Experts and novices alike are predicting doomsday for the Indian economy. GDP growth earnings and job data from one quarter are being used to brandish the fastest growing economy in the world as a failure.
The issue is not with the assessment but the failure to recognise that Modinomics has fundamentally changed the way our economy is analysed and managed - a change from macroeconomics to microeconomics. The microeconomics in play is also very unique to India and is inspired by Pandit Deendayal Upadhyaya's philosophy of Integral Humanism.
Once cannot understand Modinomics without understanding Integral Humanism.
As per Pandit Deendayal, the goal of any economic policy is to provide a life of dignity to every human being. The fundamental building block of an economy is an individual and his family. An economy can only improve if the life of individual at the lowest rung of society improves. Integral Humanism is also takes into account the unique cultural, historical and social environment of a country before deciding any policy. In summary. its a bottoms up way of managing an economy. Integral Humanism is Indian avatar of what is known in the west as microeconomics. Success in microeconomics is measured in terms of quality of life of the poorest ( called as Antyodhaya by Pandit Deedayal).
Macroeconomics on the other hand is a highly centralised, top down management of economy. Abstract ( and often intellectual) models are designed to represent an economy. The variables in the model are then measured/changed to manage a economy. Its a one size fits all approach where one model represents all of India. Success is measured with top level abstract metrics - GDP growth etc.
India is a land blessed with labour and natural resources but with limited capital. India is also diverse and the needs of one part of the country are very different from that of others. Macro economics requires huge capital which is distributed centrally. Micro economics is better suited for India than large budget based policies.
Modinomics is all about Integral Humanism - all economic policies target an individual/family
1) Jan Dhan Yojaya - Financial Inclusion for all
2) Swacch Bharat - Sanitation for all
3) Pradhan Mantri Bima Yojana - Security for all
4) Mudra Yojaya - Funding the un-funded to setup businesses
5) Digital India - Internet for all, digitisation of services/economy
6) Ujwala - LPG for the poorest
The list is endless with one common theme - their goal is to provide a life of dignity.
This fundamental change in our economic policy - from macro to micro is still not being understood by economists. They are using macro metrics ( GDP growth etc, Jobs etc ) to measure a micro economy. The GDP numbers will lag as it takes a while before the macro metrics reflect ground level reality.
As Surjit Bhalla rightly points in the blog, rural labour rates are increasing like never before. Its only a matter of time when the GDP reflects this.
Modi will approach 2019 with 99% homes with electricity, 90% with toilets and 100% with bank accounts. Macro numbers will no longer matter as it will be for the first time ever that an India will close to realising her dream - a life of dignity for every Indian.
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