Undue expectations ran high before the presentation of the vote on account, called the interim budget. Those who predicted the populist budget had only a misconceived reason that is the ensuing Lok Sabha election. They expected the government’s populist prodigality which did not happen in the 10 years of the present coalition. That resulted in sustainable and visible growth in every segment of the economy. In the last four years, capital expenditure tripled resulting in massive employment creation and economic growth. It will rise to Rs 11.11 trillion in 2024-25, which is 3.4 % of the GDP.
From freebies to growth opportunities
The vote on account has once again proved that the government takes budgetary measures not for political gains and winning elections but to ensure the long-term socio-economic welfare of citizens. The government sets plans for sustainable long-term growth moving away from the ritual window-dressing the earlier governments used to do under coalition pressure.
Good economics is bad politics. This is a fact in all the democracies with a legacy of heavy fiscal deficit. For a long time since independence, freebies were vote-winning tools. Even now some parties need the tools to win the elections. The freebie culture is deeply ingrained in our thinking though the freebies had never worked for poverty eradication or any social welfare. The Modi government does not need to resort to freebies to catch votes. It has only long-term plans. The government’s focus on bringing more in the hands of the bottom of the pyramid jostles the government’s mission of more money in the hands of the lower middle and middle class through creating sustainable earning opportunities.
Instead of the freebies, the government focused on creating earning opportunities for people, including farmers and entrepreneurs. As an enabling measure, it broke many red tapes to let the system work smoothly for the people and end the corruption. In 10 years the government removed around 25,000 unnecessary compliances and repealed more than 1400 archaic laws besides giving four lakh companies enough opportunities to rectify their defaults to avoid penalties.
Cleaning up the economic system
Corporate entities reeling under heavy debts could find a way out. The heavy debts were plaguing the commercial banks’ asset quality. The introduction of the Insolvency and Bankruptcy Code (IBC 2016) led to the corporate debt settlement in more than 2800 cases, sending a strong message to the willful defaulters. Debt resolution saw original promoters of companies like Essar Steel India, Amtek Auto, Bhushan Steel, Binani Cement, and many others with willful default history moving out of the board and management. The Modi era marked the end of commercial banks’ exposure to willful defaulters in the name of loan restructuring that contributed to inflation and dishonest ways of ballooning the bank credit. Its zero tolerance to defaulters made their life harder. The time has redrawn the lenders accountability and borrowers’ repaying responsibility to contribute to economic discipline.
The government knows nothing comes without painstaking. It ordered asset quality review (AQR) in 2015, which the central bank also wanted long ago after a stink in the rapid spurt of credit growth from Rs 18.19 trillion to Rs 52.16 trillion between 31st March 2008 and 31st March 2014, as reported by public sector banks. The AQR threw up an astonishing Rs 8.96 trillion in stressed assets, which were reclassified as NPA. As a result, public sector banks had to report losses in 2017 and in the following year. The government strategy of cleaning the balance sheet of banks with great pain helped public sector banks survive and recover assets from large corporate defaulters. The recovery process did not hinder the commercial functioning of the defaulters. The dishonest large corporate promoters were thrown out of the board, thanks to the IBC 2016. The National Company Law Tribunal (NCLT) settled more than Rs 8 trillion since the implementation of the IBC. The early pains of the bank eventually strengthened their books to add to the vibrancy of the economy.
The government does not focus merely on image building, but on setting things right even if the process is hard and unpleasant. The government spent its first term to clean up the legacy of economic mismanagement. It focused the second term on covering all segments of the economy, beginning from the bottom and covering a broader space. Modi’s extended slogan of Jai Jawan, Jai Kisan, Jai Vigyan, and Jai Anusandhan indicates the government policy of moving with the changing times.
Journey towards the 3rd biggest economy in the world
Barely three weeks before the interim budget presentation, The Department of Economic Affairs released a report named The Indian Economy: A Review after taking stock of the Indian economy and its journey in the last 10 years. The 74-page review was as good as the Economic Survey, which usually comes every year before the full-fledged budget presentation. The review in a way, was a white paper on the economy and a reflection on a 10-year growth trajectory of the economy. The interim budget speech was a 10-year progress report of the government. The unusual silence of the opposition members, who are otherwise uproarious, showed indisputable approval of the pictures that the Finance Minister presented in less than an hour in 26 pages.
The transformation of Bharat from one of the “fragile five” to the fifth biggest economies in the world speaks a lot. The former RBI governor, Raghuram Rajan in his book, I do what I do, written in 2017, recalled: “I took office in September 2013, as the 23rd Governor of the Reserve Bank of India. At that time, currency was plunging daily, inflation was high, and growth was weak. India was then deemed one of the fragile five.” Today, Bharat is fast bridging its gap with Japan and Germany to jostle into the third position. Last year, it surpassed the British economy. In the next five years, it will surpass Japan and Germany. The way Bharat is growing now, it may not need even five years to move from the fifth to third position.
Bharat is now at the transformative stage economically and politically. Old fences have gathered corrosion and started tumbling. The old fashion of declaring lavish freebies and window-dressing has gone. The performance measuring parameters lie in how efficiently the government implements plans and policies but not in how much the government allocates to each segment. Huge fund allocation and exemplary efficiency in executing projects render multiplying results. That shortens the distance to the government’s vision for Vikasit Bharat.
Udaykumar Marar
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