Ad Here  
Fast - track railways to prosperity... More lustre to leather: 70 years of CLRI IE completes 47 years... Go for a One Power India AAP - change from street fighting to administration Fear of bankruptcy, liquidation Where’s the big idea? Of judiciary and GM Trail-blazing Tamil Nadu Mr. PM, bite the bullet... Gujarat model for port development The Chinese model for rail development Cleansing a corrupt system… A challenge and an opportunity for OPS An unhealthy adversarial relationship Narendra Modi turns “THREE” State Elections: Mid-summer marathon BJP’s one man army... Welcome continuation of the reforms thrust Rahul coronated 10-point programme LOT CAN BE DONE THROUGH THE PPP MODE... Light at the end of the tunnel – Cauvery Management Board to be set up TN budget - little leeway for capex Little for development Physician, cure thyself… Entering the 50th year… BJP, shift to south A WATERSHED YEAR Kanoon, Kovind and Kumble Flying High? Reserve and perish ‘High speed’ diplomacy... Welcome euphoria over the east Call for INNOVATION, for R&D Repeat 1991– work on a growth budget... Imperative to take states along… Rajini can’t or can? DMK does it again Has PC missed out on BIG BANG REFORMS? Between the bang and the whimper… Scientists, please raise your voice for GM crops Welcome aboard President Kovind Take the next leap forward... BJP - the unifying force (of opposition parties) ! BHEL – R&D and image building require more attention The four DISRUPTIONS of the month Open letter to citizens Drive ahead, the road is well-laid... Jaya Ho Physician, cure thyself A 5-6 per cent growth is given… Corruption institutionalised; technique perfected Need for more
Narendra Modi turns “THREE”

The first head of government to be born in post-independent India, Prime Minister Narendra Modi turned three years recently. Despite flip-flops, data-gymnastics and a well-oiled propaganda machinery, he has meant good for India. That is saying a lot for someone who came to 7RCR with baggage. 

Modi’s biggest achievement has been the financial carpet-bombing, aka demonetisation, that India’s economy needed. No, it has neither killed fake currency nor terror funding but has helped the country take two giant steps towards a less-cash economy and has brought almost the entire money under circulation into the banking system.  

Surprisingly, the central bank is not giving out the numbers and so let’s glean in the figures from elsewhere to get a perspective of what happened.

Four days before the dramatic announcement, on 4 November the amount of money in circulation was Rs 17.54 trillion. Of this Rs 15.40 trillion was demonetised. According to reports, Rs. 14.97 trillion has returned to the banking system, resulting in a gain of Rs 0.43 trillion to the government. Of the Rs 14.97 trillion received, the government has reissued only Rs 9.20 trillion. The government may choose to issue the balance Rs 5.77 trillion or may let other forms of money like credit cards, e-wallets, etc., cover that sum. It would mean a transition of Rs 5.77 trillion to the digital economy and is a significant achievement. 

According to CMIE, the cost of carrying out the demonetisation exercise, as of  31 December 17 is Rs 1.28 trillion. Looked at in the backdrop of a Rs 0.43 trillion gain, the net loss of demonetisation is Rs 0.83 trillion. This loss does not consider the benefit that may flow in due to change in the climate towards the generation of black money.  The price may be worth the trouble as a one-time cleanup, provided the government moves in its fourth year to strike real estate and gold. India Cash was the low-lying fruit; property will be harder to tackle and foreign black money the hardest. 

Modi’s second significant achievement is the kicking in of the Goods and Services Tax Act. It is India’s most transformational legislation since independence and has been long in the coming. With a slew of concessions in the nature of give and take, this will be finally flagged off.  Electoral victories have helped the cause because while the country may be far more argumentative today, politically the landscape is clearly saffron.

Of course, the jury is still out on how GST will pan out. If the government can listen to the star legal voices who have a thorough understanding of the way things work on the ground and iron out those concerns, instead of calling them names, we would move forward significantly and in the right direction. The view, “Hey, let’s get going, these guys will fall in line,” is sad. 

Importantly, the Bankruptcy Code and the Real Estate Regulation Act are game changers and the government needs to be complimented for pushing it through. They would change the way we do business in India. 

Modi’s other big achievement (if you could call it that) is his voice alone is heard’ others’ count for little. We hadn’t had such a situation since the early 1980s when Mrs. Gandhi ruled the country with an authoritarian streak.  Successive prime ministers, whether by nature or by compulsion, were accommodative and to that extent appeared to be losing in power. This is not true of Modi. 

Personally, I would like to see a few things happen in the final two years of his current term. The establishment of a Lok Pal, the granting of complete independence to the CVC and the CBI like it is given to the election commission and a drastic reduction in taxes are a few. Let’s look at the tax numbers. If I earn Rs 100, I pay about Rs 34 as taxes. If I spend the balance Rs 66, even assuming GST at an average of 16 per cent, I end spending only Rs 58 on goods and services. So close to Rs 42 goes to the government and that’s a lot of money.  

And finally, the political class must give up its myriad perquisites and its sickening Z category security that gets paid out of our Rs 42. I can understand it for Modi; but why should a simple bloke like the King of alliteration, Venkaiah Naidu, need security cover?

Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236