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June 08, 2016

Economic Reforms: The Growth and Gloom Story

This Open Magazine article talks about the Modi government's reform challenges beyond the high growth number. 


The article quotes Vivek Dehejia, Resident Senior Fellow at IDFC Institute, who explains the political economy behind government's strategy: “If you have a democracy and you have a large poor population, then for a bulk of this population, some idea of redistribution remains attractive. It is important to point out that conservative economics is unlikely to succeed in a poor democracy and is only possible in non-democracies,” He adds “If your core [support] base is around 15- 20 per cent of the country’s population you still need to attract another 10 per cent or more, and hence it is attractive to move in policy terms to a more centrist position.”


As an example, Dehejia cites the poor performance of the BJP-led NDA coalition in the 2004 Parliamentary polls. “The poor result was not due to the ‘India Shining’ campaign, but due to the perception—whether right or wrong—that the alliance was not pro-poor. The lesson has been learnt. Modi is pragmatic. Why would he do what he knows will hurt him?”  he asks. “You can abolish the National Rural Employment Guarantee Act and carry out aggressive privatisation. Optically, this may look good. But what will you gain politically?”


Read the full article here.

TAGS: Modi , reform , BJP , NDA , growth , election
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