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LATEST NEWS UPDATES | This government's modus operandi is constant distraction -Pratap Bhanu Mehta

This government's modus operandi is constant distraction -Pratap Bhanu Mehta

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published Published on Dec 24, 2016   modified Modified on Dec 25, 2016
-The Indian Express

It distracts our attention from vital questions of institutional health and economic governance.

During the second half of UPA 2, the press, with some justification, created a frenzy of anxiety over India’s future, especially its economic future. After two and a half years of the Narendra Modi government, if the same standards of concern about India’s future were brought to bear on the present government, what would the heightened expression of concern look like? Why have the dramatic headlines that focus on worries of substance disappeared?

The first headline would be: Spectre of Stagnation. Despite the headline GDP growth number, private investment has barely moved. In any other context, such tepid growth in private investment would have had us screaming from the rooftops. At the end of the day, this number tells you more about how the economy is doing and is likely to do than almost any other number. Second, we used to joke that India can grow despite the state. But the fact of the matter is that for the first time in a decade, the share of public investment in projects under implementation exceeds private investment. And this is likely to continue for some time.

In short, we are becoming an economy that is not growing despite the state; it is becoming even more reliant on the state. The risks are that such an economy will need constant pump priming by the government, creating all sorts of fiscal and institutional distortions.

Admittedly, the government inherited a slew of problems. But even accounting for that, in any other context, such tepid private investment, combined with weak IIP numbers and job growth would have led to a great expression of economic anxiety.

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The Indian Express, 24 December, 2016, http://indianexpress.com/article/opinion/columns/demonetisation-narendra-modi-government-economy-indian-future-cash-flow-people-circus-4442312/


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