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FY 2020-21 An Anomaly

I hope Govt of India and Finance Ministry incentivize consumer spending. The scary thing of this economic pandemic is that the upper middleclass will realize the broader economic damage and how it will impact businesses and jobs. So they will immediately put a break on any long term (say 1 year) discretionary spending ( say like painting of the apartment, or that new gym membership, or that family vacation or buying new items for the house, or a car upgrade, and yes, electronics) Also, the lockdown will make them realize how much they spend on outside food, or how they over spend on unnecessary items, so those will also see cuts – at least in the near term.

The thing is that the upper middleclass in India is a fairly new phenomenon and they still remember the hardships that their parents had to go thru to make a decent living, so they can immediately revert to the frugal lifestyle to protect their future. But this break will choke the money from trickling down. The lower middleclass anyways don’t have much discretionary spending, but instead the lockdown will erode atleast to some extent their savings and with offices, shops, workshops (read SMES) shut, they will see loss of income in the near terms which will also stop with their spending. Once again stopping the flow of cash in the market. Also, the economic discipline of the upper class will also impact their revenues, cut down on the work orders, etc…

Which finally leaves the lower classes. With less footfalls to malls, restaurants, cutting down on vacations, shopping, these people will see the most devastating impact. No amount of govt DBT will make any reasonable difference to them. They will not be able to afford cost of living in the metros and in the near term migrate back to the hometowns to battle this storm. (on a positive note, the monsoon forecast for this year is for it to be a normal) so they may get employment in the agricultural sector.

So, to summarize, the key for the government is to keep the money flowing, or for the money to trickle down to the lower classes. They have to maybe rethink GST rates for this FY as a one off. I think governments all over have to treat this year as a anomaly and throw the rule book out for a year, do a write-off basically. The government has to incentivize consumer spending like never before. Give tax breaks so that more money remains in the hands of the consumers, so that they can then spend it back and keep the money flowing. Making loans cheaper is a dicy option, as banks are very cautious in giving out loans. The Govt’s only aim should be to keep the jobs, all jobs, both in organized as well as the unorganized sector. The only comfort they can take it that this devastation is a global thing, not a country specific, or an industry specific. Time to ignore, GDP, fiscal deficit and all the other fancy economic terms that only make sense to Moody’s or Standard & Poor’s of the world.

This is an economic catastrophe. There is not rule book for this. Rules have to be written on a new book.

I finally leave with a quote from Einstein –

We can’t solve problems by using the same kind of thinking we used when we created them.

And similarly, to find a way out from this pandemic, we have to raise the level of our thinking. We don’t need to find a pattern in it and try to fit a solution from the past. Time to rethink – reimagine!

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Phir ek baar?

Did Modi decide that he wanted to become the PM of this nation, or did Amit Shah decide that he will make Modi the PM of this nation. I always wonder how it was? Was there a day, perhaps when the two of them sat for a tea and one of the above happened.

India is voting to elect its 17th Lok Sabha. 900 million Indians are eligible to vote except maybe in WB where non-Indians too will vote 😉 This is the worlds biggest democratic exercise. This time around there will be 7 polling days spread over a month. The results should be out on May 23rd. Leading the BJP, current ruling party, is Narendra Modi, who in my humble opinion, is the world’s best politician. As he goes in for re-election, he has effectively made this election a referendum on himself. He runs the most cutting edge campaign in India’s history. Its made up of massive rallies all across the nation (typically 3-4 rallies a day, & he speaks for about 40-50 mins) All his speeches are a clever mix of nationalist issues, local issues, his performance, and his ideas for the next 5 years. His speeches have a good amount of rhetoric, blaming the past governments for stifling India’s progress for the past 6 decades, primarily the Nehru-Gandhi era & the current state government if its not a BJP government. When he is not campaigning, he is doing ‘exclusives’ with national & local media. He also finds time to sit down for a chat with a very popular Bollywood Actor to talk non-political aspects of his life and makes it too into a political masterstroke. His social media accounts actively engage the masses. He was even able to scout the social media for the INS Viraat vacation incident and make it into a major issue in the last stages of this elections. All this keeps the opposition miles behind. It feels like the opposition is still stuck in the early 2000s in terms of the campaigning strategy.

I attended his campaign rally in Bangalore. What I realized is that he has a very precisely crafted persona. I am sure that a lot of detail goes into projecting Narendra Modi that we see in the media & on stage. Not that it’s a bad thing. In a country like ours, you need a larger than life image to cut across the regional, communal, language barriers, else you will end up just being a regional stalwart, like the current crop of leaders found in the MahaThugBandhan.

Modi has successfully converted this election into a vote on his 5 years of PM-ship. I have always maintained, that you take out Modi from the BJP, and BJP is just another slight upgrade on Congress. He shows the killers instinct when the need arises. He can very well get down into a bare-knuckle street-fight (like the Bhrashtachari no 1 comment) just before polls in places where Sikhs have a significant influence. I believe he understands that there no point holding the higher moral ground & losing like Atalj in 2004. Indians need a tamasha when it comes to politics. He knows it.

Of course, ‘Ghar mein guske marenge’ narrative post-Pulwama, boosted his national image even further as he came across as a leader who is not afraid to deal with Pakistan in a language that they understand. As the elections got underway, one could see the undercurrent of his social schemes like LPG scheme, electrification of villages, rural sanitation, Mudra loans becoming discussion points amongst the common folks.

Another key narrative was set in Bengal, where thanks to TMC, BJP got into the driver’s seat on Hindutva. Bengal helped reaffirm the pro-Hindu stance of the BJP, which I feel they could not do it UP owing to the stalemate on Ram Janma Bhoomi issue. Coming to UP, the MahaThugBandhan became more of the top-down approach aimed clearly by salvage the political careers of the Yadav Parivaar and Mayawati. The masses I feel never really bought it as it’s like getting the North and the South Pole of a magnet to join together.

Another key issue was the opposition crying Rafale all over India. And it never seemed to become a key issue. The opposition peaked too soon on this. My personal opinion is that it became too complex for most to understand. It didn’t help that Rahul kept changing the numbers at every rally. Modi on the other hand never gave it any importance. ‘Chowkidar Chor Hai’ has to be one of the most ill-conceived one-liner in a campaign. Whoever came up with it and whoever approved it must be fired straight away. Modi kept his campaign fresh. He shifted into the top gear very close to the actual polling dates. Also, he played it smart with his talk with Akshay Kumar, that made up for the ban on the movie, his biography, by the EC.

While I am no expert, my observation is that the people who in 2014 voted Modi, who at that time was fairly inexperienced at the national stage and foreign affairs, have seen enough to vote for him again. Of course, the Modi government never went overboard appeasing the middle-class, though it did it in bits and pieces, except for maybe in the last budget. But doles are not what most middle class want. Safe cities, better infrastructure are important considerations too for them. Also, ‘There is no alternative’ is also a valid reason to vote Modi. Another small and yet significant segment that I would expect to vote him is the non-minority(2 of those) non-political electorate that may be motivated to vote him just because he has given a relatively stable, clean govt and seen his personal work ethic in the last 5 years. I assume a lot of first-time voters, and females voters to be part of this. At this point, credit must be also given to lots of groups who generated a lot of awareness on radio and social media that has made voting a pretty cool thing to do. While I was voting I saw quite a few first-time voters, waiting to get inked so that they could then snap a selfie and post it in their social circles just to get that – ‘I am responsible youth’ swagger 🙂

Another factor I have seen within my social media circle is that the voter, both urban and rural seems to clearly differentiate between a state and a national election. It also helped that the much-hyped loan-waivers promised by Congress when they won the state elections in late 2018 became a fiasco, with allegations of corruption which served a timely reminder as to what Congress brings to the table when in power. The quick deterioration in law and order in these states also grabbed headlines leading up to the national polls. People didn’t really buy into the NYAY especially looking at the Congress track record and it also had the middle class spooked as they realized that to fund this mega waste, it would inevitably mean more taxes, cesses on the middle class. Sam Pitroda and PC in a way confirming it by asking the middle class to be more generous in uplifting the less privileged.

So what are my predictions? Well, it’s not easy to put a number out. If I just go state wise, it’s difficult to imagine BJP could fare better than 2014. They already maxed out in BJP friendly state last time around. So the head says crossing 270 would be difficult. But if I go by my heart, and just looking at various snippets of simple people talking so passionately about Modi all over the country, the hordes of volunteers campaigning for Modi, I am inclined to say 320-330. But now the results are less than a week away. Surprisingly, none of the BJP supporters seem to be considering a remote possibility of BJP stumbling to less than 200. I shudder to think how these folks may react to a non Modi PM. The opposition seems to have already begun targeting the judiciary to create obstacles in the parliamentary process post results. EC has already been termed pro-Modi. EVMs are already faulty. And BJP voters already accused of being fascists.

Well if indeed Modi is our next PM, then the credit only goes to him and the huge trust capital that he has amassed with the people of India in the last 5 years. This trust capital is what has motivated crores to vote Modi in 2019 which the BJP and all their candidates are banking on the 23rd of May 2019.