"During the first
period of a man's life the greatest danger is not to take the risk."
—Soren Kierkegaard (Danish, 1813-1855)
Word
for the day
Hypostatize (v)
To treat or regard (a concept, idea, etc.) as a distinct substance or
reality.
Malice
towards none
The people of
Delhi, who empowered Arvind Kejriwal to take their fight against corruption
forward, have indicated (through MCD elections) that they are not happy with
him.
The question is why
they are not coming out on streets, the way they did during IAC campaign, and
asking him to step down?
Or Is there much
more than what's meeting the eye?
First random
thought this morning
Markets shrugged off Brexit and Trump in no time. Both were
marketed aggressively as potential disaster. Traders are fully reconciled to
two Fed hikes later this year. French elections gave no opportunity for a short
trade either. OPEC unity has so far not yielded much in terms of inventory glut
easing or price stabilization.
Back home the market rally is being attributed to
Demonetization (accelerated financial inclusion, better fiscal, etc.),
something that was marketed as monumental disaster by many reputed economists
and analysts.
The disregard for experts' opinion by market was never so
stark.
This one also falling in place
The most important contribution of
the present day government to Indian economy, in my view, is its national
approach to some critical economic issues.
After many decades many decades we have a political party in power
with such overwhelming dominance and aspiring for complete dominance. The
overriding influence of the central leadership over the vast area of dominance
(BJP ruled states now encompass ~60% of Indian population) allows near seamless
economic integration of many large states like UP, MP, Maharashtra, etc.). At
the same time the strong aspiration of BJP leadership to rule over the rest of
the country (especially Bihar, West Bengal, Odisha and Karnataka) motivates
them to focus on economic development of these regions as well.
Implementation of GST is more popular indication of the economic
integration efforts of the incumbent government. But in my view, the more
relevant efforts include pan-Indian approach for railways and highways
expansion, an apolitical approach for power sector reforms, efforts to
establish a nationwide agriculture market, gradually phasing out tax incentives
on area specific investments, amendment in mining laws that allows the mine
holding states to draw a larger share in royalties and incentivizes putting
manufacturing facilities closure to raw material, etc.
There are two things, impact of which will be evident only later,
are -
(a) Putting onus of
executing central schemes on states through recommendations of 14th finance
commission. Under the current circumstances where there is one dominant party
with strong central leadership, this design may work well. The planning and
policy making can be centralized and execution could be delegated to states.
But it is to be seen if it will work in different circumstances.
(b) Replacing the legacy
Planning Commission, which was empowered to make development plans in consultation
with states, with a more advisory body NITI Aayog. While both the bodies came
into existence through executive orders and depend on the government's will,
the planning commission had assumed an important role in the 5yr plan based
development model adopted by India since independence.
The new design however appears to suggest that we no longer want
to follow the central planning model that was loosely based on the Soviet
command based economic development model. It however also does not suggest that
we are ready and willing to adopt the laissez-faire model of USA, where markets
are free and federal states are materially powerful.
The conflict between the development economists who have so far
dominated the Indian policy making arena, and the market economists who have
given more important roles probably for the first time, will take some time to
resolve, in my view. We will be able to judge the pertinence of NITI Aaoyg only
when that happens.
Overall, I feel we have taken many steps on the road to economic
integration of the country, and this piece shall fall in place in next decade
or so. (refer
here)
Read with the following
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