Saturday, June 27, 2015

A Tragic Failure

Among the many bright faces in the Narendra Modi Cabinet that was finalize in the second half of 2014, the most powerful man is certainly Union Minister for Finance and I&B Arun Jaitley, a close confidante of Modi who won the latter's trust years ago during Modi's exile from Gandhinagar. Unfortunately, many have rightly dubbed him a 'Saffron Chidambaram' because his economic policies so closely match that of his predecessor's, whose party was roundly rejected by the electorate. And this is even more ironic seeing that Jaitley is not a trained economist, not a mass politician. In fact, the only think he is good at is wheeling and dealing through the corridor's of Lutyen's Delhi!

Jaitley's two greatest mistakes have been incrementalism and tax terrorism (his own term, ironically). Modi's victory in 2014 was built on the foundation of speed. Modi's style itself, as reflected in the successful Jan Dhan Yojana, is speed. He is not a status-quoist. Unfortunately, Jaitley is more interested in preserving the status quo than radically shifting it. If PVN Rao's minority government could drastically change India's economy, then there is no reason to believe that Jaitley cannot do it with a full majority. His slow style is one of the reasons the BJP lost in Delhi, with people having become disillusioned with the economic promise of Modi.

Tax terrorism is quite another story. The term originated with Pranab Mukherjee's retrospective taxation of profits and Jaitley made an excellent case against it as LOP. Curiously, he did not do away with it in his first budget, or in his second budget, but just promised thus far and no more. And yet, his tax officers have used MAT to continue to terrorize businesses, while the disastrous attempt to change the ITR forms saw a near-rebellion from the BJP's core middle class voters, which Jaitley had to back down from only on the insistence of the PM himself.

In short, Jaitley has been the grand failure of the Modi Government and the responsibility for that falls on Modi himself, for not dropping him for a real economist. The only saving grace has been the MoS Jayant Sinha, but that is hardly enough. 

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