Comment on “Modinomics: Design, Implementation, Outcomes and Prospects”
Mohamed Ariff · Asian Economic Policy Review · 2018
The term "Modinomics" embodies the essence of Indian Prime Minister Narendra Modi's economic policies.Jha (2018) explains how Modinomics is reshaping the Indian economy through a slew of economic reforms and a series of bold measures aimed at "participatory development."All this sounds like music to the ears.Jha (2018) paints an overtly rosy picture of the Indian economy under Modi's leadership and administration.The narration is quite informative and fairly persuasive.However, it reads more like an official document than a scholarly piece, which gives the impression that it is not unbiased.All this is not to deny the usefulness of Jha (2018), as it provides helpful snapshots of changes in the key macroeconomic indicators.However, all these are no more than descriptive statistics which, in the absence of rigorous analysis, can shed no light on the causal relationship between policy changes and final outcomes.It is too premature to ascertain econometrically if the double-digit growth of Indian exports in recent times is attributable mainly to Modinomics or favorable external factors.In this regard, it is pertinent to point out that India, as an oil importer, has benefited much from the terms-of-trade gains, thanks to the fall in oil prices.The record on "cooperative federalism," a mantra of Modi's government, is mixed.A notable milestone in the federal-state relationship was the increase in the states' share in the central taxes from the previous 32% to the current 42%.Also laudable was the sharp reduction by more than one-half in the centrally sponsored schemes, giving the states more freedom in tailoring the schemes to suit their own needs.Of the 29 states in India, 19 are ruled by Modi's Bharatiya Janata Party (BJP) or its coalition partners.Apparently, there is little cooperative federalism sentiment on the ground in the states under the opposition rule.A case in point is the cesses and surcharges levied, to deny these states their share of additional tax revenues at the center.Several state governments are facing serious crunches in resources for their own development and welfare programs.What is more, the imposition of Presidential rule in two states,