In 2014, the Indian electorate gave a decisive mandate to the Narendra Modi-led Bharatiya Janata Party to storm to power. Some 9 months from that fateful day, the Modi wave is nearly as strong and fundamentally altering the political dynamics of the nation. However, today the Delhi elections have sprung a proverbial block on the path of the BJP, handing the reins of the state to the Aam Aadmi Party. Away from Delhi, I have been connected to the changing political times in India, albeit in a restricted manner, and can confidently state that these elections are more an expression of negation for the confused state unit of the BJP in Delhi.
Not to forget, the so called masterstroke of the BJP in naming Dr. Kiran Bedi as the Chief Ministerial candidate may not have turned the tide in favour of the party. The key and probably sole point here is that people cannot keep voting for the BJP in the name of Modi, especially in state legislative assembly elections. To make BJP a long-term participant in these states, state leadership has to emerge. Thereof Arvind Kejriwal of the Aam Aadmi Party captured the imagination of the electorate in the state. Even today if one goes to traditional BJP voters in Delhi, you would realize that they would still vote for Modi in large numbers, possibly in a repeat of the 7-0 sweep of Delhi in a national election, but would very naturally not do so for a state party unit in disarray.
I also believe that Dr. Bedi’s assertive, often tagged as ‘dictatorial’, style of functioning may have hit the party in a negative way rather than helping it in its bid to retake control of the Delhi Vidhaan Sabha. Not to forget, there is this perception that Kejriwal is more aware and therefore better prepared to tackle the problems of the state. Last but not the least, and which will probably need a few posts to discuss, the works of hardline fringe elements in the Sangh Parivar is counterproductive even though the discourse on the ideals of Hindutva (and not necessarily Hinduism), in itself, is a worthwhile exercise. What applying these ideas in extreme, knee-jerk ways (like the massive ‘Ghar Vapsi’ movement) does is that it makes it seem like Modi needs the crutch of social engineering besides his good governance plank to command power and authority, which I completely reject. One’s work shall speak for oneself, especially in the field of politics, where perceptions change every other day.
But my post is not a lament song, for I know that Modi is not one for self-pity or purposeless wallowing in remorse. What I wanted to write on for quite some time has been on the achievements and constructive policies of the Modi government, not just to share it with others but also to learn about them more closely, and then rationally see if these first few months have been fruitful for the ruling regime. Before my schedule absolutely does not allow me to undertake such an analysis (later), let me go about this exercise.
After Obama’s visit and a month before the budget was tabled, the Modi government seemingly got to down to some business in terms of policy formulation and decision-making. The NDA government clearly wanted to boost investor sentiment and plug India’s massive fiscal deficit: the first step towards bringing about financial stability and resurgence of the nation.
For starters, on 28th January, the government announced that it was going to sell 10% stake in Coal India Limited (CIL) to raise Rs. 24,000 crore. CIL is the largest coal producer company in the world and contributes around 81% of the coal production in India. In the fiscal year 2012-2013, CIL earned a revenue of nearly INR 885 billion from sale of coal. As of March 2013, it was India’s 5th most valuable company by market value. The 10% sale was the largest ever equity offering in the Indian share market, giving a massive boost to Modi’s privatization drive as well, even though the Sensex tanked around 500 points just after the move! But more importantly, it led to the clearing up of the operational mess the CIL has been in. Nationalized in the 1970s, the CIL has on different ocassions stood as an ‘inefficient behemoth’ as a fund manager in a UK-based institutional shareholder put it. Missed production targets and issues related to the work-force such as strikes by workers have plagued the corporation, besides regulatory issues such as the Supreme Court’s cancellation of 214 coal blocks to various companies. The Modi government’s move not only cleans all this up but also adds immensely to the exchequer.
On the same day (28th January), the Indian government also fixed the base price for selling 3G spectrum in the country. For those of you who may not be aware of the 3G Scandal under the previous UPA government, the scam arguably set in motion a chain of events that led to the downfall of the Manmohan Singh – led government.
“The Union Cabinet, chaired by the prime minister, has approved the proposal of the department of telecommunication (DoT) to proceed with auction in 2,100 MHz band along with 800, 900 and 1,800 MHz bands. The reserve price approved for 2,100 MHz band is Rs 3,705 crore ($600 million) pan-India per MHz”, government sources said in an official statement. The auctions are scheduled to take place on 4th March 2015. This move by the government is expected to fetch the government around Rs. 65,000 crores. An additional Rs 16,000 crores are expected to be earned from 2G spectrum sale and Rs 5,793 crores from 3G airwaves, before the end of the financial year. The reserve prices for the auction of 2G spectrum in 800 MHz, 900 Mhz and 1,800 MHz bands were also set for the auctions in January. Again, this move helps in making the telecom sector, which has in the past been hit by heavy competition and a lack of spectrum availability, a more open market and is a positive move towards realizing Arun Jaitley’s goal of bringing the country’s fiscal deficit to around 4% of the gross domestic product.
Another relatively smaller incident which shows the Modi government’s interest in maintaining the interest of present and prospective investors in the Indian market by not levying a strict ‘adversial’ taxation regime, was the Vodafone dispute. The Modi government has decided not to appeal against a verdict by the Bombay high court, which ruled that the British telecom company Vodafone was not liable to pay tax of Rs 3,200 crore in a transfer pricing case. This breaks the tradition of what has come to be known as ‘tax terrorism’, that began with the introduction of retrospective tax (amendment) in 2012, which allowed the government to scrutinise cross-broder deals going back to 1962! No wonder the previous regime spiraled down into chaos when push came to shove (though of course it had to do with more than just this).
On the other hand, some economists suggest that India needs to unleash public spending urgently without worrying too much about what the credit-rating agencies may think about the government veering off the road to fiscal consolidation and lessening the fiscal deficit. The basic idea and premise for this suggestion was that the stressed private sector was not in a position to invest and the government needed to step in. Let’s see what direction the government takes hereafter.
These surely are encouraging signs. There are complaints asking why Modi took so long to come with even the aforementioned steps. I believe that has to do with the political number-crunching involved. Even though Modi’s BJP had a thumping majority in the lower house, they were in minority in the upper house of the Indian parliament. Now, with major victories in Haryana and Maharashtra in state legislature elections, he can be a little more sure of himself and his party, even in the upper house, and can take bold, and necessary, steps to boost a sagging economy. The International Monetary Fund (IMF) recently predicted that India’s growth rate will surpass China’s next year. But India is short of capital and needs an inflow of foreign investment, which is where the aforementioned steps, taken in late January, are so important. Modi’s next challenge would be to deliver on decisive reforms in labor, land and taxation for foreign investors.
Besides the economic steps taken, the Modi government has shown encouraging signs in providing citizens with basic human amenities. For one, along the lines of the World Bank’s assessment, the Modi government has started an encouraging drive to improve sanitation. Modi has made basic toilets a national priority: a step that would lead to improved human dignity and reduction in health issues. Moreover, provision of basic water and sanitation would also be good investment in economic terms, as per Guy Hutton of the World Bank. According to the World Bank, universal access to basic drinking water at home would cost $14 billion a year until 2030 and yield benefits of $52 billion, according to their preliminary findings, as of February 2015, that will form part of a wider review. Building toilets to eliminate defecation outside in rural areas would cost $13 billion a year to 2030 and give benefits of $84 billion. Moreover, better water facilities could mean 1,70,000 fewer deaths a year while basic sanitation would cut 80,000 deaths, primarily from diarrhoea. What this encouraging movement does not explicitly highlight is the positive impact it will have on individual dignity, social status and security.
Besides this, infrastructure development, especially those in waterways by Nitin Gadkari, are encouraging signs of change and constructive steps taken for long term progress and development. But more importantly, Modi has introduced an epic change in administrative practices and the work ethic in the administrative structure. Strict standards of efficiency and punctuality in the bureaucratic set-up is one such positive move, which interestingly and naturally has led to a lot of resentment in the large section of the electorate related to the bureaucrats. The government has tried to make negativism and ‘civil service sloth’ relics of the past, quite strictly and aggressively. A recent development in this regard has been the sacking of Sujatha Singh as the Foreign Secretary and S. Jaishankar being the replacement: a move many see as the necessary shake-up of a complacent bureaucratic structure. This brings the spotlight back to the issue of accountability of the bureaucracy and the interest of the political regime in administrative, nuclear (seen from the termination of the appointment of the Chief, Defence Research and Development Organisation) and strategic policy issues. Gone are the days when PMs would delegate substantial levels of policymaking discretion to organisations like the Department of Atomic Energy (DAE) and the, of course, the bureaucracy. Not to forget, Jaishankar’s appointment shows that in Modi’s India, meritocracy reigns supreme, even over seniority and the too-structure bureaucratic norms. The bureaucracy has to be more efficient and accountable, with incentives awarded for performance and penalties for under-performance.
And then who can forget innovative steps like mobile governance and (100) smart cities which are on the agenda of the current regime, or even the whole ‘Made in India’ slogan?
Surely, the Delhi election, which was based on local issues and factors, should not dampen the spirits of the NDA government and affect the initiative shown by Modi. India is on the path to achieving greater heights on multiple fronts very soon. All that is required is clear, decisive policy- and decision-making by the government.