In the run-up to the 16th general election, opinion on Narendra Modi was polarized. Once again, as Prime Minister Modi prepares to celebrate his government’s first year in office, the view is split down the middle.
Constant critics, like Congress vice-president Rahul Gandhi who gave Modi a zero rating, would have us believe that this is a nowhere regime which has belied the electoral expectations aroused during the campaign. Supporters, on the other hand, would equally belligerently argue: the new regime is off to a good start and that the best is yet to come.
Obviously both are extreme views and the truth is somewhere in between. Here again the assessment would differ: whether the glass is half empty or half full. It is my argument that the glass is half full. Here is why:
First off, the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) inherited a severely damaged economy along with a nation severely traumatized by allegations of corruption in public office. If this was not enough, within a few weeks it was apparent that not only was the annual monsoon projected likely to be deficient, there were also fears of the onset of a drought (both of which actually panned out). However, there were offsetting factors too. The global commodity super cycle had ended and along with it came the fall in crude oil prices.
In response, the government undertook several measures, some of which were pure fire-fighting efforts. To a large extent the NDA’s majority win—the first in 30 years—worked to calm nerves all around. It also provided a certitude to decision-making in government, something that was totally absent from the previous regime. The oil price fall cushion was used wisely—unlike in other countries, the government did not pass on the benefits to consumers in the form of reduced prices; instead it burnished its green credentials by increasing the indirect taxes on fuel prices and the exchequer pocketed the extra returns to fund the fiscal deficit burden.
Even better, growth is on the mend and inflation is on the wane—hopefully it will convince the Reserve Bank of India to cut interest rates and set the ball rolling afresh on investments, especially in manufacturing and infrastructure.
Second, it very early showcased its ability to think out of the box and willingness to back politically risky initiatives, presumably something that exudes from the sense of power the BJP draws from having 282 elected members in the Lok Sabha. Among the earliest decisions which Modi undertook—actually within the first 18 hours after taking office—was to invite the leaders of neighbouring countries for the swearing-in ceremony. In one stroke he demonstrated vision, as well as the fact that foreign policy would be a key element of his administration. It is another matter that subsequent events have not panned out to script, but nonetheless, India conveyed its desire to reset relations in South Asia.
Third, it has rewritten the lexicon of governance in Delhi—previously defined by a cosy self-serving cabal of politicians, bureaucrats, middlemen and journalists—and undertaken initiatives to transition the country to a rules-based regime. The successful conduct of the auction of coal mines is a perfect example, where discretion in policy implementation was given a quiet burial.
Fourth, it has ensured continuity in policy, even while pursuing its own version of change, and more importantly, not allowed churlishness to define its policy choices. It has therefore retained good ideas promoted by the preceding Congress-led United Progressive Alliance (UPA). Aadhaar, the plan to equip every resident of India with a unique identity number, spearheaded by Infosys co-founder Nandan Nilekani, is a good example of continuity with change. Similarly, it brought forward the financial inclusion agenda proposed by the UPA, rechristened it the Jan Dhan Yojana and put the entire political might of the government behind it.
Fifth, the NDA has hit the reset button on the fiscal polity of this country by accepting the recommendations of the Fourteenth Finance Commission. Not only has the share of states in the centre’s tax receipts been raised to 42%, they have also been given the power to customize their expenditure—as opposed to the previous one-size-fits-all policy pursued by centrally sponsored schemes. In short, the NDA believes that the states no longer need hand-holding.
Sixth, the government has eschewed any doublespeak on business. Traditionally, most politicians and governments shy away from any overt claims (something that has invited the sobriquet of suit-boot ki sarkaar). It discovered ideological justification in its slogan: pro-poor and pro-rich. Accordingly, it has worked towards improving the ease of doing business, including repealing nearly 1,000 redundant laws.
A lot of reform initiatives in this context so far have been incremental in nature. Largely aimed at improving the plumbing, these have been panned by several critics as a waste of social capital. But then think of the consequences of a clogged drain and the objectives will be clear. Yes, it may still be a halfway house, but the improved plumbing will ensure less wastage and consequently a bigger bang for the buck.
Seventh, this government has taken the first steps toward creating a social security infrastructure for all. The idea of financial inclusion is that eventually every household will be part of the economic mainstream. Similarly, the pension and accident insurance schemes introduced in the Union budget go a long way towards strengthening the social safety net.
The idea of Swachh Bharat, which is yet to acquire a concrete blueprint, will be crucial if the country has to turn the corner on common diseases like diarrhoea; most Indians in lower income groups are considered to be just a disease away from falling back into poverty.
These initiatives are consistent with rapidly growing aspirations in society. Unlike in the past, the preference is no longer for entitlements. People would rather be taught how to fish than be given a fish—exactly why initiatives like the skills programme (again an inheritance from the UPA) are key to empowerment across classes.
By now you must be wondering why the glass should only be half full. I would argue that it is also a fact that the NDA has been wanting on some fronts.
First, it seems to have misread the rural distress. It is one thing to firefight to mitigate the damage to the farmer due to unseasonal weather. But it has failed to gauge the structural fault lines in the agrarian sector and as a result,its response has been underwhelming (in an interview to Mint on Page 5, BJP president Amit Shah maintains that a long-term response is being debated within the government).
The current crisis in agriculture has been triggered by the drought last year, the collapse of the global commodity super cycle and fears of another bad monsoon this year. The shrinking spending on social sector programmes—or death by neglect, as in the case of the Mahatma Gandhi Rural Employment Guarantee Scheme—has only compounded the problem.
In addition, the nature of farming has undergone a major overhaul. For example, horticulture has emerged as the dominant segment of the agrarian economy. Horticulture production (268.9 million tonnes) surpassed foodgrain output (257 million tonnes) for the first time in 2012-13. Given its perishable nature and link to the price cycle, it is prone to volatile risk behaviour—and this can’t be addressed by short-term fiscal sops.
Second, the BJP has been unable to shut out the distractions served up by fringe groups of the party. Not only are they fodder for their political opponents, they tend to take the sheen off the progressive image that the party seeks to project. Uncontrolled, they can undermine the best efforts.
Third, it is one thing to launch a great initiative, quite another to guarantee implementation. To be fair to the NDA, though, one year is too short a time to gauge its ability to deliver. Just like the opposition is judging it by the electoral promises that were made, the NDA will be assessed on how it delivers on all the initiatives in the next four years.
In the final analysis, it is clear then that taken together, the glass is half full. A complete verdict—when India heads into its 17th general election—will, however, take another four years.
Author: Anil Padmanabhan
Source: Live Mint, May 24, 2015
