What Is the Opposite of Achche Din? Will the BJP Course-correct?
“The economy is in a tailspin and we are heading for a depression,” said Dr Subramaniam Swamy, the Bharatiya Janata Party’s (BJP’s) maverick leader and member of Parliament (MP), in an interview last week. He said that India’s real economic growth is lower than what the government claims and, if nothing is done quickly, banks may collapse and factories would start closing. The country’s GDP had fallen to a three-year low level of 5.7% in the first quarter of 2017-18. This is a shocking decline from expectations of double-digit growth after the BJP surged to power in May 2014. Dr Swamy’s concerns have resonated with a lot of people. 
 
The mood of the nation has changed. There is a sense of anger about botched opportunities, disappointment that the promise of ‘achche din’ has been derailed by a series of rash decisions, including demonetisation. Three years ago, the economy was at the takeoff stage, riding on a good monsoon and incredible optimism about the changes promised by Narendra Modi (economic reform, war on corruption, more jobs, better governance, less government and ease of doing business). We are in a self-created crisis. Every top economist is advising the government to do whatever it takes to push public and private spending to kick-start the economy. Can this be done without re-capitalising banks in a big way at the cost of the exchequer? And won’t this, effectively, put end the effort to recover bad loans?
 
Dr Swamy, who taught economics at Harvard University, has several out-of-the-box ideas for the prime minister (PM), including the abolition of personal income-tax. The government has ignored them. Instead, finance minister Arun Jaitely, after consultations to revive the economy, has come up with a push for ‘affordable housing’ as the solution. The government has announced eight PPP (public private partnership) options, including six for promoting affordable housing with private investments using government land. Recapitalising banks again is another.
 
Affordable housing is last year’s idea—31 December 2016 to be precise—as part of the PM’s address to the nation. The Union Budget followed up with an attractive package to promote housing for all; but, barring a few developers (Tata, Godrej, Mahindra, Rahejas, Sobha and Piramal), almost all others are in deep trouble. They are unable to deliver apartments paid for by customers; many have spent time in jail; some may be headed there soon. At a time when home-buyers are struggling to get their fully-paid apartments delivered, talk of affordable housing sounds like a joke. In 2008, the bailout offered by lenders to realty firms was misused to keep property prices high. Affordable housing should not be a catchy new tag; it should be about reducing real estate prices in our cities to reasonable levels. 
 
Similarly, infrastructure spending to boost the economy cannot be about showpiece projects like a bullet train of questionable utility (it is not even connecting Delhi-Mumbai). With the economy in a shambles and the promised job growth nowhere in sight, here are a few issues that could trip up the government, if it is not in listening mode. 
 
Demonetisation Failure: People went through untold hardship in support of the PM’s effort to mop up black money. After a long silence from the Reserve Bank of India (RBI), we discover that the crooked have laundered all their money and 99% of the banned notes have come back to the banking system. The government’s claim that its tax machinery will go after money in the banks sounds lame; we simply do not have the manpower and resources to go after every person who deposited old currency; most of them will probably escape by striking deals with corrupt tax officials. 
 
Taxes: While the war on black money is a flop, there is no reduction in tax harassment. True, the system is more efficient and refunds are faster; but cases of tax scrutiny being unleashed on honest taxpayers and illogical questions raised by assessment officers have increased manifold. Aggressive demands for payment of advance tax are beginning to rankle, especially when targeted at small and medium entities that pay tax diligently. It makes you wonder why tax sleuths are not entirely focused on enormous funds deposited into Jan-Dhan accounts during demonetisation. There is no transparency on how deposits into those accounts are being dealt with. Since the government likes bold decisions, why not experiment with Dr Swamy’s radical suggestion to abolish income-tax? He argues that we have a large and expensive tax machinery to collect tax but so few people pay it anyway; instead, abolition of income-tax would boost savings and restart the investment cycle. 
 
Goods and Services Tax (GST): Envisaged as a single tax rate (one country, one tax), what we actually have are multiple taxes and multiple rates that are changed all the time. A video of Arvind Datar, senior counsel of the Supreme Court of India and an expert on taxation had gone viral before the introduction of GST. He had warned the government about the dangers of hasty implementation and had strongly advocated a pilot project to bring a few products and services under GST to test the radical new system. But the government chose the drama of a midnight launch in Parliament over prudence. The daily collapse of the GSTN network is causing untold harassment to lakhs of persons and businesses. Exporters and traders complain about massive funds and working capital being blocked up and the high cost of filing multiple returns through chartered accountants. The date for filing returns is being constantly extended in the hope of fixing glitches. The impact on the ordinary person is an increase in costs across a large swathe of products and services (restaurant bills, repairs, utilities, housing societies, etc). All of this is bound to impact the economy and perception about this government. 
 
Interest Rates: Another suggestion from Dr Swamy is the reduction of key interest rates for small and medium industries, to about 9%, and increase in interest rates on fixed deposits (FDs) to 9%, to encourage savings. One assumes this refers to interest paid by banks on FDs. Dr Swamy has not explained how banks will manage this, since they are already gouging consumers for all services, including deposits and withdrawals, even when they enjoy a hefty spread of 6%+ between deposit rates and lending rates.
 
Aadhaar: The relentless and unlawful push to force people to link their Aadhaar numbers to bank accounts, telephones, and furnish them for every engagement with government, may be the government’s last big blunder before elections. Disregarding a Supreme Court (SC) stay on making Aadhaar mandatory for government services only justifies fears about its misuse to target people. Moreover, although the Aadhaar database is flawed and unverified, the government stridently dismisses all reports about fraud and hardship encountered in reading biometrics as aberrations or propaganda. There is also the issue of costs. Aadhaar is only a number until authenticated by UIDAI (Unique Identity Database Authority of India) and each instance of authentication is planned to be charged. The cost and infrastructure required to do this, and to keep Aadhaar centres alive for updating changes is sought to be pushed on to banks. This cost is most likely to be recovered from customers. Denial of government services, ration, subsidies and the inability to read biometrics is bound to unleash fresh harassment which cannot endear the government to the public. 
 
The last time around, the National Democratic Alliance (NDA) lost an election, despite a booming economy, largely because of hubris and a self-congratulatory ‘India Shining’ campaign. This time around, there is real hardship inflicted on people, declining growth and no sign of achche din. Will the absence of an alternative be reason enough to give the government another term? We will wait and watch. There is still time for a course-correction, provided the government is willing to listen and act. 
Comments
ashok singhania
4 years ago
swamy is partly correct incometax must be ablosh for 97% of taxpayers. even in gst only four percent taxpayers pay 95% of tax. that was also view of vishwa bandhu gupta former income tax commosioner. morever currency isssuer nation is not tax constraint.modi is behaving like cheif minister who cant issue his own currency. we are no longer on gold standard. but ou policy are all of that era. abolishing incometax for all will increase inequality.morever vishwa bandhu saidif these 3% paid tax honestly no need of others to pay. indian economy is slowing down because net financial asset in economy are going down. for details please go on website of warren mosler new economic perspective. he is propogator of modern monetary thoery.india did implent it policy during 2001 to 2003 during vajapee regime knowingly or unknowing. result was dramtic which forced nda to coined slogan bharat uday. three important thing they did were they increased high value currency from25% to53%. spent entire saving of public sector units and govt debt increased from 66% of gdp to84% ie they increased fiscal defceit but today modi is afraid to spent in fear of inflation.we have been reducing fiscal defecit for last 5 years. demonotisation has brought down currency to 9%of gdp from 30%0f gdpduring vajapee era. country which cant export only way out is to increaase fiscal defecit.
Abraham Vivian
4 years ago
Abolition of income tax is the only way to escape from the self created financial crisis.
Bapoo Malcolm
4 years ago
Let us ask the relatives of the 22 who died yesterday about the Achhe Din. Methinks it's safer to cross the tracks.
Vipul Sheth
Replied to Bapoo Malcolm comment 4 years ago
Claming bjp for 22 life is wrong
Modi govt is in power for last 3 yrs
Instead , ask congress what they hve done in last 65 yrs in power for railways
Chandragupta Acharya
Replied to Bapoo Malcolm comment 4 years ago
Alternatively, why not ask those thousands of women (and men) who have got toilets for the first time in their life after 70 years of Independence, and are no longer required to relive themselves under the cover of darkness or hiding behind bushes? I mean, with all due respect sir, the above comment is totally out of context with this article. I can see lot of improvements in many spheres of public life (including the Railways) in the past three years, though of course, a lot more remains to be done. Everything cannot change overnight.
Jainendra Prakash
4 years ago
A BLUNDER in 1st para of article "The country’s GDP had fallen to a three-year low level of 5.7%".
GDP hasn't fallen, Growth Rate of GDP has gone down, but GDP still growing.

Article covers the issue with arguments from one side only ( though those arguments not wrong). Wish she has accommodated some counterarguments also.
One fact is sure that Arun Jaitley is the only person who can bring Down Modi & working steadily in that direction.
Dr. Subrahamanium Swamy must replace Jaitley ASAP.


Veeresh Malik
4 years ago
Achche Din are most certainly not visible in the whole Mumbai - Nashik - Pune triangle. My friends in businesses in that part of the country, which broadly means the previous cash-only type of businesses, are totally into panic mode. That is not the fault of the Central Government. The downward spiral is composed of many parts - end of Bombay Port both commercial and naval, nil growth in Mumbai's Airport, hugely unacceptable crush loads on local trains and roads, a totally goon oriented real estate market, downfall of the Arab world oriented manpower business, dud after dud from Bollywood, all this and more, the cheese has moved out of Mumbai - Nashik - Pune, and there is no denying that achche din are not likely to happen here even if they happen in the rest of the country.

This part of the country makes the narrative. OK.

So are achche din not visible in other parts of the country?

Let me put it this way, I travel a bit by train and road, and there are two parts of India where despite everything, hope stares back at you from the faces of people and the way they walk, talk and dress. One is the South, and the other is the North-East. The Gangetic Belt is pretty much where it was, Punjab is in huge flux, Gujarat tends to play its cards to its chest

But it is another aspect altogether - what is going unobserved is the big darkness as Aravind Adiga used to say, that part of India in the middle, and the rapid way in which missing train line linkages or broad gauge conversions are opening routes for people and produce and not just coal or iron-ore, which no longer require big metro cities and their costs for people to prosper.

In these parts of the country, the Aadhar card is considered a boon, probably the first time that people have held an identity in their hands with a Government chop on it which can not be seized or confiscated. Most of us will not understand this simple fact of life because if our driving licences or passports are seized, we know the right people, but you have to understand what it meant for millions of others whose ration cards were in perpetual custody of the visible symbol of government - the PDS outlet.

In these parts of the country, the new age banking means something else altogether again - the end of centuries of serfdom at the hand of the sahukaars and the rulers, and the way our online portals are reaching out and sourcing from there is to be seen to be believed. If Himachal was the early outlier example of this, with almost 100% power and huge empowerment of women, then the middle parts of India are rapidly catching up.

Or just ride a train from Mumbai to Delhi, preferably one that does the middle parts in daylight, so not the Mumbai Rajdhanis. Take one that leaves Mumbai late at night or leaves Delhi early in the morning. See the prosperity that has arrived, again, at what were wastelands, the barren districts in the middle. But that's not the real story - the real story is that the people there, surprise, surprise, do not need Mumbai or Delhi to trade from. See all the inland container terminals on this route, international and domestic, to understand why achche din are moving directly to and from.

I could go on and on, but all I can say is - the view from Mumbai is certainly not good.

But then, Mumbai is not a reflection of India at all anymore.
vikram chinmulgund
Replied to Veeresh Malik comment 4 years ago
Awesome analysis Veeresh with some real on the ground observations. In fact Mumbai is so different from rest of India in terms of social and moral freedoms and basis of economy (high finance, no physical production except construction) that I feel it should become a separate city state like Singapore and form a trading bloc with India.
praneet chawla
Replied to Veeresh Malik comment 4 years ago
Very interesting observations. I also feel that if government is doing X amount of work, bureaucracy will ensure that actual is 0.25X, but the problem is with this section of BJP people is that they are blindly sold on the powers of marketing. If they are doing X, they will talk up as if they are doing 5X and the impact will be 10X. Plus there is a severe lack of intellectual and operational heft in his cabinet.
SUDHEER VAIDYA.
Replied to Veeresh Malik comment 4 years ago
Very lucid. But, in a way, Mumbai can be a reflection of India. Capital still flows from Mumbai.
Ramesh I
4 years ago
Fine article. Whatever 'reforms' this Modi Govt has 'unleashed' on unsuspecting people of India over the past 3 years has been a colossal failure, with pathetic planning and implementation of both Demonetization and GST being the worst of the 'reforms' as yet. This shows the ineptitude of both a PM who doesn't understand economics, and his career-lawyer FM who seems equally clueless about macro & micro economics. I don't see why a large country with a complex economic system doesn't have a well-qualified CA / Finance professional as its FM !! Surely, a Suresh Prabhu or even Piyush Goyal ( both CAs) would understand finance and economics far better than the current FM. It seems politics, as usual, overrides everything else in India. PM Modi has retained Arun Jaitley as FM as he doesn't want any strong (read competent) person as FM, who may eventually become more powerful than Modi. Autocratic leaders are often insecure too, and hence surround themselves with cronies and incompetent sycophants. I wish PM Modi would realize his mistakes soon, else India will end up with an even worse PM in dynast Rahul Gandhi, and back to the 'good old days' of Congress rule. Long live India then !
Chandragupta Acharya
4 years ago
The recent bout of negativity has emerged after the announcement of the GDP growth number and the realization that the next one quarter's may be even worse on account of transition to GST. I would therefore focus my reply only on the GST.

The international experience with GST is that prices go up initially for a couple of years and come down eventually as the economy begins to adjust. Some slowdown in the economy was expected given that GST would hit the unorganized sector adversely. This was known beforehand. Since all political parties supported the GST, it can be said that we as a nation have taken a call to go through the pain, for the purported long term benefits that the new tax structure offers. It was also the collective wisdom of all that an imperfect GST is better than no GST.

Disgruntlement from those who were able to evade taxes earlier but are finding it difficult to do so now is expected. Economists and politicians have talked for decades about ‘widening the tax base’ but the talk went nowhere beyond taxing the middle class and the corporate sector. One should now appreciate that Modi has taken an unpopular step in larger national interest.

Of course, this is not to say that everything has been executed to perfection. The timing was probably driven by political expediency - the earlier the better, giving more time for things to settle down before the next major elections. Complaints such as software glitches could have been avoided. But these are minor issues in the larger scheme of things, and will get resolved eventually. If the government was not fully prepared, it is equally true that many businesses too did not prepare adequately and kept the matter pending till the last moment. Those who prepared in time have faced no major issues.

While one can say with hindsight that there was a better way to execute, I think excessive media pessimism is unwarranted. In any case, GDP growth rate is a very short term focused, imperfect and overrated statistic whose limitations also should be kept in mind.
Sunil Krishnan
4 years ago
There's hardly time for course-correction. The focus will be on the upcoming assembly polls. Also, the hearings on the disputed Ram Janmabhoomi issue begins around the Babri Masjid demolition anniversary - this issue is dear to the current day rulers.
Bapoo Malcolm
4 years ago
Of course, there will be positivity. When you touch nadir, the only way is UP. And should not a neutral media be critical? In fact, Moneylife was quite ga-ga about Modi in 2014. A year later, Debashish Basu saw the strains coming. He had then said to me, "No matter who it is, things will always be the same". He had the foresight about what is now fact. But then a 'Nationalist Hindu Party', BBC's words, must give a Hindu rate of growth, < 5%. For the reasons, read me below. Religion + Hatred (On all sides) = Economic Destruction. The fall has nothing to do with economics. It happens when the gut takes over the head. And history will bear me out.
Bapoo Malcolm
4 years ago
The payment of 25% or more can be contested. It can be much reduced, too. There are ways; e.g., to be kept in escrow, maybe with a bank, so that the appellant gets interest on the appeal being allowed. All this must be made out when the appeal is preferred. If the other side has nothing to hide, it will not contest or do so unsuccessfully. Please remember, no law is cut-n-dried. There is always more than one way to skin a cat. In fact, there is one Bombay High court judgement, A. Khanvilkar, J., presiding, (I think it is Mopak v/s SBI) that says that if a fraud is alleged, and in this case it would be easy, no deposit is necessary. Our laws are excellent, only that we do not know how to use them. And then we cry hoarse about judicial delays. Never rush into litigation. A cool head wins everything. Look for the law that most helps you. After 65 years of Supreme Court judgements, there is bound to be a precedent to help you.
PS, this does not apply to crooked traders who purposefully evade taxes.
Gitesh Shah
4 years ago
It is said that Media is almost always wrong in doling out predictions. ABV govt lost election in 2004 because of many factors which we cannot know. But Media was caught wrong footed. Same Media was wrong footed in Bihar, Delhi and UP elections, US Media in US Elections. In 2002, 2007,2012 in Gujarat elections. So once again Media is taking a side which is against BJP govt, which I feel is good. Because Media is generally wrong - make it 100% along with economist in doling out predictions. So I think it is good thing that even last remaining neutral Media - MoneyLife is turning negative. Finally we will see a +ve breaktrough.
Gebhot
4 years ago
A couple of years back, the government of a Southern State had a brilliant idea to generate funds. Though it was shelved after a very brief period, it was awesome in its simplicity.
The method was this. The sales tax office would issue tons of notices to traders and other business owners for non payment of dues or underreporting of sales. These were mostly not valid, but they were sent nonetheless. The CTO/ACTO would summarily reject the replies given to these notices and pass orders to recover the amounts.
The next option of course was to go for n appeal, because why would you pay for something you haven't don't? Now, when you file an appeal, you have to submit 25% of the order amount before your case will be heard. The disposal of the case, usually in the favor of the traders would take at least 3-6 months and the state government would get interest free funds. Brilliant, right?!
Bapoo Malcolm
4 years ago
Do not remember anyone saying that Achhe Din will stay. It was always "annay waalay hain". Who said anything about "rayhaingay"? Precision of language is the soul of fantasy. Was there not also something called 'Swachh Bharat'? And some other catchy phrases? Munn ki Baat, Sapno ki Raat, Hum aandho nay baniyaa ek Raja, Takke sair bhhaji, Takke sair khajja. Do not expect the government to do anything. The people need to do something; everyone of us. Let a million ideas bloom. The main problem is that the BJP does not have capable people. They are more interested in hiding this deficiency by banning things, attacking innocents and harassing women. This leads to loss of revenue, diversion of energy and waste of efforts. The politics of economy have been pushed aside for the politics of hatred. No country can flourish on vengeance and vendetta. Nor can it survive on an agenda of division and alienation. The root cause of failure is not academic, but mental. Vindictiveness has taken precedence over all other forms of activity. Achhay Dino will be here to stay when we march as one. And I for one cannot expect Modi to do it. He is, unfortunately, not built for that.
Meenal Mamdani
4 years ago
This article and Yashwant Sinha's article are quite alarming.
I fear that Modi will now try to distract the people by stoking divisiveness, promoting fear of lawlessness, etc. The brunt of this will fall on the minorities and dalits. His base will be happy to oblige by engineering riots.
If only we had a credible opposition! One wonders why Congress leaders, who have a strong base of their own, don't defect from the Sonia-Rajiv Party and form their own party.
Sunil Krishnan
Replied to Meenal Mamdani comment 4 years ago
I share your opinion on the Congress leaders.
Sucheta Dalal
Replied to Sunil Krishnan comment 4 years ago
That is our problem. No leaders with spine in the Congress. But who knows... things may emerge. If not Congress, elsewhere. Assuming there is no alternative may be dangerous for ruling party
Suketu Shah
Replied to Sucheta Dalal comment 4 years ago
Agree.There are few leaders of BJP who are topmost class Like NaMo,Dr Swamy,Mr Fadnavis.But otherwise lot of them are indeed like congress.Its only they are 2 faced as they are afraid of NaMo and Mr Fadnavis in Mumbai.
Aravind Maurya
4 years ago
when there is pain there is a noise too.It will take time to boost economy as PM has no economy advisor rather than mockery people around him for three years plus.Now he understood but it is too late.
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