Of This & That...

Ye Dil Maange Mo(di)

The things we want from Prime Minister Narendra Modi

Modiji: As a self-proclaimed Behavioural Economist, who has systematically documented the behaviours that are effective in business, war and other forms of competition, I notice that you have been 'born right', i.e. you naturally and instinctively choose the behaviour that turns out to be courageous, painful at first, but turns out (ultimately) to be the correct strategy to achieve superior results at the end.

“Take the pain, wait for the gain”, started with the Bhagavad Gita. The difficult road is usually the right road, often simply because nobody takes it. In business (and in war), there is a disproportionate payoff to pursuing a path that nobody else has taken.

Often, a startup gets ahead while being seen as an underdog, in a niche product that the biggies are not interested in. The most famous case is of IBM, which actually gave Microsoft a monopoly in Operating Systems, while it focused on the hardware.

It is, however, rare for an upstart to be ignored consistently, to be considered as an underdog even after it has become a success. The real challenge is to outperform after you have become a Google or Apple, and you now carry the weight of expectations of a cheering multitude. Not just that, you have a pack of wolves (competition) baying at your heels, each one trying to outperform yesterday's winning strategies, which may have got you ahead, but are not going to be enough from now onwards.

Similarly, the 'Gujarat Model' was largely ignored by everyone, while it was being set up. Actually, it evolved, rather than was 'set up' by a carefully planned process. The “Gujarat Model' is nothing but a fertile culture, which saw fruition under strong leadership....this is a potent combination, but remember, the driving force behind it is the fertile culture, the strong leadership is just a catalyst.

Blindly transplanting it to the rest of India, would mean making some very flawed assumptions. Let us take an extreme example: contrast the obstructionism of a Mamata Banerjee, who won accolades in Bengal for her Singur 'victory', with the speed at which Gujarat enabled the same project to come up. The focus in Gujarat was to capitalise on an economic opportunity, while in Bengal, they were too busy scoring points. Now, when that kind of culture meets the same kind of leadership that got Gujarat ahead, who do you think will win.....Bengali (work) culture or Modi's leadership? Don't forget, Mamatadi won the Bengal elections with the same handsome margins that Modiji won the national elections.....so what does it say about the Bengali psyche? Now, how is Modiji going to turn around Bengal, for example?

I know I have said nothing new so far, just pointed that “India is not all Gujarat, but (all) Gujarat is India”. The entrepreneurial drive, the high savings rate, the measured consumption, the huge investments.....all this cannot be assumed across India. Modiji will have to rework his strategy to take on a more nebulous and diverse ground reality. The good news is, I think he is already on the job....

I will try and lay out some pathways that I have not heard in the mainstream media, and which require the famed “Modi-courage”.

Corporate Farming: this would be very dramatic. It would start with a backdoor land reform: allow long leases of fertile agricultural land, or even wasteland.

This would kick off a revolution in agricultural productivity, if the Brazilian experience is any indication. Start with allowing sugar companies to own their hinterland, so that they focus on cane development, increasing productivity through better seeds and superior agricultural practices, especially in water and input management.

Back it up with equity available to those companies that are setting up solar facilities for water management, and taking the energy demand for agriculture right out of the system. And the entire investment to take the energy cost in agriculture down to zero, would be under-written through the equity infusion from the Government. The equity would be back-ended, after the solar investment has been made.

This would help redirect India's fuel subsidy into a solar (capital) subsidy. These investments could get recouped through a buyback scheme, or through an exit via an IPO

It would be a very simple policy (freeing long-term leases to the corporate sector), after which everything else flows through the normal channels. Minimum wages are implemented through extending coverage to agricultural labour, like in the tea industry. Tax policies are made applicable, simply by extending the existing tax exemptions of agriculture to land leases (where the income is received in the hands of individuals). History will remember this as Modiji's biggest contribution to a structural upturn in the Indian economy, affecting the maximum number of Indians.

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