New Delhi: A fortnight from now, Narendra Modi will complete three years as Prime Minister. It is a good time to assess his work. This piece would pretend to be nothing less than a report card. It would examine Modi on several parameters, including the economy, Kashmir, foreign policy and geopolitics, inspect allegations of “authoritarianism” and indecisiveness, and also focus on his reported lack of workable ideas and policy blunders. The report card, whose first part is published today, will conclude with a rating of Modi’s three years as Prime Minister. Objectivity is the sole criteria here. Whether it pleases one section or enrages another is not of the smallest consequence to this writer or to this magazine.

The economy: Arvind Subramanian, the Chief Economic Advisor to the government, who often sports the trademark band-baaja waistcoats preferred by Modi acolytes, was livid a day ago at the Standard & Poor’s rating of India, which placed it at the lowest investment grade, and some rungs below China. International rating agencies are alternately feted and abused depending on their reports and they usually take it in their stride. If India had obtained high ratings, Subramanian would have been gushing about Standard & Poor’s.

The fact is that Standard & Poor’s has correctly assessed this country. It could have been lower, and the way things are progressing, India could get there. Nothing has changed about India’s business environment, with the license-permit raj flourishing as before. Don’t believe a word of the Narendra Modi government that India has suddenly developed a business-friendly environment. Speak to any businessman, industrialist or entrepreneur. They see the state and its agencies as adversaries that have to be appeased. If they are somehow surviving in business, credit is due to their never-say-die spirit and to their thirst to create wealth. The state only impedes trade and commerce.

Since the demonetization of November last year, things have gotten worse. Micro-credit has dried up. Small and medium enterprises, the backbone of the Indian economy, have been dealt a body blow. Their early sources of funds have vanished; and banks, caught in the self-inflicted mess of NPAs and stuck with loan defaulters like Vijay Mallya, are absolutely terrified of lending to them. Their stories will not appear in the major newspapers because this country is driven by the big-is-beautiful mantra, although big business has contributed proportionally little to this country’s growth since the 1991 reforms.

Besides scarring SMEs, demonetization has irreparably damaged the economic environment and killed the feel-good factor. The economic environment is no longer stable and predictable. Each new day brings new regulations. Suddenly one morning, customers discover that banks are charging them for every ATM withdrawal. Protests spread like wildfire before banks step in with suspicious clarifications. The Reserve Bank of India is nowhere to be seen or heard. People are left with the overwhelming apprehension that their hard-earned savings in banks no longer belong to them. This was not the case before demonetization.

And there is scarcely a week that passes when currency shortages are not reported from one part of the country or another. This was not so prior. As this is written, Poona has run out of cash. It was some other town earlier. It will be another city in the near future. Businessmen are complaining about perpetual currency shortfalls. All this is joining as rising middle class anger against the Modi government which seems hardly to move the Prime Minister who has hardened as a person. Modi’s argument is that demonetization was vindicated by the Uttar Pradesh election victory. The argument is bogus and insults the intelligence of Indians. Now there are major administration plans to sell demonetization as a success when the Modi government reaches the three-year mark. It won’t wash. People are no longer buying into Modi’s bombast and hyperbole.

Indeed, anything that the Modi government has attempted on its own in the financial sector has failed, starting monumentally with demonetization. The campaign for a cashless economy is dead in the water because people by and large no longer trust this government with their money. Money hoarding has perhaps reached proportions exceeding what they were before demonetization. It indicates a breakdown of trust between the people and the Prime Minister.

On the other hand, the measures that have or are likely to succeed in the economy were never designed by the Modi government in the first place, although it shamelessly claims credit for it. The government deems authorship of the Goods and Services Tax reform when Manmohan Singh deserves the sole honours for it. Modi’s government in Gujarat and the BJP as the Central opposition blocked the reform for almost a decade. This government is in the habit of stealing credit. There were media reports to the effect that the Modi government planned to showcase the blockbuster film Bahubali as a Make-in-India initiative. No surprise if this actually happens.

The besetting problem of the Modi government is that it lacks economic technocrats of the stature of Manmohan Singh, who probably knows more about the Indian economy than anyone among his peers. Arvind Subramanian complains that economists are not frank with their advice to the government. Why will they? Indeed, why should they bother when the Prime Minister, throwing all economic logic out of the window, claims demonetization to be a super-duper success? This government believes in form, not substance. In its orientation, it is anti-intellectual. It will not accept that grave and enduring uncertainties have leached into the economic system which are perilous for business and industry. Growth needs peace and stability. Prime Minister Modi scorns these principles. At least this writer cannot stand on dubious nationalism and fault Standard & Poor’s low economic rating of India.

To be continued...