Parag Khanna, the Founder and Managing Partner of FutureMap – a Singapore-headquartered company with offices around the world, including in the US, which helps in navigating global trends, has high praise for India’s Prime Minister Narendra Modi, in his new book, ‘The Future is Asian’ (Simon & Schuster, hardcover, $29.95)
Khanna argues in his book that Modi is building India up steadily through his technocratic mantra of “Minimum government, Maximum governance.”
Khanna writes: “At independence, India had only fourteen provinces; today it has twenty-nine. Modi is not out to reverse democracy but to compensate for this debilitating sequence of devolution before modernization by harmonizing national infrastructure, taxation, and investment regulations. He replaced the outdated Planning Commission, with a federally structured think tank called the National Institution for Transforming India (NITI Aayog) to steer national economic transformation.”
Khanna says Modi is also trying his best to become an Indian version of his hero Lee Kuan Yew who transformed Singapore to become the envy of the world, by ruthlessly tackling corruption.
“…India has gone from a country in which for decades what limited economic and social progress occurred was in spite of government to a nation where the government is one of the chief drivers of innovation and the main source of confidence both domestically and internationally. Until Modi’s election, only a narrow slice of Indians truly benefited from the 1990s liberalization policies. He has brought a technocratic mind-set and utilitarian ethos to a country that truly needs it,” Khanna writes.
Khanna notes that after decades of neglect, India is now spending up to 20 percent of its budget on infrastructure, from railways to sanitation.
“A trillion dollars in urban and transport investments has been projected for 2015-2035, and in the first three years of Modi’s administration, 50 million toilets were installed, mostly in rural areas. After decades of unchecked sprawl, India’s infamous slums such as Mumbai’s Dharavi are shrinking dramatically as real estate developers have been offered zero tax on the construction of affordable housing,” he writes.
Much as Vietnam has done, India is also seeking to lure investment away from China toward its own coastal special economic zones for manufacturing exports.
Khanna also praises Modi’s controversial demonetization and GST.
“India is expanding its tax base from the paltry level of 10 percent-just in time as its working age population expands (and is not expected to peak until 2030). The combination of the goods and services tax (GST) and demonetization has formalized much of the gray economy and weakened the black market. With a stable currency and inflation in check, India has lowered its current account deficit to just 1 percent of GDP,” he writes.
“Its stock exchange is one of the world’s best performing, and Indians are pouring into it as much as foreigners, especially as the country weighs moving the rupee toward full capital account convertibility,” Khanna analyzes.
While Indian citizens have historically been the world’s largest hoarders of physical gold, the percentage of household savings represented by gold has dropped from 15 percent in 2013 to 5 percent in 2016 as families invested more in education, health care, and insurance products, he adds.
“The combination of digitization and demonetization has meant that Indians are becoming data rich before they are financially rich. Thanks to large-scale investments by corporates such as Reliance Jio Infocomm, all of India will be covered by 4G phone service by 2020,” he writes, adding, “Already 1 billion Indians have been issued the Aadhar universal ID card. Together with demonetization and the mandatory linkage of Aadhar IDs to bank accounts, well over $100 billion has been brought into the banking system in a year.”
Khanna also points out India’s as well as Asia’s huge potential for investment, which is coming more and more from within the continent.
“All across Asia, one finds that Asians are now among the most prominent if not the very largest investors. Since 2001, more than half of the $510 billion in foreign investment in Asia has originated within the region. Japan has caught up to and is overtaking Europe as the largest investor in ASEAN, and its investments in India have been doubling annually since 2015, now amounting to $4 billion per year and soon to surpass the United States. Singapore leads all investors into India with $14 billion per year and soon to surpass the United States. China, too, has become a major investor in India into power, telecom, construction, and other sectors.”