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BJP's Prime Ministerial candidate Narendra Modi is all set to woo a select set of financial elite in the capital on Thursday in a closed door meeting meant to articulate his economic vision for the country. It is not as if they need much wooing given the predisposition corporate India as well as leading international brokerage houses have shown towards the Gujarat Chief Minister. Nonetheless, all eyes will be set on the meeting that is aimed at sharing Modi's ideas to revive the economy and his precise thinking on issues ranging from infrastructure to macroeconomic stability. 250 financial market players from 35 countries including representatives from investment banks like JP Morgan, Morgan Stanley and CLSA have been invited for the event.
We've already got a fair idea of how BJP's economic canvas is likely to emerge and what 'Modinomics' could be all about through various speeches as well as from the party's general-secretary, P Muralidhar Rao who shared with Business Standard a brief blueprint of what the party has in mind.
The key highlights of that model are likely to include -
1. Plans to remodel UPA's social welfare schemes like NREGS on the lines of the Pradhan Mantri Grameen Sadak Yojna
2. To shift focus of welfare programs from distribution of doles to asset creation
3. A thrust on infrastructure through creation of smart cities, bullet trains crisscrossing the nation and a renewed focus on public investment in agri-infrastructure
4. A lowering of import dependence by indigenizing defense equipment and more import substitution
5. Prioritizing GST implementation
But what are some of the short, medium and long term measures economists want Modi to articulate?
We spoke to four leading economy watchers on their three key expectations -
Rajeev Malik, Senior Economist - CLSA Singapore
1. Politicians in the running for the top job typically say all the right things, which doesn't really tell you anything about what the record of delivery will be. It is a bit like appreciating a show apartment, fully knowing that the actual deliverable will fall short. Still, Mr Modi has the practical advantage of having successfully run a decent show in a vibrant state for a long time. The bottom line for Mr Modi should be to map an agenda which will, ultimately, improve the ease of doing business and also ensure higher sustainable non-inflationary and inclusive economic growth. Achieving this will be a lot easier said than done, and will require a multi-pronged approach covering near-term fixes and long-term initiatives. In essence, Mr Modi will have to be a fire-fighter and a town planner as unlocking of India's economic rise needs both.
2. To achieve the above-mentioned higher sustainable non-inflationary and inclusive economic growth, Mr Modi's agenda will need to shun way from excessive populism, better targeting of subsidies, accelerated focus on lifting up the manufacturing sector and boosting infrastructure, both physical and social, and a fresh impetus to reforms in the real economy. Fiscal reforms (e.g. GST, DTC) and supply-side initiatives to combat food inflation and structural impediments are the need of the hour. Increased focus on quality vocational institutions is also needed.
3. Higher non-inflationary speed limit on economic growth is a must for creating employment opportunities for India's ballooning working-age population; in the absence of this, the potential dividend could turn into a liability. All of this will need to be done in a more transparent manner creating a level playing field, and with reduced rent-seeking behavior.
Dr Ajit Ranade, President & Chief Economist - Aditya Birla Group
1. On priority, I'd expect concrete ideas that will give momentum to the various stalled projects to help kick-start the investment cycle. The CCI has yielded some results, but perhaps it came too late. I'd also like to see a determined effort to address the inflation situation which is largely a result of fiscal imprudence. We need to tackle that with efforts on rationalizing spending, targeting and consolidating subsidies and de-duplicating centrally sponsored schemes.
2. Rollout of GST is a semi-urgent priority. The BJP must ensure it can build a national consensus on the issue because many states waiting to come on-board the GST regime are BJP run states.
3. Last but not the least, I expect the new government to identify a slew of executive actions not requiring a legislative mandate or ascent from even the parliamentary standing committee.
Dr Surjit S. Bhalla, Chairman - Oxus Investments
1. I'd want a clearly delineated set of policies that will lower inflation and revive growth. But more specifically, I would like to observe a quick and simultaneous attack on reforming social welfare policies and creation of employment. For the latter to happen, it is imperative that labour laws are amended and people are able to hire and fire while protecting certain rights of workers.
2. More decentralization in execution of social expenditure on schemes like NREGS, food security and mid-day meals. States need to be empowered and given money directly to reduce leakages. This has partially begun under the UPA government.
3. Long pending reforms on taxation - GST (Goods and Services Tax) and DTC (Direct Taxes Code) need to be brought in expeditiously
DK Joshi, Director & Chief Economist - CRISIL
(Mine is a to-do list for all political parties, not specifically the BJP)
1. A durable solution to inflation without which policies that support growth cannot be implemented. A well coordinated policy on inflation with the central bank is needed to engineer a mild revival and create a platform for sustained growth.
2. The biggest sufferer of this slowdown has been the manufacturing sector. An environment needs to be created to make it the engine of growth. The blueprint of this ecosystem has already been articulated in the new manufacturing policy, but there has been no progress in the implementation of its proposals. We need to push harder on this front, particularly the liberalization of labour laws which is proving to be the Achilles Heel for a manufacturing revival and ensuing job creation.
3. Private investment needs to be revitalized and that is directly linked not only to a manufacturing revival but also to a surgery on the infrastructure side where we are witnessing maximum financial stress. Projects have to be made viable and key reforms in the power sector, on gas pricing etc need to be completed for the sector to bounce back.
