Economic
Highlights
New Delhi, 2 January 2017
Note Ban Gamble
2017, LANDMARK FOR ECONOMY?
By Shivaji Sarkar
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 many 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 to gradually
get into the Nuclear Suppliers Group (NSG). Recall that in July 2016 India became
the 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
to cash in on the supposed discontent over the note ban. The Times of India 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.---INFA
(Copyright, India
News and Feature Alliance)
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