Book Review: Modi and Markets by Dhiraj Nayyar: Financial Express April 21, 2019

A collection of articles from the past, delving into Modi’s achievements as PM and his work towards setting up a meritorious economy, reads dated.

When you pick up a book titled Modi and Markets whose author, at the time of writing this collection, worked with the Niti Aayog, you know what to expect. The PM has been associated with everything positive about the markets since he took over, as he ushered in a spate of reforms to provide a boost to sentiment. As the Niti Aayog was the creation of the PM, there is expectation that there will be eulogies for Modi. The book does not disappoint here and, to an extent, the praise can be justified, as the PM can’t be faulted on policy, as the framework has provided the ideal platform for ushering in higher growth.

Dhiraj Nayyar, the author of the book, is better known today as a corporate economist and has been a reputed journalist who worked at some of the best publication houses. Therefore, his praise for the PM appears to be more out of conviction than a sense of belonging for the organisation he was associated with when the book was written.

Modi and Markets is a collection of Nayyar’s articles in the media over the years, which have been put together and presented in two parts. The first part, Mr Modi, is on the PM and the second is called Markets. While the former extols the positive achievements of the PM, the second contains articles that put on the table several weaknesses of the previous government, which was essentially the Congress.

The handicap of the book surfaces depending on the time when it’s read. This is so as some of the articles were written just when Modi took over as the PM and presented his pro-markets view and abhorrence to freebies, as he worked towards setting up a meritorious economy. However, in the past few months, there has been a tendency to join the bandwagon of politicians doling out freebies, which understandably, is the call of the day. Hence, what was considered to be an anathema at one time is the leading plank for the government today. Hence, these articles are contextual and might look out of place today. This is probably the challenge of bringing out such a book, which has articles from the past, which may not always convey the same meaning in a different time period.

The book, however, makes for interesting reading because the reader could have a very different view from the author on several points. Take, for instance, demonetisation. Nayyar has stated that it was good and necessary, and the impact will be felt over the years. He highlights the fact that digitisation has caught on and this is testimony to the success of the scheme. But that was in 2016. Today, there are well-researched books on the subject like the ones by Arun Kumar or the late Meera Sanyal, which use data to show that it was a failure and that digitisation was never a stated objective of the scheme and became collateral ex-post justification.

Similarly, Nayyar is quite aggressive while attacking the Congress on freebies and price control. But unfortunately, this is part of the political economy of India, where every government has to revert to such policies, as the recent cash transfer in the Budget shows. The book was compiled before the Budget and would not have foreseen the compulsions of the pre-elections time. In fact, the present government has been more aggressive in increasing MSPs and also increasing the allocations under the NREGA, which is an antithesis to what the PM stood for when he took over.
At another point, Nayyar salutes the government for keeping prices under check. Here, it can be counter-argued that lower inflation in the past few years was mainly due to good supply conditions, as well as oil prices. This was not the case in the earlier tenures of government when crude prices hit all-time highs and pushed up inflation, which was topped by droughts.

The second part of the book is on markets, where the articles were written commenting on the approach to growth, and the problems faced thereon have been highlighted. These appear unbiased. An interesting article, which was written on FDI and the Congress, raises some questions. The author has posited that anti-markets are typical of dynastic politics. The explanation is not clear, but the hypothesis is interesting and needs to be explored. It is hard to accept the view that dynastic parties tend to be wary of markets.

The author distinguishes between ‘populist’ and ‘popular’, and feels that one can be popular while being ‘unpopulist’. This he buttresses when he talks of the government increasing rail fares, but provided better services in the form of cleaner coaches. This is arguable, as there is scant evidence to show that the quality of services has improved. As for fare hike, people have no choice, as it is the only mode of transport available.

Nayyar is spot on when he points out the challenges for the government that it needs to take on with urgency. He indicates that, in 2015, he had written about the need to end tax terrorism. Demonetisation gave the opportunity, but tax reforms still lag. There is a need to reassure investors here. The same is extended to agri reforms, which should make it market-driven. Here, it can be said that as it’s a state subject, the central government has its hands tied and can work well only where the same government is in power.

The book is a good compilation, which will be debated, given that the articles are from the past where the context was different. With approaches of various governing regimes tending to converge, one may tend to disagree. It would be interesting if the author would like to revisit these views today.