Mr. Ninan calls Dr. MMS unlucky. It fails the test of empiricism. He enjoyed – for no ‘fault’ of his – five best years of economic growth between 2004 and 2008 (up to third quarter). He then was presented with a collapse in the price of oil in the second half of 2008 and in 2009. He did not have too many monsoon failures to contend with (just one?). He inherited a good and stable fiscal and external deficit positions.
Unfortunately, PM Modi has not been so lucky. PM Modi had inherited an economy that was set back by several years, if not decades, by the outgoing administration. It is still reflected in poor numbers on Industrial Production.
Also, towards the end of his article, Mr. Ninan presents Dr. Reddy’s argument somewhat incompletely. Dr. Reddy, if I recall, advocated a balanced current account over a full economic cycle in his keynote speech at the annual NCAER conference in 2012. He did not call for elimination of current account deficit year after year, if I recall correctly.
Another thinly argued piece is this one in FT. It notes that the allure of Modi is fading for foreign investors. Provides no new or incremental information to back up this claim. The problem with this article is that it deals with telecom mess and Coalgate. Both are UPA legacies. The comments by Marten Pieters has nothing to do with the NDA. It is a continuing mess.
For example, read Devangshu Datta’s article in ‘Business Standard’. It does a good job of cataloguing the issues that bedevil India’s power generation, distribution, availability and its viability, finally. The solutions are all not necessarily in the hands of the Centre alone. If States do not allow their power producers to price power economically and to sell to those who can pay for it, then the chain of problems builds up backwards all the way up to Coal India too. It is a big and messy legacy issue.
If one surveyed the global economy today, there are not too many economies for the MNCs to go to, frankly. They can beat the China drum but there is no sound any more. It is hollow. The FT articles is, thus, yet another example of Western pressure tactic without substantive content.