2017 – Landmark for economy?

The note ban is envisaged to change the course of the economy and politics in 2017. It has raised aspirations and Prime Minister Narendra Modi will have to deliver at a more feverish pitch. The hype over demonetisation has at the same time overshadowed much of the credible performance of the Modi government.

While many problems everyday are highlighted on the travails of people at bank counters and the ATMs, business stagnation, loss of wages, RBI’s forecast of 0.5 per cent GDP fall; the performance of the government on the international front, highway construction, dole denial or decision making remains in the background.

For instance, an overloaded media and government publicity machinery simply chose to ignore the most significant assault on the US and China. It also ignored whether the tough demonetisation scheme can change future economics and diplomacy.

The US Congressional Research Service (CRS) has virtually conceded that the hike in US visa fees, that affects employability of Indians in its country, is inconsistent with General Agreement in Trade and Services (GATS) obligations, evolved in the Uruguay round in January 1995.

It has come out with its study following the Modi government dragging the US to the World Trade Organisation’s (WTO) dispute settlement body in March 2016for increasing fees for H1B and L-1 visa categories. New Delhi stated that the move would impact Indian IT professionals and alleged that the US was violating internationally binding agreement, GATS.

The CRS says that one potential outcome could be a WTO determination that disputed statutes are inconsistent with GATS. It is a simple admission that despite friendship with Obama, Modi is correct and can change the WTO paradigm.

This broad hint may lead to intense diplomatic dialogue by the new Donald Trump administration and pursue India to move out of the WTO dispute resolution in lieu of the cut in visa conditions for Indians. If the US loses the case in the WTO, it would have to open up its doors to everyone including the Singaporeans, Chileans and other disliked Latin Americans.

India along with Indonesia has also sent strong messages to China for resolving disputes in the South China Sea. The message calls for utmost respect to the convention establishing international legal order of the seas and oceans (UNLOCS).

Moreover, New Delhi has also opposed China’s rail-road cargo service with Nepal as it hits sale of Indian goods. No wonder, Beijing has protested against India’s $1 billion aid to Mongolia and termed it a “bribe.” It even went on to tell India that if it opposed the Nepal link, it could face endless troubles.

Further, China’s support to Pakistan-backed terrorists such as JeM chief Masood Azhar continues to be an international irritant.

However, Modi through his whirlwind tours has tried to enlarge cooperation canvas and ensure energy security through deals in Saudi Arabia, the United Arab Emirates, Qatar, Mozambique and the US. The NDA government’s steps are considered bold and strategic by international experts, such as its move at making India a partner in the US defence strategy, which is to boost critical production.

This may help India gradually get into the Nuclear Suppliers Group (NSG). Recall that in July 2016 India became a member of the Missile Technology Control Regime (MTCR), considered a precursor to the entry to NSG. The government’s rescue missions in West Asia – Operation Rahat – exemplified that bold initiative can change perceptions about India.

Nobody possibly realised that choking terror funding was so simple. Jammu and Kashmir and Chhattisgarh witness unprecedented solutions. Terrorists are on the run, stone pelting has stopped and the Naxalites are taking the safe route of surrender as their cash evaporates.

It would not only change the development discourse but would also reduce expenses on policing – possibly equal to the cost of printing new currency notes and destroying the old ones – nearly Rs 30,000 crore.

Yes, the cash crunch has thrown new challenges to the rural economy. Agricultural markets saw a sharp drop in trading volumes. Small farmers who require funds sold their kharif produce at a discount. The government has thus started thinking in terms of farmers and kisan credit cards but the latest National Sample Survey (NSSO) says that 52 per cent farm families have an average debt of Rs 47,000.

A well-thought strategy is needed.Undoubtedly, demonetisation is a bold decision to move away from 1991 Manmohanomics. It is an experiment that is likely to become the anchor for future discussion on Indian economy.

Modi is accused of changing rules over 60 times in 50 days (Nov8 - Dec30). The detractors see it as flip-flop whereas others view it as the adaptability of a non-rigid government to suit practical needs.

This perhaps has prevented the Opposition from cashing in on the supposed discontent over the note ban. A headline on December 29 read: “Round one seems to be Modi’s”.

This may well be correct as seen by the “joint” Opposition’s rejection of Congress being the automatic leader of an anti-BJP campaign.

Political circles are still apprehensive of scam-tainted Congress, or “which,” to quote Rajmohan Gandhi (Indian Express, Dec 27), “did not or could not fight corruption… Modi seems closer to cultural revolutionaries of the Right and Left”.

However, digitalisation has its problems. It is expensive and security is lax. Even Infosys chief Nandan Nilakeni says that each transaction costs Rs 5 to 15 more on e-wallet and much more on debit and credit cards.

But it is fast. Overnight it has catapulted India into a digital age, a promise the 2016-17 Budget made – a big leap since computerisation by Rajiv Gandhi. Prudent Modi is expected to make it inexpensive, secure and people-friendly.

Modi has to bring farms and farmers into focus in the Budget. He has to ensure when production rises, farmers’ investments are protected and that middle men do not thrive in their difficult times.

It goes without saying that the note ban is a big gamble. Modi has to win and for all -- rural folks, urban workers, and the industry. He has to send banks after the large lenders to end bad loans. The pitch must be
feverish.

People want to see him succeed in a globally challenged economy. They want him to take care of their travails, decide on floor deposit interest rates at 9 per cent so that their money value remains intact, do away with income-tax, highway tolls, make people cash rich and cut bank transaction costs.

More money into people’s hands is the panacea for pacing up economy. The country expects 2017 to become a landmark in Indian economy.

By: Shivaji Sarkar