas programme for single engine fighter jets, has been boosted with orders for 83 from the Air Force and the acquisition of 100 GE Aviation engines. DRDO too has gone in for a JV with Rolls Royce in addition for the manufacture of a wide range of aircraft engines. India has also developed 1500 Hp and 750 Hp turbo-charged engines for its Main Battle Tank and Armoured Carriers. Ammunition manufacture has been reorganised in order to get out of the clutches of Communist trade unions that have engineered go-slows and man-made blockages for long.
A lot of the military manufacturing initiatives are achieving the dual objectives of becoming cost efficiently atmanirbhar, while bypassing the rigmarole of technology go-slows and embargoes from the military export majors. This is very important in an every-country-for-itself atmosphere prevailing.
The armed forces are being structurally reorganised to form more integrated fighting groups involving all the three services. A new rocket management corps is on the anvil. Space warring capabilities are being developed. High altitude warfare battalions have been raised. There is increased recognition of the changing face of modern warfare. This involves digital process, drones, armed drones, robotics, missile deployment, stealth technology, electronic and satellite surveillance, space wars, missile shields, cyber warfare.
On “Civvy Street” LIC is going in for a mammoth IPO, even as the Indian stock market is booming as a show of confidence in the future. A plethora of start-ups are not only accessing mega funds on the stock market but have put India in the top echelons of the global start-up ecosphere.
The Chinese debt crisis is now spilling out into the open with the Evergrande real estate group, with over $300 billion owed, trying to barter its way out on the point of default. Analysts have long predicted that the mountain of debt that fuelled Chinese growth, as indeed it did the American boom years, is not sustainable. The difference is that the US has the confidence of the world behind it but China does not.
Though China will do everything possible to control the financial and social fallout, it will still be highly preoccupied with containing the damage. Abroad, the Chinese getting paid in seized assets in sub-prime countries is also far from good enough.
India has a good chance to catch up. This will be assisted by the constitution of the Quad and other outside followers of the same script such as France, Britain, Singapore, Vietnam, and probably, even Russia.
With a 67% approval rating in a recent CNX survey, the present Modi government is still overwhelmingly popular. It should therefore not only win most of the Assembly elections including UP in 2022, but also the general election in 2024. Assuming the NDA gain another majority, they can implement their nationalist economic agenda till 2029 at least. And a 15-year run tends to ensure a further continuance as the opposition dies of political starvation.
Side by side we must continue making large gains in diplomacy, foreign affairs, manufacturing, robotics, cyber software, start-ups, modern high-yield agriculture, preventive medicine, cutting edge technology. High year-on-year growth will end our days of playing Gunga-Din, the water bearer—meeting the thirst of the developed world. A prosperous, modern, responsible, civilisationally-gifted India is to be our identity in the future. It is our duty to realise this and work towards it.