Modi 1.0 : the Performer-In-Chief !

The oxymoron of the season is that Indian economy was found sputtering in the recent past just before the election & yet India delivered a historic win to Modi - unprecedented pro-incumbency !

So even as almost all Indians go about celebrating, should we worry? More so since Modi did not unleash high intensity reforms and so India's growth rates remained below potential?

Well one can worry in the absolute vacuum, just like the media folk like to - but not in reality.

At the onset, we must understand where India was when Modi got first sworn-in on 26th May 2014.

India's ranking in the World Bank monitored Easy Of Doing Business index was a shameful 140 on 190; now it is 77, huge leapfrogging over a five year period.

India had then also found itself in the disgraced The Fragile Five economies list. Today, in the expanded The Troubled Ten economies list, India's name is absent.

The global rating agencies too have upped India's grade. 

Finally, Indian banking system was on the brink of a collapse due to the all time high non-performing assets, where most loans to corporates were given away in an undeserving & unqualified ad hoc manner, rendering the system to be soaked in corruption. 

Today, because of Modi's strong arm tactics, there's a beeline among the corporate head honchos to return the money or face loss of company ownership. And yes, some have lost their companies.

Sure, Modi did self-impose ( some dubbed it as self-goals) tough measures like a) Demonetisation (rendering 86% of printed circulating cash as trash if earned illegally or to be exchanged for new notes if legitimate ) and b) GST.

Both of these resulted in withdrawal symptoms and so did act as major speed breakers as bulk of India worked in the informal economy. 

But in view of the above two blows, while many lost money, some were grudgingly forced into the formal sector.... & are now learning to pay taxes. 

That also resulted in the obviously unethical coming together of 22 opposition parties - a motley mix of arch rivals under the banner of "Mahagathban" or the great collaboration.

Notwithstanding the hardship & the counter view presented by the army of opposition parties - most Indians understood that the said two measures were good for the economy in the long run.

The world agreed too !

India earned it's highest Foreign Direct Investment & Foreign Portfolio Investment ever, pumping it's reserves to an all time high. At the time of the results coming in, the Indian stocks are found to be at an all time high.

So even when last election quarter showed a big drop in the corporate earnings, the government yet had a windfall tax collection - a clear harbinger of the things to come. The number of new tax payers have also galloped their way in.

Considering the pain, the Indian public has demonstrated an unusual and rare human trait & endowment i.e patience & maturity respectively - missing so much in that "of-for-by the people" system of electioneering.

They actually voted in a guy, that imposed austerity of sorts, took away money from many and imposed tight measures. 

Unlike Venezuela which also tried some things similar & failed, India saw no riots nor strikes - otherwise typical of developing nations in such times. 

Looking outside, in the last 5 years, we see not one country in the world where the animal spirits have been unleashed & economy is running on all cylinders fired up to the max, even when it wasn't suffering as much as India was when Modi ascended to the prime minister's chair.

So let's get it straight - 114 countries were growing at a GDP growth rate of 5% or higher, until the global financial crisis that hit in 2008.

Notwithstanding the promises at G-20, all major countries came up with lose monetary policy to spruce up their economy and covertly began looking inward to protect jobs at home i.e. slow poisoning globalization. 

The IMF's regular downward revision & good natured euphemistic language since the last few years gives us a clue - global economy is definitely crawling it's way closer to a recession.

Today, less than ten nations are growing at 5% or higher growth rates. 

China's GDP growth of about 14% at one time i.e. prior to the global economy collapse in 2008 to now less than half of that over a decades time can always be used as a bell weather as she is, unlike India, largely integrated with the global trade. 

Her forex reserves are down - already lost over a whopping USD 1 trillion from it's peak. 

Every leader in the world wants local manufacturing and for that, the inducements are a plenty - the obvious being lowered taxes. The Trump induced trade war is a manifestation of the reality. 

For most part India has ducked the slowdown trend - that's a huge achievements considering where she started five years ago and what it was suffering from. Modi did not allow the Indian economy to happily slide into the slow but sure IMF's trap and then do things as dictated by the external lenders - he saw it coming and did what he must. 

That's leadership 101 !

Also, Modi delivering a clean corruption free term is a welcome change. Modi 1.0 was in a consolidation phase, Modi 2.0 should do much better, as unlike the first term - in about 24 months he could have a control of the upper house too, allowing him to free the tiger, caged until now.