In The Media ⁽⁴⁰⁰⁾

Read full article Abstract: It is no exaggeration to say that the defining event of 2014 was the emergence of Prime Minister Narendra Modi as India's most popular leader. In April 2012, Fareed Zakaria of CNN had predicted that the December 2012 Gujarat election would spell oblivion for Mr Modi. But exactly the opposite unfolded - it propelled him into national prominence. By the dawn of 2014, his stature had grown sufficiently for the Bharatiya Janata Party (BJP) to name him its prime ministerial candidate in the May 2014 parliamentary elections. But few commentators were still willing to grant Mr Modi an election victory that would propel him to the top office of the country. Unable to digest the decisive victory the BJP had scored in December 2013 state elections, the bulk of the media went to work to build Arvind Kejriwal of the Aam Aadmi Party into a national leader on the back of his rather modest victory in Delhi. Victims of wishful thinking, many also routinely produced analyses showing how a fractured BJP mandate would force Mr Modi…

The critical question that Rajan does not address is how precisely a highly labour-abundant India can escape the path that every successful labour-abundant economy has followed to achieve economic transformation. Read full article In his recent Bharat Ram Memorial Lecture, Reserve Bank of India Governor Raghuram Rajan offered a puzzling proposition: that the global economy "is growing more slowly, and is more inward-looking, than in the past means that we have to look to regional and domestic demand for our growth-to make in India primarily for India." Rajan, in effect, rejected export-led growth as a feasible strategy for India. A corollary of his proposition: mass manufacturing cannot be the backbone of the Make in India campaign. To be sure, mainstream economists can hardly disagree with many of Rajan's policy recommendations. Export subsidies-which in any case are prohibited by the World Trade Organization-are not a smart way to stimulate export growth. And import substitution industrialisation through higher trade barriers isn't a winning strategy either. Indeed, I would go a step further and argue for the resumption of trade liberalisation that has…

Read full article Abstract: If there is one policy reform on which there is consensus, it is the Goods and Services Tax (GST). Yet, as negotiations between the Centre and states reshape this important reform, continuous reassessment is warranted. If we were to implement the flawless GST as originally recommended by the task force of the 13th Finance Commission (TFC), the gains would be immense. The latter had recommended that India replace myriad central and state indirect taxes by a single uniform value added tax on substantially all goods and services. With the combined indirect tax revenue of the Centre and states a tad below 11%, allowing for a handful of exceptions, the TFC taskforce had pegged the uniform GST rate at 12%. Taxation at this rate would mean that the taxpayer would not have to pay an unusually high tax on any single commodity or service. The burden will be spread evenly across different goods and services consumed. The single rate would also eliminate production inefficiencies since it would tax value added at each stage of production at the…

The government has not acted to end tax terrorism, which means the 'Make in India' campaign is in jeopardy Read full article In a recent interaction with Finance Minister Arun Jaitley, former Finance Minister P Chidambaram said that if he had had 282 MPs, he "would have passed a simple legislation that is required to undo" retrospective taxation. But the former minister's actions belie his words. Rather than demonstrate any inclination to repeal the law, as finance minister he had aggressively deployed it. The running joke during his tenure was that the National Advisory Council set the expenditures, the ratings agencies decided upon the fiscal deficit, and the finance ministry unleashed its taxmen to collect enough revenues to satisfy the expenditure and deficit targets. Using a term popularised by candidate Narendra Modi, this "tax terrorism" was among the root causes of the dip in the growth rate from which the economy is yet to recover. While Mr Jaitley has promised not to open new cases of retrospective taxation, his ministry too has been slow to take actions that would soften…

Read full article Abstract: Of the numerous initiatives that Prime Minister Narendra Modi has launched Swachh Bharat Abhiyaan, which would give Mahatma Gandhi the gift of a clean India on his 150th birth anniversary on October 2, 2019, has the greatest potential to transform the lives of all Indians – rich and poor. Sanitation has been the theme of virtually every government in recent times. Prime Minister Rajiv Gandhi had launched the Central Rural Sanitation Programme in 1986 and Prime Minister Atal Bihari Vajpayee the Complete Sanitation Campaign in 1999. But no previous government has shown the resolve and commitment exhibited by Modi. This time it feels real. Till date, sweeping streets and ending open defecation have occupied media centre stage. But equally critical to Swachh Bharat are access to piped water; well-functioning drainage, sewage and solid waste management in all cities and villages; elimination of ponds in which stagnant water collects and serves as host to bacteria and mosquitoes; instilling greater appreciation of cleanliness in all its aspects among the masses. Indeed, taking the campaign to its logical conclusion…