In our view, it is important to understand what a regime change
at the center would mean for the Indian economy, especially if the change leads
to Mr. Narendra Modi becoming prime minister. As suggested earlier, not
many people we spoke to were clear about the economic policies, programs and
agenda of BJP in general and Mr. Narendra Modi in particular.
In our view, presently India is struggling with the
limitations of the Nehruvian model of economic development that we have
followed since independence. Even BJP, when it came to power, decided to leave
the alternative model “integrated humanism” proposed by its ideologue Mr.
Deendayal Upadhyaya and followed a variant of Nehruvian model terming it
“Gandhian Socialism”.
The current variant of the Nehruvian model is largely a
distortion of the classical Keynesian model that advocates a larger role for
the private enterprise with active state intervention during extremities of
business cycle and argues against higher savings in both private and public
sector. The Keynesian model has its genesis in the great depression and mostly
found useful during larger economic crisis.
However, Modi seems to be an advocate of Laissez-faire or
free market which entails minimal state intervention even during crisis. He has
implemented the model in Gujarat with limited success. But it is pertinent to
note that unlike many other states, Gujarat has a history of 200years of
industrialization and 60mn people who are globally recognized for their
enterprising skills.
This is certainly not the case for most parts of the rest of
the country.
It is therefore important to evaluate whether the Gujarat
model could be replicated at the national level, or in other words whether Modi
can deliver the same results as Prime Minister what he has delivered as Chief
Minister of Gujarat.
In our view, considering the present state of socio-economic
development of various parts of the country, it would be 10-15years too early
to test the Laissez-faire model at the pan-India level. Modi’s Gujarat model
therefore may need significant adjustments at the national level. Perhaps an
amalgam of Gujarat’s Laissez-faire and Chhattisgarh’s socialist models could
provide a more workable model at this point in time.
But at the same time the Gujarat model should not become his
limitation also. Modi has very successfully demonstrated his strategy skills in
past one decade. It would be totally wrong to assume that he would not be able
to adapt to the larger responsibility and formulate an appropriate strategy for
integrated development of the country.
In our view, given the almost unmanageable socio-economic
diversity of India, the model propagated by Mahatama Gandhi is still the most,
and perhaps the only, relevant economic development for the country, viz.,
focusing on domestic strengths rather than weaknesses and building bottom up
beginning with Village economy.
Previous posts in
the Mandate 2014 series:
Thought for the day
“So, I'm lying on the couch and Laura walks in and I say, 'Free at last,' and she says 'You're free all right, you're free to do the dishes.' So I say, 'You're talking to the former president, baby,' and she said, 'consider this your new domestic policy agenda.”
George W. Bush (American, 1946 - )
Word of the day
Sobersided (adj)
Solemn or grave in disposition, attitude, character, etc.; serious-minded.
(Source: Dictionary.com)
Shri Nārada Uvāca
RBI Guv is renowned for his prophecy on US sub-prime crisis.
Wonder when he would open his third eye on Indian sub-prime!
