BackAn open letter to Narendra Modi
You have a clear choice: take the path of healing this country and putting it in proper order or choose a path of majoritarianism
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Dear prime minister-in-waiting,
While others sulk and bicker about constituencies and opponents, it is time for you to think about what you will do when you assume office. You have a clear choice: take the path of healing this country and putting it in proper order after 10 years of lost opportunities or choose a path of majoritarianism that some are charging you with. I hope for the sake of the country you choose the former.
Leaders of many other countries have been able to untangle real or perceived shackles of the past and emerge as nation-builders. These leaders have often rescued their countries from the economic doldrums and put their people back on the path to prosperity. In Brazil, Luiz Inacio Lula da Silva, transformed himself from a radical activist to one of the most popular leaders. Lula lead Brazil from the depths of a currency crisis in 2002 to eight years of stability and prosperity. He focused on social programmes built on the strong foundations of fiscal and monetary prudence. On foreign policy he adopted a pragmatic stand, befriending both the left-wing authoritarian Hugo Chavez of Venezuela and Republican president George W. Bush of the US. When he stepped down from presidency, he had an approval rating of 87%. But perhaps more than Lula your own ascent to power may be likened to that of Margaret Thatcher of the UK in 1979. Thatcher became prime minister when the UK had been through a decade of economic despair and a “winter of discontent" characterized by widespread strikes by trade unions. With strong convictions and a steady hand, Thatcher put the UK back on track and served as a beacon for subsequent reformist movements from Chile to China. You must, of course, be your own man, but it may help to choose elements from both Lula’s and Thatcher’s style for India.
India’s 10 years of discontent have left its economy in a shambles and its people dispirited. Your challenge will be to reinvigorate the economy and instill hope.
You have many years of experience as the economic czar of Gujarat state. Even so, permit me to make a few suggestions. Your first order of business has to be to get the electricity sector working again. This will allow Indian businesses to help themselves. By establishing fuel linkages, revitalizing the central and state electricity regulatory commissions to reset tariffs and beginning the process of separating agricultural lines in other states as in Gujarat, much can be achieved. Most importantly, a steady hand at the wheel with clear objectives will rectify a situation caused by years of dysfunction and confusion.
Your second objective should be to eliminate the country’s primary and revenue deficit in two and three years, respectively. It is shameful that India still runs a primary deficit (difference between revenues and expenditure without interest payments) after two decades of strong growth. The simple fix is to expand the tax base and tighten spending. Our track record for expanding the tax base is pathetic. It need not remain so. All it takes is simplification, focus and enforcement. The spending side is dominated by subsidies for oil and fertilizers (most agree that these should go) and large universal social programmes. India’s large pockets of poverty necessitate various forms of social insurance. You should fully adopt the Aadhaar programme (rechristen it if you like) since it is an excellent way to target beneficiaries of social spending and reduce needless subsidies to others. A declared objective to eliminate these deficits will break the structural back of inflation.
On infrastructure, the need of the hour is to re-energize road, rail and telecom sectors that have been choked by the cholesterol of inaction and graft. They need to be put back on track. Speaking of tracks, the railways need serious capital investment to convert fully to broad gauge, modernize services and electrify. Much else needs to be done, but if you are able to make a dent on these on arrival you will have done enough to kick start investments in the economy.
Instilling hope and healing society beyond merely the economic is a delicate task. The economic management of the country requires purposefulness and precision, the social healing will require civility, patience and empathy. While pandering to the minority is wrong, placating the majority is no less a sin. The opportunity in front of you is to offer a fair and balanced environment for all of India’s citizens. Affirmative action in some form will still be required but not to an extent that it distorts markets and angers the majority. India’s plurality is the lifeblood of its success as an economy, democracy and a nation. Importantly, diversity is the most comprehensive definition of the idea of India. I hope you, as its custodian, will do what it takes to enhance and nurture it.
Jai Hind.
P.S. “Healing is a matter of time, but it is sometimes also a matter of opportunity", said Hippocrates.
Narayan Ramachandran is chairman, InKlude Labs. Comments are welcome at narayan@livemint.com
To read Narayan Ramachandran’s previous columns, go to www.livemint.com/avisiblehand
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