The 2024 election is increasingly turning into an ideological contest between an economic philosophy that prioritises growth and another that lays more emphasis on redistribution. Debates over economic policy were front and centre during India’s high noon of socialism in the late 60s and early 70s.
In more recent elections, a consensus on market reforms had taken hold. But in this election season, PM Modi’s strong attacks on redistributionist aspects of the Congress manifesto and his emphasis on growth have brought economics back to the forefront.
In an exclusive interview with Network 18 Group’s Editor-in-Chief Rahul Joshi, News18 Kannada Editor Hariprasad, and News18 Lokmat Anchor Vilas Bade, Modi expressed his determination to elevate the Indian economy to the position of the third largest in the world.
Major multilateral economic agencies agree. In its April world economic outlook, the IMF predicts that India will become the world’s fourth-largest economy by 2025 and the third largest by 2027.
Also Read: Network18 Exclusive | 10 key quotes from PM Modi's interview
“During Manmohan Singh’s tenure we were at 11, we brought it to five after a lot of effort, and now we will put in some more effort and take the country to the third spot,” the Prime Minister said.
The IMF earlier this month raised India’s growth projection for 2024-25 to 6.8%, reinforcing India’s status as the world’s fastest-growing economy, a prognosis backed by various multilateral agencies.
In his remarks, the PM appeared to emphasise the need to avoid any policies that would derail the Indian growth story. Responding to a question on Congress leader Rahul Gandhi’s plan to survey the state of India’s wealth distribution, Modi described this as an example of an “urban Naxal” and ‘Maoist” mindset.
The Congress leader has likened the proposed survey to an “X-ray” which will reveal, as per his speeches, stark inequalities in wealth distribution. Though not mentioned in the Congress manifesto, some of Gandhi’s speeches have referred to redistribution post this survey.
The broader message in the interview with Network18 was a strong critique of the politics of subsidies and an emphasis on empowerment.
As many as 250 million people had been lifted out of poverty, Modi said, and once they have escaped the poverty trap, they were determined not to fall back into it.
This theme animated his remarks on state governments.
Referring to the performance of the new Karnataka government, Modi said that the prestige of Brand Bengaluru had declined. “Look at Bangaluru, it has played a big role in raising India’s reputation across the world. Bengaluru used to be the tech hub and now it has been turned into a tanker hub.”
Also Read | Mumbai should not be allowed to go down the Kolkata route of ruin: PM Modi
The Congress came to power in Karnataka in May last year on the promise of five guarantees, including free bus travel for women, free electricity, and direct income transfer schemes of various kinds. While seemingly popular, the state government is widely seen to be struggling to spend on infrastructure. “The issues they sought votes on, they are unable to deliver on these,” the PM said.
Mumbai, he warned, should not go the way of Kolkata, he said responding to questions on Maharashtra.
The economic philosophy articulated by the PM is clearly predicted on investments in infrastructure rather than subsidies. It’s not that this government does not do subsidies.
Indeed, the PM emphasised Ayushman Bharat, the health insurance scheme and the the provision of piped water to every household which clearly involves subsidies. The Pradhan Mantri Garib Kalyan Yojana provides free foodgrains to 800 million beneficiaries and is immensely popular.
However, unlike the Congress schemes, many of the Modi government’s subsidies are linked to efforts to boost manufacturing. These include the production-linked incentives (PLI) which are in place across 14 sectors and so far, brought in investments of Rs 62,500 crore and has helped boost the China plus 1 narrative.
On the anvil are subsidies to boost semiconductor and the widespread adoption of renewables.
The trajectory of the Indian economy during a third Modi term will depend on the success of such schemes. Call it productive subsidies versus the wasteful kind.
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