Below are some of the factors which may be responsible for the current slow down
1. Economic data is massive. Even with the communication revolution and supercomputers, it is impossible to gather and process data even in a small country, what to say of a country of 130 crore economic agents.
2. Something is happening in the Indian economy. It may be reorganisation led by the formalisation of the Indian economy forced by demonetisation and GST. Technological advances all the time make old jobs disappear and new jobs appear, always more jobs than before. But there is always the drag, and people are forced to change cities.
3. If a socialist economy is run by honest leaders, there is always an initial increase in growth as the slack caused by a looting elite is utilised. But soon even the honest leaders run into the wall of arithmetic which not even the Schrodinger’s electron can penetrate. Nobody can defeat mathematics. Most BJP leaders are socialists. Most want to preserve the status quo. They only want an honest tax department, and nothing more. We don’t know about Modi the enigma. We don’t know whether he is a socialist who believes that his honesty would make it work, or whether he knows that socialism is a big lie. We can only wait and watch.
4. Entire Indian bureaucracy is an extortionist gang. Just yesterday CBI arrested a govt officer who was trying to bribe it with Rs 15 lakh as part of a deal of Rs 2 crore bribe to save an IPS officer. So all the time, 24×7, they frame rules to obstruct business, trade, manufacturing, every economic activity. Then to remove these obstructions they demand and get bribes. An existing steel or aluminium plant planning to increase its capacity still needs afresh over 150 clearances, permissions, and NOCs. In a sane, free society, no clearance will be required by such plants. We are strangulating economy with our own bare hands.
5. Environmental mafia is the most powerful now. You can have all of the above 150 clearances, and still, a PIL thug can get a court to shut down construction of your plant, or if constructed, its operation. Not even tyrants and dictators are that arbitrary.
6. The new Land Acquisition Act passed by the Italian is another evidence that the natives can’t even frame laws. Good that Brits gave us IPC. This act empowers any “farmer” to block a project at any stage. People are not moral beings. You give them a chance to fleece you, or to fleece the state, and their greed will never be satisfied. And Indian land records (supposed to be maintained by the demiGods of IAS) make locating the actual owner a never-ending quest. Land acquisition never gets completed.
7. From the belly of corrupt bureaucracy are born the thieving parasites who all partake their cut from every economic activity: local thug the रंगदार, the village Pradhan, journalists, assorted activists, full-blown mafia gangs of the area; all come and extort money from the businessmen. Then come the labour leaders. Their right to violence has not been challenged as yet.
These are some of the factors I have listed which may be responsible for the current slow down after the initial slack of a socialist economy has been used.
Fact is, the only wealth of a Nation is the integrity of its people. If people are honest, the country progressively becomes richer. Either Indians are changing their behaviour, and the economy is changing gear for good, and will speed up as the clutch is released. Or, if Modi is also a socialist, we are in for a soon-to-begin royal screwing.
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Very good analysis. I think Modi should try to balance between populism and free market economy. He appears to be lacking good advisors.
If Dr Swamy gives less radical suggestions than abolishion of income tax, even if only as his nth best alternative, Modi may listen.
I hope the shrewd person in Modi will soon start doing course correction and strike the right balance.
If Modi handles Kashmir problem well, and Amit Shah and the likes are stopped from silly ideas like promoting Hindi as national language, his economic failures will be forgiven in lieu of the good he does in tackling Kashmir issue for ever.
BJP stood for free market economy. Now, after suit boot jibe, Modi turned socialist. As said by Subramanian Swamy Indians don’t like coercion to change rather they change when incentives are offered. Thus, demonetisation was a big flop because it was not done during Income Disclosure Scheme and the penalty was too stiff. Similarly GST was made horrible by making compliances very difficult. SMEs spend more time on GST paper work. Similarly Companies Act, Income-tax Act just made lives of entrepreneurs more difficult with stringent CSR norms, Angel Tax etc. Only less government can save India from the tyranny of its bloated aristocratic socialist bureaucracy. Modi needs to tame this elephant if he really wants to make India great.
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