Wish people / society moves from scarcity to abundance
In 2014 people voted Modi with
: Lots of optimism
: Anticipated breakthrough development
: Expectation of big bang changes / reform in India
: Glorious future for India
: Modi win and government failed
: Modi missed big bang reforms
: Modi failed short of people’s expectation
: Modi didn’t do anything wrong, but he didn’t do the right things
The term big bang reform / major changes was very much popular at the time of 2014 election. Let’s quantify in words what is mean by “big bang changes” / people expectations. Neither people define nor Modi define it, let’s put in simple word as “Affordable Life”
What is “Affordable Life”
If a persons work sincerely in a day, then he should have reasonably priced home, quality education for children, convenient transportation, fair & transparent law and order, quality food, reasonably priced medical facility , savings for future etc
Lets see how Modi failed short of people’s expectation
1) Smart City vs Rebranding / Renaming Exiting City As Smart City
Initial plan was to build “NEW” 100 smart city and not as seen today i.e. rebranding / renaming existing city as smart city
Past : One state one city strategy
In last few years, I lived at Pune, Mumbai, Bangalore & Hyderabad.
Apart from financial capital Mumbai, lots of development happened in Pune in past few decades in Maharashtra. In Karnataka you may not have heard any well-known city name apart from Bangalore. Even though today we have two states, Telangana & Andhra Pradesh as separate, still they have joint capital Hyderabad. Simply because prior to division of state, only one city was developed i.e. Hyderabad
Result of this kind of strategy
Outcome of this kind of strategy is people all across small city or village migrate /wish to live in metro city for education / job / business. Off course this can be politically motivated, people making policy say starting an education institute / software hub / offering tax concession at industrial area, can buy land in designated zone well in advance to have unfair benefits
How big can be unfair benefit?
Lets make hypothetical unrealistic projection
Pune’s population increased from 15+ lakh in 1991 to present around 60 lakhs
Approx 45 lakhs addition of people
Say 11.25 lakh units of residential house / flats (assuming hum do hamare do, nuclear family structure)
Let’s make more assumptions. Had development had not happened property rates would have been lower say construction cost 1700 per square foot + land cost 1000 per square foot.
Present average property purchase rate say 6500 per square foot.
Average house / flats size say 700 square foot
Unfair benefit per unit 700*(6500-2700) = 26.60 lakhs
For 11.25 lakhs units amount will be 26.60 lakhs *11.25 lakh = 299250,00,00,000 i.e. approx 3 lakh crore per city.
There numbers are hypothetical unrealistic and can be debatable.
Whatever may be real number, question is why people should spend large part of their active working life, to have “Makan”
Rather than investing in “Makan”, can investment be routed to productive assets for well being people as well as country?
How new smart city could have been benefited
Residential: lower real estate cost i.e. better life
People spend less time of active working life in job / business, i.e. spend more time with children, spouse, parents, and also spent time on personal interest / development / entertainment
Commercial: lower cost i.e. eases of doing business
Not every person is interested working in industrial / software park. Lots of people want to do business on their own. Today in big city rental cost of shop /office for business are too high.. I have seen people paying 20,000 to 50,000 per month i.e. paying 2 lakhs to 6 lakhs as yearly rental in good locality. High rental is big barrier for doing business. Though people have interest to do business, they can’t afford rental cost.
People can buy properly to do business rather paying rental
Say 300 sq feet shop area can be available at low prices, say a rate of 4000 per square i.e. 12 lakh per business shop. People can afford to buy shop and do business rather paying for rental.
Lower cost of products and services
In mall or QSR prices are inclusive of rental cost. If rental cost can be brought down, cost of products and services will be lower.
More prime market space to do business / large people engagement
Some part of city is well known for shopping. Space limitation is there for new businessman to enter in this market. If we can have say 5 to 7 new smart city per state can lead to more prime market space available to do business.
More people can be financially engaged
New investment cycle & growth
Development of new city can lead to investment cycle
2) Complex Laws vs Simple Fair and Transparent Laws
Recently Modi made statement that government has scrapped more than 1,200 redundant laws. How many of us aware of name / contents of these 1200 laws?
Reality is laws which are used in day to day business are highly complex / bureaucratic. They should be simplified and made fair and transparent.
Other recent news says The Directorate General of Foreign Trade (DGFT) has issued notices to about 100 Indian units of multinationals, demanding refund of around ?5,000 crore that it said they wrongly claimed since 2003 under an export promotion scheme for services
These companies are not sham company or doing business with black money. It just those laws are complex and interpreted differently by company as compare with DGFT.
In year 2017 government is going back to accounts of 2003
Every few months I saw some business news arising out of complex laws
During negotiation at the time of Jewellers strike in 2016, news appeared that jwellers are ready to pay tax but they do not want central excise officers to visit their premises.
How much comfort does corporate or people have while interacting with government agencies?
Let’s talk about demonetization as it has got a very clear message from people
In 2008 world faced financial crisis, but Indian economy was resilient. It is said that India has parallel black economy so world crisis had not affected India in great way.
On 08nov2016, Modi launch surgical strike on black money and corruption via demonetization.
Black money term is used for people as well as government..
a) People stand with patience in queue for long hours to get notes deposited / exchanged.
Poople have respect for Modi, so they did not complain about it
b) 15lakh crore + money / old notes were in circulation at that time. Almost all money / old notes found to be deposited in bank / exchange with new notes. Why almost all black money find way to bank?
People hate bureaucracy / complex income tax law / office. People converted almost all black money. As laws are complex, people find smart / intelligent ways to convert money.
Simple message people respect Modi but hate government / bureaucracy. Wish government respect people and simplify laws.
Earlier Modi launched “swachh bharat abhiyan” with broom in hand. Later he comes to know unless people participate in it, it can’t be successful. If people have more respect for local government body in their area, they will keep city clean. People respect foreign, so when Indian goes foreign they don’t litter there
If government respects people by making simple fair and transparent laws as well as interaction with government agencies, people will follow it.
Corruption term is mostly used / associated with government or government agencies. Corruption is not required when in ordinary course of life people buy / sell goods / services
Government made telecom and coal auction online i.e. corruption free /transparent manner. Does all transaction at / interaction with government agencies is corruption free?
3) Make In India By Foreign Investment vs Make In India With Indian money
Modi went all around world for MakeInIndia with foreign investment. Not sure how much is delivered.
Modi ignored / underestimated power of money that Indian people have / can invest. Modi can get dramatic results, if he can crate investment opportunity for Indian people to invest in Indian projects
4) Less Work More Credit
GST was initiated by congress; BJP opposed it when it was in opposition.
Now Modi claims credit for it
May be at some point of time the black economy will be converted into white
i.e. unaccounted trade will be accounted trade
i.e. business will remain same (black + white) but accounted business (white) will increase.
Increase in white trade will increase in GDP
& Modi will claim credit for it.
To sum up
Modi has chosen technique which will take long period of time for success of India. It may take a decade or more for glorious golden future for India rather than five year election term.
Wish people / society moves from scarcity to abundance
Usually I don’t write blog on criticism. But, recently I have written few blogs with criticism. Hope I am back on constructive side to create something beautiful
Also read my 2014 blog :)