PM Modi an ‘inflation hawk’, felt pain of poor as RSS prachark: Morgan Stanley India MD Ridham Desai

Nagpur: The managing director of Morgan Stanley India, Ridham Desai, said Prime Minister Modi could witness the hardships faced by the poor as he moved around the country as a Rashtriya Swayamsevak Sangh (RSS) pracharak. "That experience made controlling inflation his top priority after forming the govt," he said.

"I would call him (Modi) an inflation hawk," said Desai, adding, "It does not affect the rich if the prices go up, but it's the poor who suffer a lot. The PM knows it very well."

Replying to a question on criticism of FM Nirmala Sitharaman, Desai said, "Much of the opposition could not even realise what happened in the budget as the details lay in the fine print. Not all understand economics," he said.

He pointed out that till 2014, the RBI did not have any specific mandate. "If growth was to be pushed, the interest rates were cut, and hiked if inflation was to be curbed. Now, the Parliament has given a clear mandate to the RBI to control inflation. The consumer price index is to be at 4% with a leeway of 2% on either side," said Desai.

On the risks he perceived, Desai said a change of leadership is one. "This is because India is a democracy, and the election outcome cannot be predicted. In 1977, even Indira Gandhi, who had the entire govt machinery under her control, lost. A change of leadership certainly has its effect on the economy," he said.

However, Desai also underlined that democracy is the ultimate trump card of the country. "It's not like China, where the political leadership need not act for any downside. In India, even three months of slowdown matters, and the leaders have to scramble to take corrective measures," he said.

Desai said the essence of the financial budget lies in the fine print. "It's mind-boggling this time. In 2012, the then finance minister Pranab Mukherjee was asked a question on a retrospective tax proposal in a post-budget interview, and he was not aware of it," said Desai and stressed that the fine print is the clearest this time.

He said the country is set to reach a nil primary deficit level in the coming years. This would reduce the borrowing level and ultimately boost the economy.

On the tax front, he said hiking the taxable income limit to Rs12 lakh gives relief of Rs1 lakh crore to taxpayers. "Out of this, at least Rs60,000cr may come to the stock market," he said.