RAHUL HASN’T OFFERED ANYTHING NEW IN POLICY

While every word uttered by Prime Minister Narendra Modi has long been scrutinised and dissected, it is striking that so little attention has been paid to the substance of Rahul Gandhi’s public pronouncements, a point I raised as long ago as 2010 in a Wall Street Journal column. This is a remarkable lacuna considering by all accounts he’s about to be elevated to the presidency of the Congress party and presumably will lead the party’s campaign in the 2019 general election.

But how is the party that Rahul Gandhi will lead different in its fundamentals from the party of his mother and grandmother? India recently marked the centenary of Indira Gandhi’s birth and much serious commentary dissected her strengths and weaknesses. But Rahul Gandhi has to my knowl- edge never criticised the disastrous economic policies pursued by his grandmother which worsened all of the features of the licence raj she inherited from her father, Jawaharlal Nehru and set India’s development back by decades. On the contrary, at a campaign stop in Gujarat in September, Gandhi actually listed bank nationalisation along with the green and white revolutions as a major accomplishment.

Gandhi obviously can’t be blamed for the bad policies of Indira, but he can’t escape responsibility for 10 years of UPA in which although without ministerial position he worked closely with the party president, his mother, Sonia, and wielded considerable influence behind the scenes. To that end, he bears some credit, and some responsibility too, for the UPA’s turn toward entitlement-based welfare and away from economic reforms.

Gandhi’s much publicised recent tour to the United States does not dispel the notion that he’s not learned the right lessons. Rather, his speeches continue to harp on the importance of small business and cast aspersions on the need to promote large scale manu- facturing firms as envisaged in the Modi government’s Make In India scheme. This fixation on small being better, a pernicious legacy of the “poor economics” of Mahatma Gandhi, which Rahul Gandhi continues to pay homage to is simply bad economics and a retread of failed Congress socialist policies.

Gandhi has said little if anything on what concrete steps he would take to create large-scale meaningful employment and get India back to a high growth trajectory and content to repeat vague platitudes about helping the poor.

By contrast, Modi has brought a decisive shift in economic policy since coming to power in 2014, demonstrating his willingness to take political risks. Even if you discount policies that build on initiatives started under the UPA, such as the GST, Modi deserves credit for pushing through a potentially game-changing insolvency and bankruptcy code, a move away from leaky and corruption prone welfare schemes towards direct benefit transfers, the monetary policy framework agreement which brings India up to world standards and the recent drive toward digitisation and formalisation of the economy following on last year’s demonetisation.

My own research discussed in this space recently clearly shows the move away from cash toward digital payments is one uncontestable gain coming out of demonetisation. My ongoing research suggests also that demonetisation may be delivering longer term gains in the move away from informality toward formalisation. For instance, the ratio of aggregate deposits to broad money (M3) in scheduled commercial banks which had stabilised around 0.8 before demonetisation spiked at 0.87 in January 2017 and has since been converging to a new equilibrium which may be higher than the old one. That means more deposits and less cash.

Despite some misses and not doing enough to unshackle the rotting socialist edifice of the past, there is no denying that the overall thrust of Modi’s economic policy has been toward modernisation and reform.

By contrast, Rahul Gandhi has offered no new ideas, just a facelift of the socialist edifice with no rethinking of the foundations.

BY CONTRAST, MODI HAS BROUGHT A DECISIVE SHIFT IN ECONOMIC POLICY SINCE 2014. HE HAS DEMONSTRATED HIS WILLINGNESS TO TAKE POLITICAL RISKS