CHILL ……… Mr. Jaitly ………Please !


Things are not bad. They are, actually, good!

 

Mr. Jaitly, made a statement this week, that perhaps Indian economy has slowed down in 2019. I don’t care if the economy has really slowed down. On the contrary, I am scared about what steps he would take to revive the economy. Hence, I have decided to address this post directly to him.

Mr. Jaitly,                                                                                                                                                         Indian economy is showing signs of slow down, when you measures it’s performance from the conventional yardstick, the growth in GDP. But the relevance of this method has long demised. RIP GDP. There is no appropriate tool to measure the health of a deflationary economy. Under any circumstances we should not use GDP as a measure and react.

The analysts are saying that the domestic consumption has come down and hence the slowdown. They also say that there are no private investments and hence there is a job crisis. Let me deal with them one by one.

The domestic consumption has come down because the consumer preferences have changed. No new private investments are taking place for the same reasons. The private industrialists are low in confidence, not with the government or governance, but with the prospects of them making profits. According to me, they have missed the cue from 2008 itself. They have no control over their own business to have any relevant long-term vision. The consumption pattern has not changed overnight. The capacity utilisation has been consistent at around 72% for 10 years, that too, over the capacity that was created 10 years ago.

As for job crisis in India, I don’t see one in existence. I completely agree with your assessment if there is a job crisis of the magnitude projected by the analysts and political parties, there would have been a revolution. No one seems to track the jobs generated by SMEs and Social Enterprises. There is a lot that is happening there. Incidentally, there is a link between this truth and change in consumer preferences.

My request to you is to just ignore `Inflation’. Forget the fiscal management process. The world has moved into a perennial deflation economy. Please put in money in the hands of people, particularly in the hands of those from the lowest income group. Any amount of money you put in there can not cause inflation because price is not controlled by demand and money supply but by technology. You have absolutely no means to control the effects of technology. The money so put in will make the poor to buy essentially the food items. That will help the agrarian crisis. The so called `Agrarian crisis’ is because of over production by the farmer, because of adoption of superior methods. The farmer is not able to find the buyers for increased production. Invest heavily on infrastructure. Develop tourism. Tourism that gives experiences, of heritage, spirituality, etc. Do not expect the private sector to create production capacity. When needed create it in public sector. If Nehru is criticised for his policies after 50 years, while they looked good at his time, Modi should avoid similar criticisms. At current speed it will happen in 20 years. Relevant investment in public sector is the correct policy today.

An economy must satisfy the needs and requirements of the citizens. You must notice that I have avoided the word `Aspirations’. The message that I am conveying is that a government should understand what the citizens want and try to fulfil those wants. Today, the millennials are not aspirational (may surprise you as this is contrary to the general understanding). They seek experiences. They don’t seek luxury. Instead, they seek wellness. They are not seeking knowledge. They are seeking deeper understanding and wisdom. They don’t seek luxurious houses. They seek living homes. Co-Living is the new property. They do not want to indulge in rich food. They want healthy meals. They want to travel. They do not want 5-star luxuries. They want clean and functional facilities. They don’t want to own cars. They want facilities for mobility. They want to explore. They don’t want to explore what glib corporate marketing suggests. They want to explore what their individual taste suggests. They don’t want to earn, save, amass and acquire wealth. They are not investing in stock markets, not even in mutual funds and debt instruments. They don’t like profit, competition and growth. Instead they want to share and serve. They believe in `Co-Optition’.

Incidentally, millennials form 70% of our population. You must concern yourself about the needs of theirs, instead of the other 30%.

Yours I remain,

J Prakash

prakash@jprakashconsulting.com

9840459595


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