From the Desk of the Chairman

By the time you read this piece you would have already elected a new government to rule over you for the next five years, at the least.? As always, there are also a number of intermediaries facilitating this process. For the purpose of what I want to say here, let me confine myself to the economic dimensions of my expectations.? In any election there are primarily two parties, viz., the elected and the electors.? The elected obviously get rewarded with power and influence over our lives. “What do we get” as an LIC ad says?? Though we as voters get no chance to ask this question on civic matters, we can still try to answer that question – if not as a question but as a recommendation.? After this succinct introduction, let me now put forward my small wish list of things that I want to get done by the incoming government.

1.????? One of the burning problems that faces the country today is the swelling number of unemployed.? Large number of them may be unemployable thanks to our education system, the responsibility for the same would also rest with the government of the day. Today even the highly coveted engineering graduates from the IITs have also joined the queue seeking jobs as of writing this. A staggering number of 38% of IIT graduates remain unemployed! ??The new government should not add to this problem, as it is a ticking time bomb besides being a colossal waste of national resources.

2.????? We see these days a large number of newly qualified people undertaking a reverse migration – from the urban areas to the rural areas. Not that they want to; but they are forced to, in search of livelihoods. In the process a young man’s journey to the far-off land of prosperity is getting a lot longer.? If the newly empowered person after a decent education hoping to mortgage his agricultural land for a much-touted startup finds to his chagrin that it is easier to cultivate that infertile land than to sell it for no fault of his or his family.? One never thought of the mess the land record keeping system in India is.? The solution is in digitising the land records in the rural areas and further refine the law pertaining to land holdings. ?

3.????? The Goods and Services Tax after the initial hiccups has settled down though are still riddled with loopholes.? One of the purposes of migrating to GST was simplification of the taxation system.? It is time that we move over to a less cumbersome system eliminating classification disputes over multiple slabs for a better compliance environment.? This job should not be left to the next generation just because procrastination is tempting and convenient.?

4.????? There is a crying need to improve the manufacturing competitiveness in India. Chaina having embarked on this before us, have taken a march over us with spectacular results. With our present attitude of wanting to better China fair and square, it is time for an encore.?

5.????? Having made a phenomenal impression about ourselves in the global stage, we need to reinforce the message that we have left our habit of fiscal profligacy and then reinforce the fact that we are indeed a shining example for fiscal rectitude. ?

6.????? India’s growth story needs the unstinted support of the small-scale sector.? In fact, it can only be achieved with the help of a thriving MSME sector.? This is particularly important from the point of view of employment generation also that would provide the much-needed impetus to our industrial revival.

7.????? In our efforts to promote industrial revival the Production Linked Incentives (PLI) have worked wonders. This has to be pursued with renewed vigor.? More sectors can be considered eligible for PLI as also more manufacturing functions.

These are only a few suggestions for starters.? There are plenty more to be done.? Not that we do not know what to do and also how to do it. We just do not have the will to do it.? However today with our renewed self-belief in our own abilities with a ‘can-do’ attitude, it is time we embarked on a new path of economic revival of the country that had at best of times seemed moribund. ?Duvvuri Subbarao, who was the Governor of RBI had this to say in an article in the Times of India on the subject.? “The election campaign is behind us. ?Ironically, in a country where millions struggle for daily living, it was dominated by Hindu-Muslim divide and bulldozer politics rather than bread- and-butter prices”.? This sums it all up when it comes to current realities.

Now that the general elections are more or less over, let me also venture to suggest something that most people feel but do not dare to articulate.? We have developed one of the best election machineries in India.? At the end of such a grueling and prolonged campaign all the players are tired – the candidates, the electorate, the election commission with its staff, et al.? The election circus happens at a time of the year when the climate is absolutely hostile with temperature hovering over 50°C.? It can only get worse.? This is unfair to all the participants.? You are actually punishing the poor electorate for just coming out to vote.? The election cycle should be changed with the elections set to fall at a time when people can come out to vote and also enjoy the process as much as the results.? This is also not friendly to the contestants.? Experts may give any kind of explanation for the dip in the percentage of votes, but the real culprit for a large fall, as happened this year, is the unfriendly climate.? The famed Indian elections are about to become the prime victim of climate change.? The time to act is now.? All of us have been following elections in India for donkeys’ years. ?In my lifetime so far, I have not seen an election more bitter and cantankerous than this.? It simply is visceral in intent and vitriolic in content. I keep wondering how those who manage to get elected in this environment can go into the Parliament Hall and work together for the betterment of all of us. By the time the election process is over, there will be few basic decencies left in them to talk to each other and work together to get any legislative work done for all of us.? No one can come out of this election smelling of roses.? It is time that we bring out a meaningful and acceptable code of conduct rather than design an officially codified one. That is not all.? This election has more politicians competing with questionable past. If you are a contestant with a questionable past, involving crime or corruption, you can still get all your sins washed away and be in politics exclusively serving yourself and your family.? No time in the past, the future of such dubious people in society seemed brighter. We need to change and reform rather than trying to tinker with only the election process.? If not, we do not deserve the right to the title of the largest democracy in the world. What use of a democracy in any way that is imbued with so many moral imperfections?? No wonder that the phrase ‘honest politician’ has entered the lexicon as an oxymoron!

Earlier this month India entered into an agreement with Iran to operate the latter’s port of Chabahar.? This had been in the works for quite some time now. The signing of this agreement holds a huge significance for India for more reasons than one. However, when the agreement was signed it attracted much less attention in India thanks to the din generated by the general elections.? This Port, once it gets completed, holds so much promise.? ?Chabahar provides a trade route for India to ship goods to Afghanistan and the Central Asia region.? One of the advantages of this route is that it bypasses Pakistan which is mired in its own perennial domestic problems and the route therefore is prone to even state supported armed conflicts.? Chabahar is a key part of the International North South Transport Corridor (INSTC), a multimodal transport network connecting India, Russia, Iran, Europe and Central Asia. This gives India a crucial link to a vast market and enormous trade opportunities.? The Port can be a vital base for India to provide humanitarian assistance to Afghanistan and the region.? What is more, Chabahar is located just 170 kms away from Gwadar Port in Pakistan, which is being developed by China. Chabahar's development is seen as a way to counter China's growing influence in the region.? The success of getting this Port integrated to India will depend on the development of infrastructure of the Port including roads and railways connecting it to Afghanistan and Central Asia.? The political situation in these countries will play a huge role in determining the ultimate success of Chabahar as a trade route.? This is a calculated risk taken by India.? Chabahar being a part of the international Norh-South Corridor that connects the East to Central Asia and Europe, India’s trade with both regions will potentially increase. A ten-year contract was signed between India Ports Global Ltd., and Ports and Maritime Organisation of Iran.? The Chabahar Port means a lot for both India and Iran.? It is India’s first international port that will give it access to massive global trade and tremendous strength to rival Pakistan and China.? For Iran, it is in addition to a trade gateway. It would serve as a critical alternative to its existing congested port Bandar Abbas. For a war prone country like Iran an alternative port is always welcome. Iran is under sanctions, and it remains to be seen how that country manages its relations with the US.? It, however, remains to be seen if India would end up importing sanctions in the name of expanding its trade ties to Central Asia.?

The International Court of Justice (ICJ) in a recent judgment ordered Israel from continuing their military operations in Rafah, the southern city of Gaza.? No one is under any illusion about the likely reaction of Israel in their operations to get rid of Hamas terrorist operators from their midst. ??Come to think of it, no ethnic community had been persecuted as badly as the Jews in the history of the world.? The atrocities committed by Hitler during World War II is legion.? When Israel, in search of a homeland, set up their tent in the Palestinian land despite the reservations mainly from Arab countries like Egypt, Iran, Saudi Arabia, etc., the opposition to the new state disappeared without too much of difficulty largely because of the moral suasion of the United States. Besides, there was also a semblance of sympathy with the new nation whose population having been brutalised by Hitler.? With the new Jewish state justifying their existence by dint of their hard work, prosperity was just a natural byproduct even in a hostile land.? The Jews having subjected to genocide of the worst kind at the hands of Hitler was expected to be a paragon of virtues in the new place where they settled in. That was not to be, as recent events reveal.? The sympathy for Israel and its subjects has already evaporated.? What happened on 7th of October 23 was despicable.? Instantaneous anger against Hamas who kidnapped the Israelis as ransom was also justified.? The vengeance with which Israel confronted the poor Palestinians for the work of Hamas, whatever sympathy there was for Israel has also now vanished.? In a way, humanity has failed itself when the whole world for whatever reason allowed Israel to have a free reign of terror against unarmed Palestinians. The entire world became a mute spectator to untold atrocities against Gazans.? After seeing the heart wrenching destruction and wanton killing of Palestinians, out of sheer disgust some of the countries have now started speaking up against Israel. China, South Africa, Brazil, and several other countries in Latin America.? Now Ireland, Spain and Norway have also joined the chorus against Israel.? Israel has become a pariah state.? What a fall from grace for what was considered an advanced nation state.

The Reserve Bank of India (RBI) seems to be working relentlessly these days. When Shaktikanta Das, a career bureaucrat from the Finance Ministry was shifted from Delhi to Mumbai as the Governor of RBI there was a sense of disbelief.? How can such a typical low-profile bureaucrat make the cut to occupy the corner office in the highly sought after job as the Governor of RBI?? This feeling only got reinforced after the presentation of his Monetary Policies initially.? An amiable and soft-spoken Das initially looked like occupying a chair too large for his own personality. ?How wrong we were! His predecessor Raghuram Rajan took upon himself to clean up the Bank’s Balance Sheet. His focus was on bringing an element of stability to the national currency and the banking systems.? If Rajan was a celebrated economic thinker who struggled to get things done in a highly politicised environment, Das, having worked in government in Delhi took to his new job like fish to water.? Now, the Guv in his extended term has started some much-needed spring cleaning of the banking system.? RBI with all the powers at its command was known to bark but seldom bites.? That has all changed now. ?Das started with the fintech service providers in the banking system. So far, the regulator has resorted to imposing fines for non-compliance.? Fine is not fine with Das.? Ever since the new Governor has taken over, he has taken up cudgels with the big names in the banking sector like the HDFC Bank, American Express, Bank of Baroda, Bajan Finance, Paytm, IIFL, JM Financial and Kotak Mahindra.? No mean achievement this.? The RBI has also lifted some of the restrictions where it is convinced that remedial measures have been taken by the participants. The old lady in the Mint Street has shown some vigour in her old age.? If you needed some sugar coating on the tough measures taken by the Governor, here is the news that he has handed over a cheque to the government for Rs 2.11 trillion as dividend for last year. No mean achievement if you consider the fact ?this should help the government to meet the budgeted Fiscal Deficit to GDP ratio for FY 25!

Thank you.

Venkat R Venkitachalam

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