In an interesting column published by Mint, Bloomberg writer Andy Mukherjee wrote that India expected Narendra Modi to be a Shinzo Abe, someone who would lift India’s flailing economy from the dumps that the United Progressive Alliance (UPA) left it in. He has apparently not delivered on growth, while Abe has. Let us agree that growth has not quite rebounded over Modi’s tenure, never mind what the new GDP series says, but the Abe comparison makes no sense. The kind of Keynesian fiscal and monetary pump-priming that is possible in a country with an ageing and declining population, and a quarter-century of stagnation, is simply not possible in India, which faces the opposite situation: a rising working-age population and an in-built pressure for growth.

In fact, whenever we have had a Shinzo-esque party in power, we have ended up messing up our economy. India’s Abe was the UPA combination of Manmohan Singh, P. Chidambaram and Pranab Mukherjee, and their policies were purely Keynesian and spend-happy. We began doing what Abe started in 2012 eight years before him, even before the global financial crisis hit us. We put the economy on fiscal and monetary steroids, and this was the single most important cause for the growth slowdown that followed 2011-12.

What we can hold Modi accountable for are two sins, one of commission, the other of omission. The former includes demonetization, and the latter, his failure to pump money into banks early enough to prevent a prolonged period of slow growth in the context of our double balance-sheet problem. The forced formalization of the unorganized sector brought about by the goods and services tax (GST) put another speed breaker on the path to growth when we needed accelerators.

But one should not let economists go scot-free in all this. Barring demonetization, which no one recommended, almost every single thing Modi did had economists, politicians and businessmen rooting for it. Stick to the path of fiscal consolidation, Modi was told in 2014; he not only did so, but went along with Chidambaram’s fiscal deficit fiction of 4.1% in 2014-15 when the real deficit figure was probably closer to 4.7%. Implementation of the GST will raise GDP by 1.5-2%, said business economists; well, warts and all, GST is the dominant indirect tax today, but we are yet to see GDP soar into the clouds.

Some of the criticisms are simply motivated or misguided. Soon after the government announced demonetization, it was claimed that the government had destroyed the independence of the Reserve Bank of India. But it was the same government that nominated conservative economists to the Monetary Policy Committee (MPC) and shifted the responsibility of deciding rates to it. And it was the same government that empowered RBI to force banks to send their non-performing loans to bankruptcy courts. If RBI’s authority has indeed been encroached upon in some areas—and that is debatable—in others it has been enhanced. The truth is not black and white.

When economists and politicians criticize Modi for his actions, they should note that for every finger pointed at the PM, three point towards them. They can wriggle out of responsibility for engineering the slowdown by claiming that Modi did not do GST properly. True, but in a diverse and complex economy like India, to expect perfection in every policy is asking for the moon. You can’t ask for fiscal rectitude and then expect growth to pick up quickly. You can’t ask for a higher tax-to-GDP ratio, which means less money left in the hands of citizens and corporations, and expect consumption or investment to zoom. You can’t ask the MPC to target inflation and then not take responsibility for ending up with one of the highest real interest rate structures in the world (3-4%). You can’t ask for a bankruptcy code to fix over ₹10 trillion in bad loans and then fret about a short-term shrinkage in output and jobs.

If growth has been weak and patchy, we need to look for reasons other than just Modi. Demonetization was a self-inflicted economic wound, but most of Modi’s reforms were broadly in the direction of what economists and businessmen have been demanding. What we forgot was the downside of reforms. The pain is front-loaded, the gain backloaded. When corporates deleverage themselves, they flog existing assets harder. This is obviously not going to result in any exuberant burst in investment activity. When entire sectors are in the throes of technological transformation—telecom, IT services, banking, mobility—you are going to face cost and job pressures. Also, as the world turns protectionist, new and rising tariff regimes will slow down trade and export growth. Add domestic follies like endless farm loan waivers, and India’s states have no fiscal space left to invest in infrastructure.

Modi is no Shinzo Abe because India does not need one. He is a fiscal conservative (by Indian standards, one must add), which perhaps comes from his Gujarati DNA. In another time, his fiscal conservatism should have been the toast of economists. That he is being roundly criticized for what he did right tells us what is wrong with his critics.

R. Jagannathan is editorial director, ‘Swarajya’ magazine.

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