General Disequilibrium
Opinion | India’s ailing economy needs a green pill for revival
The Green New Deal could work in India too, allowing for a qualitative difference to the economy
As the 17th Lok Sabha is constituted and a new cabinet of Union ministers gets appointed, there will be a lot of gratuitous advice pouring in from different corners. Some of it will be on the necessary social changes, some of it on pending legal modifications but most of it will be on the economy. This column is also adding its voice to that babble. There is reason to heed this torrent of free guidance because the economy does need a solid nudge. Economic activity has slowed down with consumption showing signs of stagnating and a prolonged investment inertia has stifled both growth impulses and new job creation.
The regulators are doing their bit. The Reserve Bank of India (RBI) released on 24 May a draft circular on a new liquidity framework for non-banking financial companies (NBFCs). Markets regulator Securities and Exchange Board of India (Sebi) also released a draft report on the same day recommending new rules for facilitating higher foreign portfolio investments. This newspaper has published news stories and op-ed articles about the economic agenda ahead. Many inputs will be familiar: flooding the system with surplus liquidity to allow for growth, resuming investment in infrastructure, revisiting the private-public partnership model, boosting consumption via higher government spending on rural development (it’s about 1.5% of gross domestic product currently), exercising spending discipline to keep the fiscal deficit under control, and so on.
These are all important, meet the minimum hygiene standards and should be implemented. But the government needs that one strategic piece—in tech jargon, a killer app—that won’t only shift the narrative but also allow for a step change, a qualitative difference, to the economy.
The Green New Deal (GND) could be the answer. Inspired by Franklin D. Roosevelt’s New Deal, GND has been around in some shape and form but it has suddenly acquired eye-popping velocity, with multiple politicians, green activists and policy wonks talking about it. GND might work in India too, with some modifications to fit in with Indian conditions. There are two main reasons why GND might find ready acceptance in India. One, it meets Prime Minister Narendra Modi’s push to reduce the country’s carbon footprint and stack up large capacities in renewable energy generation. Two, public sector’s importance in the GND blueprint aligns with Bharatiya Janata Party’s social-democrat tilt in economic policy.
There have been many versions of GND but three main targets stand out: decarbonization (accelerated electrification of vehicles is one way), jobs creation (which converts GND mainly into an economic transformation policy and less of an environment policy) and protection for those hit hardest by the transition.
All these three legs can be resized and remodelled for India. GND advocates in the US have also been ardent advocates of a modern monetary theory (MMT) but that needs a wider and more extensive debate, especially the bit that encourages use of the central bank’s reserves for development works. But, GND has another aspect which could augment one of India’s weak spots.
GND has found tremendous support among the youth in the US which has been participating in mass political action to not only push for legislation but to also shake up an inert political class in denial about global warming and climate change. A pan-US youth movement called the Sunrise Movement is trying to forge a consensus in the Democratic Party to support GND. It goes even deeper. In school after school and numerous colleges, students are walking out of class to protest against the lack of policy commitment to mitigate climate change, especially when the effects will be felt mostly by the students when they grow up. The spark was first lit by a 15-year-old Swedish schoolgirl Greta Thunburg, who started protests outside the Swedish parliament in August 2018, demanding Sweden reduce its carbon emissions and align itself with the Paris Agreement. Today, inspired by her, school students in Australia, Austria, Belgium, Canada, The Netherlands, Germany, Finland, Denmark, Japan, Switzerland, the UK, US, Colombia, New Zealand and Uganda have been participating in school strikes. This is now a global phenomenon and no longer some isolated, faddish movement aimed at getting likes on social media.
Noticeably, India is missing from that global tapestry. Any conversation about student politics in India motivates multiple voices to either immediately ask why students should get involved in politics, or provide unwarranted advice on how students should focus only on studies (actually exams) and not get distracted by politics. All those who abhor student politics, and rage against it, forget one critical fact: most college students are eligible to vote. Therefore, asking them to make a judgement call on politics at the municipal, state and national level but to block their political instincts once they enter the campus is asking for a compartmentalized personality. It is also patronizing for those who don’t share their future to start lecturing them.
But, worse, the act of insulating students from politics may affect the kind of politics the country inherits. Today, most student unions are wings of mainstream parties and that influences and shapes their agenda. This then stifles political expression of issues that affect them, like global warming or climate change. India needs its Sunrise moment.
Rajrishi Singhal is consulting editor of Mint. His Twitter handle is @rajrishisinghal
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First Published:26 May 2019, 09:16 PM IST
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