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My take on Team Modi 2.0 (written before the awful GDP data) will soon be on the web. I’ll supply a link. Here’s a thread with some thoughts: My reading of Nirmala Sitharaman as finance minister is that Modi wants to drive the agenda from the backseat. That is both good and bad.
Obviously, the economy warrants decisive leadership. A lot of buzz has been created around privatisation, labour and land reforms under Modi 2.0. I have recently argued in favour of using structures like InvIT, TOT and NIIF for asset monetisation at scale. google.com.hk/amp/s/www.bloo…
Since ministries (such as labour) have to be on board, I see Sitharaman’s role as a sort of coordinating minister for economic affairs. So far so good. The risk of Modi driving the agenda is that his strongman instincts could, like in Modi 1.0, push institutions into irrelevance.
So I think the new finance minister needs to have both a “to-do” and a “not-to-do” list. This, for instance, should be high up on the not-to-do list: cogencis.com/newssection/fi…
And while I welcome the release of the unemployment survey pib.nic.in/newsite/PrintR… from now on Niti Aayog must stay out of official statistics. Not a single balance sheet in India today can rev up the economy. Foreign risk capital wants to come — if it’s offered truth and trust.
My colleague @anjani_trivedi, a keen China watcher, gave this reminder on how land is a bottleneck if India wants large factories and supporting infrastructure: bloomberg.com/opinion/articl… Modi 1.0 didn’t have upper-house strength to push through land acquisition, but Modi 2.0 will.
Besides, land “acquisition” should only be for holdout cases; land “pooling” is a fairer solution —acceptable to farmers and affordable for industry/infrastructure. Let owners of land earn a decent, continuous stream of dividends. That’s a big opportunity for Modi 2.0.
What besides land and labour? I have written extensively about banking and capital market reforms. I’m missing one area: product markets. Now that elections are over, and the “Gabbar Singh Tax” jibe has gone away, it’s time to be practical and fix GST. Slash compliance costs.
That will leave energy markers as the only other thing to complete a picture of supply-side reforms under Modi 2.0. It’s disconcerting that discom debt has gone back to pre-Uday levels. Who in their right minds will produce power if they get paid after a year of supplying it?
On the demand side, consumption and investment are weak, yes. But on exports, Modi 2.0 must use new foreign minister S Jaishankar’s expertise and connections to both sell more to China (and reduce India’s bilateral trade deficit) as well as replace China in final U.S. demand.
The other role I see for Jaishankar is in helping India tiptoe around what my colleague Tim Culpan calls the tech Cold War. bloomberg.com/opinion/articl… For India’s 5G rollout, it will be an important issue.
Penultimately, thank you for engaging with the thread, agreeing with some things, disagreeing with others. My big wish from Modi 2.0 is that we can keep our conversations alive, and to paraphrase Tagore, not lose the clear stream of reason in the dreary desert sand of dead habit.
Finally, do follow my talented mates: @shuli_ren on China and markets; @davidfickling on resources, airlines and trade war; @anjani_trivedi on industrials, auto and trade war; @nishagopalanhk on banking, deals and property. Here’s my just-published piece: bloomberg.com/opinion/articl…
And this post script only because I couldn’t fit in @tculpan who covers tech and the “digital Iron Curtain”; @Moss_Eco who has an eye on all things central banking; @mbrookerhk and @RosenthalRC who edit us robustly; and @aaronMCN who showcases all of us on social media. Thanks!
