New Delhi: Next to social and political fragmentation are the economic uncertainties plaguing India which has played a role in weakening the country geopolitically although this may not be readily apparent. The order of the day is geo-economics. Since nuclear weapons are the great equalizer, pure military power commensurately has lost salience. The country that leads in geo-economics has a future; without real and sustained growth and jobs, a nation might as well stop pretending to be a serious power. On this metric, China outstrips both the United States and Russia, although it is still early to write off America. The Indian economy under Narendra Modi, on the other hand, is tottering, and India now draws the accusation China once did of fudging economic data. If these accusations snowball, India will lose the trust of the world, and this would indubitably rebound on the country’s geopolitical standing.

As with society and politics, a country needs liberal and stable economics to grow and prosper. Under Modi, economic liberalism and stability have been destroyed. Modi owes his political life and present leadership to the RSS and the Sangh Parivar which are spectacularly unversed in economics. (For that matter, they abhor every manner of intellectual pursuit that opens the mind and triggers the questioning process.) All of them hew to outmoded and discredited ideologies of autarchy and statism and their claims to being liberalizers of the Right are plainly jokey and pathetic. Since Modi is an autocrat who is also convinced of his omniscience about, inter alia, economics, he has led the government from one economic blunder to another. Only a quack could have demonetized eighty-seven percent of the currency as a countermeasure against black money, and it is only the resilience of the Indian economy, in which Modi has no hand, which saved a meltdown. Not content, he hurtled down where gods fear to set foot and imposed GST measures that were both monstrous in their complexity and in the extortionate taxes levied on goods and services. These combined to pull down the economy to its worse growth rate in years; resilience also has its limits. This was followed within months by a fatal ten percent tax on mutual funds and long-term capital gains which have killed the last hopes of the middle class to stay above water with a collapsing economy. The stock market has been plunging since the imposition of the LTCG tax.

Overtaxing an economy is the surest way to destroy it. Having set off on that perilous path, the Modi government is both adamant against making sensible retreats and also clueless about saving the economy by other means: And there may be none. It would scarcely be an exaggeration to say that the Modi government is the most illiterate and unschooled in matters of the economy of all the governments since the 1991 reforms. There is a highly qualified economic advisor who has been made redundant by a clerk with a PhD in yoga who makes all the financial-policy decisions for the Modi government and announces them with the deathly animation of a hangman. He was a big moving force behind disasters like demonetization and GST and he has come out fighting in defence of the tax that has extinguished mutual funds and the stock market. The Sancho Panza of this whole dreadful circus is Arun Jaitley who arrogantly struts about to cover his monumental incompetence and active diminution.

For a majority of Indians, a steady government or private sector job and assured meals are of infinitely greater importance than GDP growth, expansion of manufacturing, rise in exports, low taxes and stable policies, low inflation rates and low interest rates, and the other staples of a first class economy. To that extent, a crumbling economy should not worry Narendra Modi and his awful government -- except for the ever-widening employment gap. With millions being added to unemployment rolls at short and frequent intervals, it becomes a vastly disruptive factor in domestic politics. But this writer’s chief concern is geopolitics. The largest market, the United States, is becoming a fortress. China is bracing for this and has come out of hard places before. The biggest worry for India in addition to all this is the slow and steady emergence of the Trans-Pacific Partnership where the US’s absence may well prove a blessing in disguise. India’s political and economic destiny is anchored in South Asia but the Modi government has taken relations with most neighbours to new lows. There does not seem a hope in hell for Indian geo-economics till quacks and tax ultras run the show.

To be continued....

Read “Imperilled India - 1” here .