In PM Narendra Modi’s economic policies, both Karl Marx and Adam Smith are out of date

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The BJP’s economic policy has been an enigma for many. When the Narendra Modi government came to power with an overwhelming majority in 2014 it was expected to lean heavily to the right. Businessmen, industrialists, and policy analysts were preparing for a Thatcherite regime unleashing a second wave of economic reforms.

However, as months passed, with its repeated assertions of being a government dedicated for the poor and focus on rural India, it was seen to be more left than ‘the left’ in many ways. Ironically, the Opposition accused Modi of being pro-rich, while the business community itself appeared disenchanted if not in public but surely in private circles.

Political commentators attributed this dichotomy between prior perception and apparent reality to early push-backs faced by the government on land reforms and jibes about Modi’s occasional ‘over the top’ sartorial choices. However, after nearly eight years of his tenure, realisation seems to be dawning that the Modi government has been working on a dual track, or at two levels as it were — welfarism above the line, and systemic reforms beneath the surface. Another definition of ‘double engine sarkar’ if one can call it so.

On February 7, in his motion of thanks to the President’s address in Parliament, Modi alluded to both. The first is manifested in schemes such as Jan Dhan, PM Garib Kalyan, PM Awaas, Ujjwala, Ujala, Swachh Bharat, etc. The second is reflected in efforts towards ease of doing business, PSU disinvestments, private-public partnership in railways and airports, and opening up sectors such as defence, drone manufacturing for private sector participation. Vinay Sahasrabuddhe, a BJP MP from Rajya Sabha, says the BJP follows a kind of “mixed economy” that is neither capitalist nor socialist. In its books, Karl Marx and Adam Smith are both out of date.

Two years into his second term, Modi’s nuanced economic policy is becoming more obvious to discerning observers. In a narrow sense Atmanirbhar Bharat can be interpreted as a renewed call for Swadeshi. It dovetailed into Modi’s previous campaign of ‘vocal for local’. But, in reality, far from being protectionist it is an invitation for making Indian industry globally competitive. Apart from technology and indigenous capability, two imperatives for being part of international supply-chains are cost and scale. A large part of China’s success has been its ability to leverage the vast domestic market and developing skilled manpower. Atmanirbhar Bharat is a step in that direction.

As the Prime Minister explained, taking defence as an example, if the domestic defence equipment manufacturers are able to meet a chunk of India’s own requirement it is a matter of time before it starts supplying to other countries. He elaborated the point with reference to startups expressing hope that some of the unicorns incubated in India can become MNCs of the near future.

One of the biggest beneficiaries of Atmanirbhar Bharat is likely to be the MSMEs that are also the creators of jobs. The ambitious Gati Shakti master plan will not only facilitate efficient movement of goods, but also radically bring down costs.

As Modi pointed out on a lighter vein, industrialists have always been linked to politicians. This is not a new phenomenon. Even Jawaharlal Nehru and Indira Gandhi were accused of being partial towards big business houses such as the Tatas and Birlas. However, contrary to popular belief, these relationships are not based only on quid-pro-quo. If Nehru and Indira Gandhi leaned on some industrialists it was because, when in a fledgling economy not everyone had the capacity to undertake large investments. Similarly, in the global arena, countries such as Japan and South Korea were able to break the hegemony of western conglomerates by leveraging the might of home-grown corporations such as Toyota, Honda, and Samsung.

India too will need some big boys to find a toe hold in the world economic ecosystem. To berate Indian enterprise, comparing them with variants of COVID-19, would be doing the nation a disservice.

No process of change can be painless. There can always be two views on what more could have been achieved if done differently. Counterfactual analysis provides a lot of vicarious pleasure for those not in the hot seat. But, what India has managed despite global headwinds and the rampage wrought by the pandemic cannot be discounted.

We have to look at the future with a telescope and not with lenses of the past.