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Raghuram Rajan: The establishment man, who descends on India when the weather is pleasant, now lies about PLIs helping Ambanis and Adanis

To make statements like this attacking PLI, simply for the sake of opposing Modi, not only reduces his own image, and academic credentials, it makes all his other possibly meaningful statements sound suspect and agenda-driven.

India is blessed with lots of Nobel laureates, economic experts and academic geniuses that mostly reside abroad and that too mostly in the Anglo-Saxon world. They drop by and visit us when the weather is good and give us gyaan on how to solve poverty. Of course, these days everything is in the cloud so we get wisdom from the cloud too. Physical visits are not necessary especially since many of them find “this is not the India I grew up in”.  That gravy train derailed in 2014. 

Don’t expect them to do any serious introspection on why, despite being part of the establishment all these years, they did not turn India into another America with their expertise, so they could sit here and give gyaan to Mozambique or Mongolia on poverty alleviation. And not have to lecture us from New York or Boston. Unless their case is that a highly developed, fully employed, healthy and prosperous advanced nation was handed over to Modi in 2014 and he ran it to the ground. If you are a cynic, you can almost believe that Nobels, Bookers and Magsaysay’s are handed out not for what they have done but for how much they can do.

Raghuram Rajan is one of these experts. Go over his track record, you will find he was very much part of the establishment for years. He was our economic advisor from 2008, taking over as CEA from Kaushik Basu in 2012. Basu is yet another economic superstar who considers a day as wasted if he does not attack Modi in at least a dozen tweets. Such was the brilliant job Rajan did as CEA that MMS promoted him as RBI Governor in 2013. He stayed on until Modi refused to give him a second term. 

Since his return to academia Rajan has been focused on telling us how wrong we were in electing Modi. That is if he is not too busy applying an intellectual coat of paint to dynast Rahul Gandhi. Unfortunately, that paint needs a new coat every other month. As a wag puts it, he successfully predicted six of the last two recessions. Quite often he will be on TV channels, predicting gloom and doom. And our “fearless” journalists will interview him like some freshman kid interviewing a Nobel laureate professor with a reputation for a short temper, for the student’s magazine.

He can confidently talk to our “speaking truth to power” media because none of them will ask him about the increase in bad loans, loans given to connected cronies, coal blocks and other resources allocated to pals of the ruling elite without auctions and the loot of national resources that was the overarching theme of the UPA era. All under his watch as advisor and RBI governor, a position from which he should have known exactly what was going on. No sir, he did not resign in disgust or do any “Award waapsi”.  

However, once Modi came to power, he started offering anti-establishment soundbites to the durbari media that had morphed into “fearlessly independent, speaking truth to power journalism”. In May 2014, when UPA was already voted out and just days before leaving office RBI changed the gold import scheme, according to CAG resulting in windfall gains of Rs.4,500 cr to select businesses. When you hear lectures on the “idea of India” remember incidents like this. Rajan justified this as a “reform”. Pity other “reforms” were not done in such great haste. Ever heard any “journalist” ask him about this?

Latest pearl of wisdom from Raghuram Rajan: PLI helps Ambani

The latest wisdom from Rajan is that PLI (production linked incentive scheme) only helps “well-connected” firms. To make his point clear he names the very same industrialists that have been demonised and abused on daily basis by corrupt dynasts – Ambani and Adani. For good measure, he added Tatas. You see, if Adani studied African studies or sociology at JNU and become an activist, living off donations from George Soros, he will be the toast of our left-liberals. Since he is committing the horrendous sin of creating jobs, paying taxes and making money, he can be abused without any evidence. By the way, in whose era did the humble unknown cloth retailer aka Dhirubhai Ambani become a crorepati industrial tycoon? Was it the era when even to visit the loo you need a license or permit from Delhi? And another permit before you can button up? Don’t ask too many inconvenient questions – you will be labelled a troll.

Clearly the old order is rattled by the success of PLI in attracting investments – that too in making electronic and manufactured products – where China enjoys a near-total monopoly. Mobile phone exports have shot up 32-fold to about $6b and sure someone is losing market share. Its very potential is its enemy. And what better way to attack it than use the same language his own student uses day in and out? That should earn extra brownie points from the “woke” left too.

But let us turn to facts.

Firstly, is the allegation that “well connected” firms only get PLI incentives anywhere near the truth? Obviously not. After all, you are not handed over a cheque. You must invest first. Look at the list of companies – Hyundai, Apple, Samsung, Foxconn, and many others. Dozens of them. If all of them are “well connected” then we must congratulate Modi and Sitharaman for having such a large number of global blue-chip connections. After all, in the UPA era, we only had the royal damaad and his Bhandari friends.

Secondly, why is RR commenting on a matter he knows very little about. Firstly, PLI is not just about electronics. It is being implemented in 15 sectors ranging from steel to pharma to textiles to IT hardware. On top of that electronics is not all $10-$20b chip factories. There is enough action in the middle and lower end. Intel and TSMC etc makes chips that are at 7nm or even lower. The semiconductor plants India is attracting are in the 28-65nm range where there is a global demand surge and shortage as well. These chips are used in a myriad of applications, even if they are not the latest high-end mobile phones or laptops. For example, media players, refrigerators, security alarms to cars. They don’t need $20b. It is not wrong to start small or at the lower end and move our way up. 

Thirdly, are allocations made on “connections”? Perhaps Rajan saheb still thinks we are in the UPA era. No sir. Bids are invited. For example, for the battery storage initiative, as many as 10 bids. Four were selected. OLA and Hyundai got the lions’ share and Reliance and Rajesh Exports got a small share. Similar bids have been invited for making drones. It is likely many medium-sized companies and startups will apply because they dominate the sector. The PLI scheme for textiles attracted as many as 67 applications, not all Ambanis. Under this scheme, those investing Rs.300 crores get 15% – which means they must bring in 85%. Most other schemes too have similar up-front commitments. No one gets a free lunch.

Fourthly, RR should know very that offering incentives to job creators and investors is a global practice, whether we like it or not. The stampede of ministers and officials that follows Elon Musk is not just an extreme case. Practically every country, especially our major Asian rivals like the Philippines, Vietnam, Indonesia, Malaysia and others dangle carrots of various sizes and shapes. Sadly, even first world rich nations not desperate for jobs, offer billions in incentives. We have to play the game the way it is played, without, of course, going overboard. Given our socialist era babudom, rampant unionism, infra bottlenecks etc., we need more, not fewer incentives to get over some of the other drawbacks we suffer from.

No one can deny Rajan his right to vote Congress or pray for Rahul Gandhi to be our PM. MMS served Sonia Gandhi and maybe Rajan wants to do the same with Rahul. Even if he gives up on his Indian passport, that is very much his right as an Indian origin person. That people like him and MMS, though personally clean, have become the biggest enablers of dynastic corruption and fascism is a sad fact we have to live and deal with. But to make statements like this attacking PLI, simply for the sake of opposing Modi, not only reduces his own image, and academic credentials, it makes all his other possibly meaningful statements sound suspect and agenda-driven.

But then, it is practically impossible to nail down our leftist intellectuals even if they are caught lying through their teeth or spreading fake news. Because if a rabbit has three warrens these liberals have dozens of ways to escape. Goalposts are mounted on motorised wheels to be shifted at will. They are usually “selectively quoted”, we should “read the entire speech”, and it “doesn’t matter if the picture is fake or statement is false, it is the overall point I am trying to make” etc. etc. 

Doctor saheb, go for a cure!

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Ganesh R
Ganesh Rhttps://fnganesh.substack.com/
Ganesh is a software consultant who has spent the last few decades overseas for work. But he is very much an Indian citizen and deeply connected to India. He likes to share his perspectives and opinions which are based on personal experiences, extensive travel and interaction with various cultures.

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