Dear Prime Minister, The people of India voted you in twice. The first time was in 2014, as the last two years of the UPA government saw very high inflation and declining growth and corruption scams were exposed. The people of India bet on you to deliver them your promise of ‘Sabka saath, sabka vikas’.
Prime Minister, you raised our hopes to disappoint hugely. In 2016, you unleashed an uncalled-for and bungled demonetisation of the economy from which we have never fully recovered. You then followed it up with an ambitious, but badly designed and implemented, GST, which further choked off growth. In your first five years, you allowed RBI to misdiagnose inflation — and introduce an inflationtargeting regime, which kept interest rates too high and the rupee overvalued.
As a result, your first term saw India’s worst export performance. Fortunately, the new RBI is trying to correct some of these problems.
You gave us many new schemes — with great titles. Make in India, Skill, Digital and Startup India sounded very promising, but remained that. My favourite JAM (Jan Dhan, Aadhaar, mobile) was touted as a huge achievement — and in theory it is, as it would allow you to ensure that money got to people without leakages through direct benefit transfer (DBT).
Yes, the number of new bank accounts got India into the Guinness Book of Records. But as Shamika Ravi’s 2018 Brookings India paper, ‘Is India Ready to JAM?’ (brook.gs/3ckoNb7), showed, the combined access to JAM varied hugely, and in many northeast states, Bihar, Uttar Pradesh, Chhattisgarh and Jharkhand, millions don’t have the required trinity to get meaningful benefits. Even in April 2020, the Aadhaar website shows Assam and Meghalaya showing Aadhaar saturation of 22.3% and 29.7% respectively.
The PM-KISAN scheme is also a good idea, but is too little. Better to roll all the fertiliser, electricity and pesticide subsidies for which you spend a lot in your budget but don’t get to farmers, especially smaller ones, distort cropping patterns and harm land productivity and water availability into an expanded PMKISAN and give the farmers money directly. They will invest and spend it more productively.
The Ayushman Bharat health insurance scheme, which has reached one crore beneficiaries, is also a good idea. But it must be accompanied by a wellfunded basic health system that 100 crore Indians lack. Otherwise, we are just papering over cracks when he foundation is weak.
Sir, your infrastructure-related agencies did relatively well as they accelerated delivery. But in the final years of your first term, the economy kept declining. While you may have inherited an NPA-ridden banking sector, you allowed it to fester and grow, and threw good money after bad without attempting any serious reform. I am surprised your finance and economic experts did not tell you that an NPA-ridden financial system is like a heart patient with clogged arteries. A multiple bypass was needed, but even an angioplasty was not performed.
But despite these, the people of India gave you an even bigger mandate and you responded with an expanded slogan ‘Sabka saath, sabka vikas, sabka vishwas’. Even with a slowing economy, the first budget presented by your second government in 2019 was a big disappointment. Instead of helping unleash animal spirits and draw in the private sector, the economy saw its sharpest decline in investment and economic growth.
Now, we must deal with the Covid-19 pandemic. Lockdowns in developing countries with weak safety nets and large parts of the population living hand-to-mouth in unsanitary, crowded conditions are unworkable.
Perhaps, we reduced the spread of the virus, even as our Covid-19 curve is still growing rapidly. Sir, we can debate the necessity or otherwise of the draconian lockdown forever. But we must admit it was badly managed. Your own government’s 2017 Economic Survey had discussed in great detail the challenges of internal migration.
So, it is surprising you were caught unawares by the scale of returning migrant workers and their plight. If the muchheralded JAM was in place, it should have been possible to help these people. But instead, we are back to food through a leaky corruptionridden PDS. You have proposed a ‘One Nation, One Ration Card’. But that will leave the hapless migrants even more at the mercy of corrupt ration shop owners, far away from home. Give them cash transfers instead, and make JAM come alive.
We listened, sir, with shock and awe when you announced the Atmanirbhar Bharat Abhiyan (ABA) package of Rs. 20 trillion (10% of GDP), but were hugely underwhelmed when the details showed that the direct fiscal stimulus was under 1.5% of GDP, increasing to 3.5% when you include various contingent liabilities — smaller than what UPA did to get out of the Great Recession of 2008-09. The slogan of self-reliance, sir, sounds good and we have heard before. But if we lift the drawbridges and retreat into Fortress India, it will ensure low growth and no jobs for millions for years to come.
You have given us hope with promise of reforms in land, labour, liquidity and laws, and freeing agricultural markets. Work with states to make these happen properly to attract domestic and foreign investment. But your bigger worry now should be the sharp negative growth this year, from which we may not recover for a long time. For that, you will need to spend more and provide more funds to states as well. At the moment, they need sahanubhuti (empathy) and sahyog (support) more than atmanirbharta (self-reliance).