The Economist never sounded so confused !

The Economist never sounded so confused !

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The grand old man of global economic journalism  seems to be tottering after having stooped low to make a personal attack on the legitimately elected leader of the world’s most populous democracy.

It says : India’s prime minister is not as much of a reformer as he seems – But he is more of a nationalist firebrand ; Jun 24th 2017

It begins with a judgment – Quote :WHEN Narendra Modi became prime minister of India in 2014, opinion was divided as to whether he was a Hindu zealot disguised as an economic reformer, or the other way round. The past three years appear to have settled the matter. Yes, Mr Modi has pandered to religious sentiment at times, Unquote.

However, it immediately contradicts itself, Quote : he has also presided over an acceleration in economic growth, from 6.4% in 2013 to a high of 7.9% in 2015—which made India the fastest-growing big economy in the world.

He has pushed through reforms that had stalled for years, including an overhaul of bankruptcy law and the adoption of a nationwide sales tax (GST) to replace a confusing array of local and national levies. Foreign investment has soared, Unquote. 

< Don’t miss the caption on its cover which says quite to the contrary!

This confused style which lacks The Economist’s characteristic scholarly conviction , persists through the series of 3 articles making up this story.

As an Indian investor, its important for me to see past the fog of  the Left’s libertarian views aided by their Nehruvian Secularist comrades and know the truth about our economy as closely as possible; especially when even journals of the stature of The Economist indulge in such misguided writing. Not that, it seems to bother Apple, Google and the rest of FDIs, who continue to pour money into India.

Here below are some of their headlines across three locations :

  • More an administrator than a reformer – More a chauvinist than an economist
  • The constant tinkerer – Narendra Modi is a fine administrator, but not much of a reformer – Tax reform does not go far enough; land and labour reforms have barely been tried : 24th June 2017, Mumbai
  • Falling in line – India’s raucous democracy is becoming more subdued – Narendra Modi’s government is extremely sensitive to criticism : 24th June 2017, Mumbai 

This is obviously an experienced writer who knows too well that, 80% of readers do not go past highlights and headlines. Albeit, the features are peppered just enough with positive word bytes so as to avoid being accused of political bias or lack of objectivity.

Then there is the standard Indian media lament about Yogi Adityanath’s appointment as UP’s Chief Minister and the NDA’s Presidential candidate      ” Ram Nath Kovind, being a longtime devotee of a Hindu group allied with the party, but also a dalit—the bottom rung in India’s caste system” and about Modi looking to expand the BJP’s reach (as though the right to expand political reach happens to be a special dispensation made by God only to the NDA’s Opposition!).

It then goes on to grudgingly admit – Quote: Under the leadership of Narendra Modi, the prime minister, the BJP has won a string of impressive electoral victories, at both the national and state level. The opposition is in disarray; another BJP triumph seems likely in 2019. Yet the BJP is extremely sensitive to criticism.Unquote

I will let my readers make up their own mind with a final Quote from The Economist > 

In India, importing has forever been easier than transporting and the GST will reverse this logistical anomaly by bringing about the long awaited economic unification of India. Unlike previous governments, Modi’s has displayed courageous leadership in implementing this huge economic and constitutional (not merely tax) reform by putting national interest above personal electoral interest; knowing fully well that, it will cause a lot of heartburn till its benefits become evident in or beyond Elections in 2019.

The GST is much more than a tax reform which will not only make India ‘one’ market but also digitalize our entire trade and services, thereby throwing wide open the hitherto opaque world of wholesaling and retailing transaction flows. It will also provide us the much required source for credible economic data; not to mention an expansion of India’s notoriously inelastic tax payer base.

As for the mythical bureaucracy resulting from GST; has anyone made an effort to examine the IT backbone supporting the GST? As a dear friend of mine, a successful practicing tax professional and a vocal Modi baiter said, the system (as it settles down) is geared to automate all indirect tax assessments and put an end to the much dreaded inspections, paperwork, etc associated with our much splintered indirect taxation regime. There will primarily be one return to be uploaded and the rest are system generated.

Politics is after all the art of the possible which means a 90 or 95% GST is any day better than no GST. I am confident we will over time see its creases and wrinkles being ironed out. India could not have afforded to wait longer by procrastinating any further in the hope of achieving an academic ideal.

The GST has seen participation by ‘all’ state governments in a display of exemplary federalism. It makes me proud that, India’s democratic process has prevailed and this new tax is not only “revenue neutral” but also “progressive” in its rates. Over 85 items, most of those which form the Consumer Price Index have a zero tax rate which should leave a favorable impact on inflation.

In a country with such a large poor population, I cannot expect any government in its right mind to have enacted the GST as a “single rate tax” . It had to be a “single tax” which was never, and rightly so, meant to be a “single rate of tax”. Surely anyone with an understanding of India, such as The Economist will appreciate this, basic fact. Of course, there will always be opposing noises made by some politicians to stay relevant when in the opposition.

In the meanwhile, Harvard’s Centre for International Development has forecast that India will have an average annual growth of  7.5% till year 2025 whilst; it replaces China as the “economic pole of global growth” even when emerging markets would stay ahead of developed economies in terms of economic growth. Maybe The Economist should dwell on that to provide a realistic evaluation of our economy.

I cannot resist ending this post by saying, this is the first time ever that, I have seen The Economist come across like a tabloid, led astray by vested interests and struggling to keep up with its hard earned reputation for apolitical objectivity and credibility.

Honestly I have to say they have failed!


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One Reply to “The Economist never sounded so confused !”

  1. This magazine has lost its credibility and purpose indulging in more of personal slander meaning that it has its roots in the Italian Gandhi family causing a lot of heartburn and Fraustration.

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