Mandate for Modi: A Business Agenda

22 May

Mandate for Modi: A Business Agenda

“When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”
― Thomas Piketty, Capital in the Twenty- First Century

The brilliant french economist has written a seminal book. This is a important insight that rate of return of capital far exceeds income growth. One has always felt this for a long time now. I believe wealth creation rarely trickles down  though there may be some ancillary benefits. Thomas Piketty is right. Thus political management of economy is so important. Politics precedes economics. If the political management of economy is excellent invariably economic indicators will improve and overall investment climate will be positive. It is here Narendra Bhai Modi , India’s designate prime minister has  a clear edge and in my opinion will do fine.

I have often felt India’s best Prime minister after the great Jawaharlal Nehru was Narasimha Rao ( Prime Minister of India (1991–1996) . He was the real architect Indian economic reforms for which his erstwhile  finance minister and most recent  prime minister Manmohan Singh got much credit. Manmohan singh could lay foundation of economic liberalization because of political management and political will of executive lead by Narasimha Rao. Manmohan singh in his later roles as Prime minister hardly excuded this political management and political will to push reforms. May be that function was divorced from him as alleged in a recent book by his media advisor. May be he was not cut out for it. Either way political management and political will precedes economics. It is here Mr. Modi will come out stellar, he has a huge mandate and has a track record of being investor friendly. I think Economy is in good hands. We can safely assume that.

There is one more thing that want to share. It is this, state must not abdicate its responsibility towards Job creation. While it is true state must get out or disinvest from unsustainable businesses . It must create jobs in undeveloped areas where there is no incentive for business to go or function. I recently saw a documentary about poor village kids happy that they have found regular jobs as ” Home guards”. The regular income has more spinoff effects than marginal work created by government schemes .

I want to share this knowledge@ Wharton article which accurately details the economic challenges for the designate Prime minister of India. I am prone to think if political management of economy is right then generally economic indicators improve. It is here Narendra Bhai Modi may prove to be stellar and we can safely assume economic stewardship will good for next five years. So its in good hands.

Hope you have a lovely day dear friends. Thank you!


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