With India’s Q3 GDP number coming in at a swashbuckling 7.2%, Modi’s India has clawed back to its position as the world’s fastest-growing economy.
Following these numbers, the ecosystem has begun the usual debate that follows the release of every batch of GDP figures. Will the numbers hold? Are the figures reliable? Will the good news get better going forward or not? And above all, is the economy “out of the woods” after the “twin shocks” of Demonetization and GST?
Lost in this debate is the sight of the fact that the dishonesty of India’s intellectual elite has been thoroughly exposed by India’s latest GDP data. First of all, how is GST supposed to be a “shock” to the economy? The Goods and Services Tax (GST) was widely seen as the crown jewel of economic reforms for over a decade. History will remember that Narendra Modi was the Prime Minister who enacted and implemented this greatest of tax reforms.
But just because Narendra Modi succeeded where all his predecessors had failed, including “great economist” Dr Manmohan Singh, the GST suddenly went from being called a “reform” to a “shock.” The intellectual dishonesty of our elite could not be more obvious.
Unable to attack the premise of GST itself, the experts have mostly focused their criticism on the supposedly “flawed implementation” of GST. Let’s look at the headline numbers here (remember that GST came into effect on July 1, 2017).
GDP Q1 (Apr 1 — Jun 30, 2017): 5.7%
GDP Q2 (Jul 1 — Sep 30, 2017) : 6.3%
GDP Q3 (Oct 1 — Dec 31, 2017) : 7.2%
So, the Indian economy slowed down to 5.7% for the 3 months before GST was to come into effect. If the tax structure is going to change in less than 3 months, any business would slow down and wait. Is there much that the government could have done about that? Then, once the new rules come into effect, people get back to business immediately and we see a little jump from 5.7% to 6.3%.
And in the 3 months after that, the economy roars at 7.2%, the highest among major economies in the world.
That’s all: Six months to implement the greatest tax reform since independence. Just six months.
This is a country where the foundation stone of Sardar Sarovar Dam was laid by Jawaharlal Nehru in 1961 and work did not even begin until 1979. This is a country where Nehru created a commission in the 1960s to look into the construction of a Railway Bridge over the Ganga near Ghazipur in Eastern UP. But the foundation stone for the bridge was laid by Narendra Modi in late 2016.
In the same country, Narendra Modi has taken just six months to implement the greatest tax reform since independence. Dear experts, tell us now: was it too much? Were six months too long?
What ‘flawed implementation of GST’ were they talking about? How many months of disruption would you have allowed for a “perfect” implementation?
Right now, these “experts” are basically hiding under their desks and hoping nobody holds them accountable for all the ridiculous potshots they have taken at Modi’s GST. They are hoping people forget and move on. It is for us to hold these experts accountable. Otherwise, we will be forever stuck with an incompetent, lazy and compromised intelligentsia exercising much sway over public opinion.
I call it “Modi’s GST” because that is exactly what it is. The Prime Minister generously invited all parties to the launch of GST, giving them full credit in what was really a team effort and a national achievement. Dr Manmohan Singh was offered pride of place, but he declined. If nobody else was willing to share the risks, who else should take the credit?
It’s now Modi’s GST.
History will record that Modi got it done. And that Dr Manmohan Singh failed. History will also record that Dr Manmohan Singh could not muster the courage to show his face at the GST launch. That the Congress Party opted for petty politics at a watershed moment for economic reform in India.
History will also record that India’s academic and intellectual class was so dishonest, compromised, partisan, short-sighted and narrow-minded that they could not give Modi a six-month window to implement India’s greatest tax reform. Did they believe so strongly in Dr Singh’s view of “In the long run, we are all dead”? I am given to understand that Dr Singh had a distinguished career as a student. Was he so short-sighted that he never began studying six months before an important exam?
No, dear experts, GST is not a “shock” to the economy. Calling GST a “shock” is like saying that a student spending four years studying at IIT is a “career shock,” instead of looking for a job after finishing high school. And Narendra Modi has done supremely well in getting everything about GST has done in six months.
The only reason you don’t see Modi getting credit for this superb work on GST is because the entire intellectual class is compromised and partisan. But then, Modi is no stranger to this phenomenon. I request you to remember a time only about two years ago when the exit of Raghuram Rajan was announced. The experts even had a pompous name for it; they called it ‘Rexit’; implicitly drawing a comparison between Britain leaving the EU (Brexit) and one man leaving his job in India.
Close to 35 million people voted in the Brexit referendum. A momentous event that will shape geopolitics for decades to come.
But in the eyes of our intellectuals, that event is roughly in the same league as Raghuram Rajan leaving his job in India. I repeat that just to give you an idea of the magnitude to which our intellectuals lost their sense of proportion. One expert famously predicted in the Economic Times that Raghuram Rajan’s departure might cause the Indian economy to lose as much as $100 billion, along with a collapse in the stock market and the Indian Rupee.
The fact that none of this actually happened never mattered. In fact, the reverse happened. But no contrition was ever expressed, explicitly or implicitly by our “experts.” They just went hiding under their carpets, observing a strategic silence until their failures were forgotten. That’s always been their modus operandi. Lie big and run fast.
If any expert is reading this article, s/he is probably laughing at me saying things like “History will record this” or “History will record that.” Because guess what?
As GST and Rexit showed, experts may not control the facts, but they sure do control the record.
And they will use it.
If we the voting public do not revolt against the tyranny of compromised experts and show them their place, the next generation will read in their history books about how Dr Singh successfully implemented GST after Modi made a mess of it. Right next to the chapter on how Aurangazeb spent all his time rebuilding the temples that Chhatrapati Shivaji had destroyed.
Abhishek Banerjee is a math lover who may or not be an Assistant Professor at IISc Bangalore.