BJP's rebel with a cause

Demonetisation, according to the author, led to another major flaw in the way the government dealt with the crisis in the micro, small and medium enterprises sector

India Unmade

How the Modi Government Broke the Economy

Yashwant Sinha with Aditya Sinha

Juggernaut 

242 pages, Rs 699

This is a book that the Congress cannot do without in the forthcoming general elections. Everything that has gone wrong with Narendra Modi’s government has been discussed meticulously and set out in its 11 chapters.

If you still harbour doubts about what the book intends to achieve, read the last four sentences of its epilogue: “In summation, the Modi government is just about event management. He is the best in creating false impressions. In the process, Modi has given India its ‘lost half-decade’. Elect him again and by 2024 it will be a lost decade.”

That this statement is written by Yashwant Sinha, a well-regarded and competent finance minister in the Atal Bihari Vajpayee government for about four years, adds to the book’s special appeal and also raises obvious questions about why he has written this book now. He, too, is acutely conscious of this.

Mr Sinha says he was not always a critic of Mr Modi. Indeed, he was among the first to have sensed Mr Modi’s popularity and had announced that he should be made the Bharatiya Janata Party’s prime ministerial candidate in the 2014 elections. His disappointment is that in spite of the BJP securing a majority in the Lok Sabha elections and the fact that the newly elected government had everything going for it on all fronts, the promises made were hardly fulfilled.

Mr Sinha writes he waited for 40 months before starting to speak out. “While others may have stifled their own dissent, I have not. I cannot remain silent; history will not forgive me if I did. I speak out now in the national interest, not for any other reason.” He does not leave you to guess what those other reasons could be. He clarifies right at the start of the book that he has no personal vendetta against Mr Modi for not appointing him a minister or giving him some other post, “as some people incorrectly speculate”.

Not surprisingly, Mr Sinha reserves his harshest words for demonetisation. He calls it a catastrophe and, worse, he says it broke the back of BJP’s core vote bank — the owners of micro, small and medium enterprises (MSME). Demonetisation, according to him, led to another major flaw in the way the government dealt with the crisis in the MSME sector. He argues that “to mollify this sector and forcefully improve liquidity and the disbursal of bank loans, which have dried up thanks to the non-performing asset crisis, Modi’s government threatened the RBI’s autonomy, another move fraught with long-term negative consequences”.

An entire chapter is devoted to the way the government has tried to dress up the numbers on the economy’s gross domestic product (GDP) by, among other things, changing the base year. More worrying is his revelation that the government has plans to change the base year for GDP calculation once again. What, unfortunately, dilutes the authority of the book is that such an important statement is based on rumour and hearsay.

The most illuminating chapter is on Mr Modi’s style of functioning. Mr Sinha’s valid criticism is that the prime minister has centralised the decision-making process and, therefore, deprived himself of the benefits of the institutional memory of a government, its civil servants and technocrats.

A running theme in all the chapters is how the Atal Bihari Vajpayee government had governed with greater vision, more meticulous planning and better outcomes. In the chapter on the goods and services tax (GST), Mr Sinha rightly bemoans the fact that the Modi government did not embrace a three-rate structure from the start — a platform that he as finance minister had set up with a standard Cenvat rate of 16 per cent, along with a lower merit rate and a higher demerit rate.

Mr Sinha also draws attention to the fact that capital expenditure has not seen any significant increase in relation to GDP, and particularly in relation to revenue expenditure. He makes fun of Mr Modi’s failure to privatise Air India. Mr Sinha does not mention, however, that he, too, had proposed the privatisation of Indian Airlines in his Budget of June 1, 1998. That proposal, too, did not get implemented. Such is India’s politics.

The book is easy to read, perhaps because it is co-authored by Aditya Sinha, a journalist. There is no great analysis in it, but Mr Sinha has competently put together in one volume all that one may find problematic in Mr Modi’s governance style and policies. Readers are left wondering if Mr Sinha, with his vast experience as a bureaucrat and a minister, should have offered some alternative strategies to avoid the kind of mistakes Mr Modi made. For instance, the chapter critiquing the government’s Make in India campaign underlines the problems but does not offer a way out of the crisis in Indian manufacturing. Are labour law reforms a way out?

For serious readers, the chapter headlines do not enhance the book’s appeal. Flippant titles such as “Pradhan Mantri Attention Deficit Disorder Yojana” to refer to the many schemes that Mr Modi has launched or “Gayi Sarkar Teri Taxation” for the GST undermine the gravity of the arguments that Mr Sinha has put forward in many of the chapters.