Isro chief K Sivan has stated its Vikram lunar module, part of the Chandrayaan-2 mission, had a hard landing on the lunar surface. Perhaps something similar could be said about the India story, which had risen dramatically over the last decade but no longer attracts so much attention. Investments and savings have soured, the bad loan problem remains, now consumption and demand are collapsing (as unprecedented declines in the bellwether auto sector indicate). GDP growth declined for five successive quarters and hit a low of 5% in the last April-June quarter. As foreign companies ship out of China due to enhanced US tariffs, they are relocating to countries such as Vietnam, Malaysia, Mexico and Bangladesh while India receives little benefit.
While the Modi government has made bold moves on the foreign policy, security and political fronts, economic policy has been marked by excessive caution, incrementalism and empowerment of the bureaucracy rather than markets. This has led to a paradox. As an example, Prime Minister Narendra Modi has managed the international repercussions of the nullification of Article 370 in J&K deftly, while balancing great power relationships with successful meetings with Presidents Macron, Trump and Putin within the last three weeks. But diplomatic heft also comes from economic growth, on which New Delhi is slipping.
Alongside Hindutva excesses, widespread lynchings, the NRC fiasco where there is talk about detaining millions in Assam even as the government considers extending NRC to other states, do not cumulatively give rise to a pretty picture. They may constitute the surround sound which explains why the 370 decision, even if inherently justifiable, was in general received negatively in the Western press. India is known as a land of many colours, and any undermining of that reputation will negatively impact its soft power. This amounts to a double whammy, as the economy’s engines failing to fire indicates a decline in hard power as well.
In this context, excessive sound and fury in claiming government achievements could come in the way of taking necessary corrective steps and thus prove to be counterproductive. However, by calling for a $5 trillion economy by 2024, Modi proclaimed the right target. And the government can call on enough economic experts who can tell us how to get there. Listen to them, rather than getting bureaucrats to craft economic policy. Have the political courage to take bold reform measures. And yes, social inclusiveness would help too.
