Modi Magic Waning?

Asis Ranjan Sengupta

All the euphoria created over fake nationalism in the wake of 2014 parliamentary poll, and empty roars against terrorist outfits proved futile. On the contrary, countrymen were terrorised by fringe saffron outfits on the one hand, and the combined attack of Note Ban and faulty implementation of, conceptually sound, Goods and Services Tax (GST) on the unorganised sector workers and small traders, causing paralysis of economy. So much so that, export, manufacturing and other key sectors registered a steady decline, affecting the GDP figure, which is now considered the soul criteria of growth, again Growth being the soul parameter of the health of the economy, and not the equitable distribution thereof. The Tax collection is going down, fiscal deficit widening.

In fact, the present dispensation was just relishing dividend of lower crude prices caused by the crisis in the Gulf countries, from start,as the tax remained the same, and budgetary allocation against core sectors like education, health, agriculture slashed, all fresh recruitments in Government offices suspended, and a comfortable fiscal deficit was managed somehow. And rating agencies like Moody's raised rating to the pleasure of Modi-Jaitley duo. But as crude prices are going steadily up, the situation is volatile, prices are rising alarmingly, demands are sinking, production sagging, import costs rising, all are posing challenge before the country. If prices are not checked, and fiscal deficit rise keeping upward trend, it will be difficult to lower interest rates further, and that is likely to invite the displeasure of big corporate houses, whose patronage is the urgent need during the elections ahead, particularly the Parliamentary one in 2019. Mr Modi has gone so frustrated and agitated that during a rare press interview to Electronic media, to his pet Zee News channel, openly advocated in favour of "Pakora" vending as a viable alternative economic activity. In this connection, it won't be out of place to remember that, CM in W Bengal was earlier ridiculed by the people here for her advocacy for "Chop" (the Bengali version of "Pakora") and Tea stalls, as good source of mass earning. Is it a re-run of "what Bengal thinks today, India thinks tomorrow", observation by Gokhale, the prominent liberal leader, during the freedom movement?

But the matter did not end there, to bridge the widening fiscal deficit gap, the Modi-Jaitley economics, have recourse to another debatable route. The disinvestment has always been a very favourite agenda with all the Governments since 'globalisation'. But the idea of large scale sell-out never took place due to the absence of buyer. So, the latest move is one of insider trading. This is what it means. Oil & Natural Gas Commission (ONGC), is a profit earning global PSU, enjoying some respectability, engaged in mainly oil exploration and search for new oilfields, in India as well as abroad, with it's overseas arm ONGC Videsh. Hindustan Petroleum Corporation (HPCL) is a fuel distribution company, in the domestic market. HPCL is also a profit earning PSU. So, see the magic, in one stroke, the entire Government stake in HPCL was sold to ONGC. Or rather the latter was made to acquire the major Central Government share, of the former, by a large sum of Rs 37 thousand crores. The proceeds went to Exchequer, producing a favourable impact on fiscal deficit narrowing, as also the achievement of disinvestment target. Both are likely to remit a good signal to domestic and multi-National Corporates.

This is just a change of hands, from right to left or the reverse. Earlier, same farcical disinvestment exercise was witnessed when ONGC went to float share in the Market, and in absence of any suitable buyer, Life Insurance Corporation (LIC), another PSU giant, was made to buy the entire stake. Further HPCL, is going to take over sick PSU like the Mangalore Refineries. Thus ONGC-HPCL combine is being projected as a big multi tasking oil giant, engaged in all types of activities in connection with oil exploration, refinery and distribution. In this connection, it may also be recalled that, earlier, the Gujrat State Petroleum Corporation (GSPC), which is a sick unit, bearing the burden of alleged financial scam of nearly 20 thousand crores, during the regime of present PM, who was then Gujrat CM, was earmarked for take-over by this vey ONGC. At the end of the day, the huge fund required for such hand over and take over exercise, is stated to be financed by again none other than a consortium of PSU Banks like PNB and Bank of India, and others. So what is the game? It is just one of Government deficiency (fiscal deficit) being bridged by sell of stake in Government owned PSU, the cost of which is forced to be borne by Banks who are financed by public money, particularly the small depositors spreading across the length and breadth of the country. It is as simple as that! What else it could be than cross subsidising the exchequer by the people, and that in addition to their normal tax burden.

See the funs, all the PSU organisations are as usual made the pawns in the hands of the rulers, who always used it, for the cover up of their inefficiency, failure, and bureaucratic whims, let alone over-all corruption. This is how the Banks have been sent to coma down the decades, and of course how, plush sector potential units like Air India, have been ruined. Now that ONGC is a healthy unit, without any debt burden so far, the remaining juice must be squeezed out till it is reduced into sick unit. The Central Governments always exploited the healthy PSUs as milch cattle, this time in ONGC, they found the Kamdhenu to reduce the public debt by putting it in debt by borrowing from Banks, already ailing under the burden of such bad debts.

The problem with Modinomics is from the beginning, it highlighted on 'Vikas' of so-called 'Gujrat Model' which always neglected the agriculturists and common masses, and focused only on investments, mostly foreign, through the domestic crony agents. That is why so much discontent was visible among Dalits, farmers and even the advanced Patidar community, whose opportunities are sinking rapidly. Dr Raghuram Rajan, ex-RBI Governor, pointed out the limited possibilities of rapid growth by massive foreign direct investment, the experiment that succeeded in China initially, decades back. But he found none to listen to his suggestion for search of an alternative. The idea of reaping the benefit of Globalisation appears to be over, as the principal proponents of the Globalisation like USA or UK are now feeling the heat, and now against it and in favour of raising walls of protection on their contrary. So, it is evident from the last Davos summit, the staunch advocacy for globalisation in international forum by India, may benefit old beneficiary like China, but never new entrants like India, who may not get any thing beyond Foreign Portfolio Investment (FPI), or International Institutional Investment (III). In fact further fact finding discloses, as also revealed by a recent public speech from the respected economist and former PM, that the Indian import is highest from China, and it has gone up manifold since the days of stated demonetisation exercise. The impact of liberalisation and globalisation, is that the wealth and income accumulation as a result of 'growth' are concentrated in the hands before, like never before. Recent Oxfam survey revealed that 73% of wealth is concentrated in the hands of 1%, and this trend gained momentum in last three years, the last and current year broke all previous records.

The fact remains, the economic policy followed by Modi dispensation, is in no way different from the ways of the UPA, since the days of liberalisation, the only difference is, the present one is more crude, lacks the minimum human touches of the previous regime, and gestures are more naked and ugly, as well as the words or phrases being hurled are more shrill and threatening for the common citizen, who have every reason to believe that they have been grossly deceived in terms of the 'Jumla' or false electoral promises, as also of the misleading assurances being uttered everyday to stupefy them.

Frontier
Vol. 50, No.34, Feb 25 - Mar 03, 2018