Who's the Pappu now, Mr Modi?

Modi demonetised the farmer Rahul compensated the farmer This aphorism spread on social media over the weekend even if there arent many farmers wasting time on their timelinesPrime Minister Narendra Modi and his BJP take this aphorism seriously During the election in Rajasthan Madhya Pradesh and Chattisgarh Congress President Rahul Gandhi promised to waive farm loans His party won the three Hindi heartland states and the newly swornin chief ministers proceeded to implement his promise The BJP quickly waived farmers loans in two states that it rules Gujarat and Assam More BJPruled states will undoubtedly follow suit given Modis personal stakes in the 2019 parliamentary election every few days speculation surfaces on potential replacement PMs should Modi fall significantly short of a Lok Sabha majoritySome say that farm loan waivers constitute mediocre economic policy or no policy at all That is not true ask any farmer who verges on suicide because of crushing debtDr Manmohan Singh returned to power in 2009 in no small part thanks to the Rs 60000crore farm loan waiver in the budget presented in 2008 even if the loan waiver was a lastminute addition Of course Indian agriculture needs better policies as former finance minister Yashwant Sinha and I have outlined in our justreleased book India Unmade How the Modi Government Broke the Economy Juggernaut Books Farming in India contains a dubious paradox Indias largest private enterprise is also its most regulatedModis government promised to double farmers incomes but failed Its irrigation scheme is lopsided in implementation in the states The crop insurance scheme benefits insurance companies more than it does farmers But above all what hurt Indian agriculture was Modis blunder of demonetising highdenomination currency in November 2016 You know the details A predicted consequence of demonetisation that proved true was the destruction of rural supply chains and the drying up of agricultural credit When demonetisation hit less cash meant less consumption of crop and produce and it also meant less money to buy seeds fertiliser etc for the next round of sowingDemonetisation led to rural distress It also led to distress in the micro small and medium enterprise sector leading to a government plan to raid the Reserve Bank of India RBIs reserves leading to Urijit Patels resignation as RBI Governor but more on that on another occasion The farmers let Modi know how angry they felt over his nutty disruptive governance by booting his party out of government in three Hindispeaking statesIncidentally despite the scattered evidence of electoral malpractices like deletion of voters from rolls etc Telangana gave a thumping endorsement to its government and one major reason is chief minister K Chandrashekhar Raos Rythu Bandhu programme which gives financial support to farmers at Rs 8000 per acre It helps the farmer with credit purchase of seeds and equipment etc In India Unmade we discuss this programme as a model for the entire country It would obviate the need for loan waivers and despite a considerable outlay of say Rs 2 to 3 lakh crore at the outset could set agriculture on a higher growth trajectory which in turn is the bedrock for an overall higher GDP growth trajectory our country needs doubledigit GDP growth for substantial job creationModi will try to cure himself of his selfinflicted wounds in the runup to the elections Having installed a favoured exbureaucrat as RBI Governor his government this week announced it would infuse R83000 crore into public sector banks taking the total infusion to Rs 106 lakh crore for 201819 it is meant to help banks facing prompt corrective action and borderline banks to improve their capital ratio so that they may start lending to businesses again so that businesses may grow and expand and thereby become engines of job creation His government also announced a reduction of the Goods and Services Tax GST on dozens of items at a cost of R5500 crore to its revenues it is to address the biggest complaint against the sloppily implemented GST in July 2017 that it was mindbogglingly complicated It may also make middleclass consumers happyHowever there is too little time for a turnaround in the economy before the parliamentary election Modi may harp on all his initiatives and the fact that India registers the highest GDP growth among big economies despite his governments continued rejigging of official statistics the sole purpose of which is simply to make Modi look better than Dr Singh but without job creation voters will pay scant attention And no matter what Modi does on the rural front Rahul has already seized the initiative It will be difficult to seize back No wonder the aphorism mentioned at the beginning is spreading like wildfireAditya Sinha is a writer and columnist His latest book India Unmade How the Modi Government Broke the Economy with Yashwant Sinha is out now He tweets autumnshade Send your feedback to mailbagmiddaycomCatch up on all the latest Mumbai news crime news current affairs and also a complete guide on Mumbai from food to things to do and events across the city here Also download the new midday Android and iOS apps to get latest updates