Privatisation: But from which PM Modi?

Human memory is short. That alone can explain why many are deliriously happy with his latest slogans and ignore seven years of poor "doing business" climate, taxtortion, extortionate oil prices

After seven years, Prime Minister Narendra Modi has suddenly re-emerged as the Vikas Purush, which was to be his original mojo. In two separate speeches in Parliament, he has used words that would bring tears to those with a religious devotion to the wonders of capitalism and privatisation. One, “the culture of abusing the private sector is no longer accepted” and, second, “can babus do everything … what type of capability have we acquired by handing over the country to babus?” To this, Sanjeev Sanyal, principal economic adviser to the finance ministry, tweeted: “lived to see an Indian Prime Minister make such an unapologetic pitch for India’s private sector”. I can only say, the wonders of tortuous Indian policymaking through political speeches never cease, and neither do the reactions of otherwise accomplished people to such speeches. This is because we forget easily or we suffer from wilful blindness.

What we have forgotten

Mr Modi came to power almost seven years ago, riding on a highly energetic and imaginative marketing campaign that colourfully blended slogans, promises, and accusations, effectively tapping the anger of everyone — from jobless youths to frustrated businessmen. Among his two memorable pre-election slogans were “the government has no business to be in business” and “minimum government, maximum governance”. Now we are hearing the same thing in different language. In the interim seven years we were treated to an embarrassing hurricane of empty memes, catchphrases, alliterative coinages, and clever abbreviations plus schemes, yojanas and projects, a much higher dose of babudom and, of course, the madness of demonetisation. Not much privatisation, nor any hosannas for the private sector. In fact, quite the opposite. Mr Modi started off by changing the names of schemes of the United Progressive Alliance (UPA) government, expanding them, and adding many of his own. Taking a leaf out of previous Congress governments, it announced a loan mela called MUDRA. Thinker and writer Arun Shourie correctly described the government as “UPA plus cow”.

Public sector: There was no reform of the public sector, no meaningful disinvestment, only sleight-of-hand, such as ONGC buying Hindustan Petroleum and Power Finance Corporation buying Rural Electrification Corporation. Billions of rupees have been taken out of government companies as dividend, denuding them. A couple of them don’t have enough money to pay salaries. Ownership, corruption, and lack of accountability in public sector banks remain unchanged, with the result that hundreds of billions of rupees of taxpayers’ money has been injected into them just to keep them alive.

Private sector: What have been the thoughts of wealth creators being extolled today? Rahul Bajaj was forced to say “we had an Emperor on May 27th 2014 and the shine is wearing off”. Among Mr Modi’s many catchy slogans was “tourism, not terrorism”. But despite ranking eighth among 140 countries under “cultural resources and business travel”, India ranks 109th in “tourist service infrastructure”, in a study by the World Economic Forum. A few days ago Vallabh Bhansali, a financial expert and die-hard fan of the current regime, said Budget 2021 beat the 1991 reforms. And yet, a few months ago he had said: “If some tax regime or provisions go against the government, it changes the law. The citizen is battered so that there is no way his innovation can work and he must always lose. Subsidies, arbitration awards are not paid fully and therefore there is a lack of confidence. We have gone beyond ease of doing business and come to a stage where the government has to say, please do the bus­iness.” This was seven years of the “let the private sector create wealth” philosophy of the prime minister.

In 2015 when Mr Modi gave his first media interview, Sanjoy Narayan of Hindustan Times asked him: “The business community is upset that not much has changed in terms of ease of doing business and with what they see as a spate of tax notices? Do you think your government has been able to make a difference?” His reply was a masterful misdirection. “My government is working for the common man … Industry has to come forward to take the benefits of the process we have set in motion … Red tape should not be there does not mean it should not be there for Mukesh Ambani, but be there for a common man; that won’t do.” Today there is far more red tape and tax terrorism for small and medium businesses.

Hence, my question in the title of the piece: Which PM Modi should we believe in? The one whose slogans sent our pulses racing before the elections and the one who has made no change to the maddening hurdles of doing business, or the one whose speech a few days ago is making us weep with joy when he said: “Wealth creators are also important for the country, only then wealth can be distributed.” The Modi government, which wasted seven years debunking big-bang reforms and has obsessively tinkered with public sector banks (Gyan Sangams, Indradhanush, Banks Board Bureau, recapitalisation, mergers, etc) or the one that is now seen as a radical privatiser of two public sector banks?

Human memory is short. There is a limit to how many things we can focus on and that limit is smaller than we think. We remember only what is very recent (recency bias) and meld it with our other inherent biases (Mr Modi is the Indian Thatcher) to form quick conclusions. Human memory about policy issues is even shorter. That alone can explain why many are deliriously happy with his latest slogans and ignore seven years of poor “doing business” climate, taxtortion, extortionate oil prices, and high dependence on babus and the big state that has kept the enterprise system stifled.

The writer is the editor of www.moneylife.in | Twitter: @Moneylifers