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Which India will prevail?

J Mulraj | Updated on September 27, 2019 Published on September 27, 2019

PM Modi wowed the over 50,000 person crowd in Houston, Tx, at the ‘Howdy, Modi’ event organised by the Texas India Forum. Donald Trump was present, hoping that some of Modi’s political capital with the diaspora will rub off on him in the 2020 elections. He is under attack by the Democrat controlled House of Representatives, which has initiated impeachment proceedings, and a swing of the Indian diaspora vote would help.

Modi’s later televised interaction with Michael Bloomberg, reveals his vision of an economically stronger, and a benevolent, resurgent India. He talked with Bloomberg on an array of topics, starting with climate change where he stated that India’s goal of generating 175 GW of electricity from renewable sources had already been 50 per cent achieved, and that he, personally, had upped the target to 450 GW.

That is an ambitious target and, not only does it help meet environmental targets but, if rooftop solar power generation is encouraged through a proper incentive scheme, can help create millions of jobs. This happened in Germany where, under a minister, Hermann Scheer, an attractive feed in tariff for roof top solar generated power supplied to the grid, created more jobs than in Germany’s auto and engineering industries combined.

Modi admitted that India has the third largest reserves of coal in the world, and India cannot afford to not utilise it. But there are ways in which coal can be used in an environmentally friendly manner, such as gasification, and he invited global companies to bring in the technology to invest.

Yet, coal unions called for a one-day strike to protest foreign investment in the coal sector, which is what will allow, via gasification, the continued exploitation of coal reserves. The strike affects power production, with eight power plants, capacity 13,000 MW, having coal stocks only for a day.

Which India will prevail?

In solar roof top power we have the potential and Modi has the vision. What holds us back? Is it simply bureaucratic lethargy? Which India will prevail?

In his interaction with Bloomberg, Modi also stressed on the need to properly use another scarce resource, viz, water, and the government’s efforts at that, including establishment of a river grid and rain water harvesting and re-use. It is high time water is priced properly, for without proper pricing it leads to improper cropping. State level politicians promise free/subsidised electricity to farmers, who misuse this by pumping more groundwater than needed. Levels of groundwater are alarmingly low. Cropping patterns are all wrong; sugarcane, a water guzzling crop, is planted in Maharashtra, a water scarce area.

Sugar is the most controlled industry with the government having a say in cost of raw material (cane), in the finished product (sugar), in the amount of product released to the market and in restrictions on the radius a cane farmer can supply to the sugar mill. It is only the large cane farmers who benefit; the other stakeholders lose. The losses are absorbed largely by co-operative banks, which are often set up for this purpose. Last week, one of them, PCB, was brought RBI control, which mandated that depositors could withdraw only ₹1,000 from their accounts. This is called a ‘bail in’, as opposed to a bail out, in which taxpayer funds are used to rescue a failed bank.

In the case of PCB, one large loan, to HDIL, was apparently the culprit. So which India will prevail? One in which mismanagement and fraud are punished, or one in which powerful persons go scot free?

A well governed India has lots of potential to grow and for investors to make money. Leading fund managers opine that the earnings cycle has turned and that there will be positive surprises.

On the flip side, the ‘swamp is being drained’ as the misdeeds of corrupt politicians, businessmen and bureaucrats are being revealed. These investigations cannot be allowed to be derailed either by shoddy investigation which deliberately presents poor evidence in order to ensure no action, or by the nauseating practise of adjournments granted at will to those who are guilty.

If we get the judicial and investigative systems in order, a brighter India will emerge for the vision is there. If, however, we continue, as we have unfortunately been doing, with a ‘chalta hai’ attitude, permitting an Anima Farm with unequal rights, then India will plod along. Which India do we want?

The writer is India Head — Finance Asia/Haymarket. The views are personal.

Published on September 27, 2019
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