If 2014 was the year of politics, 2015 will have to be the year of the economy. And, if this has to happen, it is necessary that we have a correct understanding of what the mandate of 2014 was all about. The mandate of 2014 was shaped by the political discourse of 2013. That discourse was all about fighting corruption in high places and getting the economy back on rails. The man who led the Bharatiya Janata Party to power in the summer of 2014 seemed to understand that.
His campaign was all about good governance and development. As we move into 2015 it seems necessary once again to remind ourselves of this fact. Many political analysts are putting forward fanciful theories about the 2014 vote — that it was a "communal vote", a "majoritarian verdict" and a mandate for Hindu upper caste assertion. This is nonsense. The mood of the electorate in 2014 was shaped by a sense of despair that had come to grip this nation. Many had begun to believe that the Great India Story had come to a premature end, before everyone could live happily ever after.
What is the Great India Story? It went something like this. Since the beginning of recorded history till the 18th Century India and China were the world's two biggest economies. In 1700 these two Asian neighbours accounted for almost half of world income. Then came European colonialism and by 1950 their combined share of world income was not even 10%. In India's case, the argument goes, from 1900 to 1950 British India's growth rate was close to zero per cent per annum. From 1950 to 1980, free India grew at an annual average rate of growth of 3.5%. This went up to 5.5% in the post-Emergency and post-Liberalization years of 1980 to 2000 and further up to an average of over 7.5% in the new millennium.
So India, like much of Asia to its East, the story went, is on a rising trajectory of economic growth and this economic rise would restore India to her "rightful place in the comity of nations" — a favourite phrase of successive prime ministers.
From an investor's point of view the vital importance of this story was that it defined 'expectations' about India. And, "expectations", as that great 20th Century economist John Maynard Keynes, told us, influence investment decisions and thereby have a way of getting fulfilled. The expectation that India is on a rising growth curve fuelled a large part of the investment surge that we have seen in the period 2000-2010.
In the last three years, especially after the presentation of the infamous 2012 Union budget in Parliament, these expectations began to turn negative. By 2013 there was a flight of capital out of India as even Indian business began investing abroad rather than at home.
Then, Narendra Modi stepped in and promised a return to the good times of higher economic growth and more inclusive development. The vote of 2014 was about that. The Constitution of India begins with the words "India, that is Bharat ..." India's rise would be Bharat's rise. India cannot do well without Bharat doing well. So, the idea of India and the idea of Bharat are merely two sides of the same minted coin, our Republic. If the polity can arrive at this consensus on New Year's Eve, one can set aside the divisive rhetoric of the past few weeks and move into 2015 on the purposive note that 'good governance and development' would indeed be everyone's priority. The Indian economy has to return to a growth path of 7% and above, offering new opportunities for employment. Be it fiscal policy or monetary policy, be it labour policy or environment policy, be it education and skill development or health and social welfare, the focus of all policy has to be to restore growth momentum to the economy and make that growth process socially and regionally inclusive. These are words, but policy begins with words and one must get one's words right. If development, inclusive growth and employment generation become the key objectives of all policy, then and then only can it be said that the government is respecting the mandate of 2014. I quite like the slogan of 'Make in India', and it is necessary to understand that that is the only way to 'Make India'. Bharat Mein Banao — Bharat Ko Banao! But for this slogan to become reality, much more needs to be done on the policy front. Nothing is more important than creating a social and political environment at home in which the makers of India would want to make in India. That will have to be the agenda for 2015. Baru is Honorary Senior Fellow, Centre for Policy Research, New Delhi
Thanks to timesofindia.indiatimes.com
His campaign was all about good governance and development. As we move into 2015 it seems necessary once again to remind ourselves of this fact. Many political analysts are putting forward fanciful theories about the 2014 vote — that it was a "communal vote", a "majoritarian verdict" and a mandate for Hindu upper caste assertion. This is nonsense. The mood of the electorate in 2014 was shaped by a sense of despair that had come to grip this nation. Many had begun to believe that the Great India Story had come to a premature end, before everyone could live happily ever after.
What is the Great India Story? It went something like this. Since the beginning of recorded history till the 18th Century India and China were the world's two biggest economies. In 1700 these two Asian neighbours accounted for almost half of world income. Then came European colonialism and by 1950 their combined share of world income was not even 10%. In India's case, the argument goes, from 1900 to 1950 British India's growth rate was close to zero per cent per annum. From 1950 to 1980, free India grew at an annual average rate of growth of 3.5%. This went up to 5.5% in the post-Emergency and post-Liberalization years of 1980 to 2000 and further up to an average of over 7.5% in the new millennium.
So India, like much of Asia to its East, the story went, is on a rising trajectory of economic growth and this economic rise would restore India to her "rightful place in the comity of nations" — a favourite phrase of successive prime ministers.
From an investor's point of view the vital importance of this story was that it defined 'expectations' about India. And, "expectations", as that great 20th Century economist John Maynard Keynes, told us, influence investment decisions and thereby have a way of getting fulfilled. The expectation that India is on a rising growth curve fuelled a large part of the investment surge that we have seen in the period 2000-2010.
In the last three years, especially after the presentation of the infamous 2012 Union budget in Parliament, these expectations began to turn negative. By 2013 there was a flight of capital out of India as even Indian business began investing abroad rather than at home.
Then, Narendra Modi stepped in and promised a return to the good times of higher economic growth and more inclusive development. The vote of 2014 was about that. The Constitution of India begins with the words "India, that is Bharat ..." India's rise would be Bharat's rise. India cannot do well without Bharat doing well. So, the idea of India and the idea of Bharat are merely two sides of the same minted coin, our Republic. If the polity can arrive at this consensus on New Year's Eve, one can set aside the divisive rhetoric of the past few weeks and move into 2015 on the purposive note that 'good governance and development' would indeed be everyone's priority. The Indian economy has to return to a growth path of 7% and above, offering new opportunities for employment. Be it fiscal policy or monetary policy, be it labour policy or environment policy, be it education and skill development or health and social welfare, the focus of all policy has to be to restore growth momentum to the economy and make that growth process socially and regionally inclusive. These are words, but policy begins with words and one must get one's words right. If development, inclusive growth and employment generation become the key objectives of all policy, then and then only can it be said that the government is respecting the mandate of 2014. I quite like the slogan of 'Make in India', and it is necessary to understand that that is the only way to 'Make India'. Bharat Mein Banao — Bharat Ko Banao! But for this slogan to become reality, much more needs to be done on the policy front. Nothing is more important than creating a social and political environment at home in which the makers of India would want to make in India. That will have to be the agenda for 2015. Baru is Honorary Senior Fellow, Centre for Policy Research, New Delhi
Thanks to timesofindia.indiatimes.com