18 Months Down: An Objective Analysis of the Modi Government

18 Months Down: An Objective Analysis of the Modi Government

On the eve of the 16th Lok Sabha election results, a group of friends—many of whom had quit jobs or taken time off from businesses to volunteer for the BJP—decided to meet at a resto-bar in Delhi’s Connaught Place to ‘chill out’ after several months of hard-work in the summer heat. But, every discussion would lead to the same question: “what will happen tomorrow?” The fear of the unknown was lurking and highly palpable.

When the first set of leads flashed on the TV screen on May 16, the fear of the unknown began to recede; it would vanish totally as the BJP’s seat tally crossed the magical 272 mark and sent the supporters into a tizzy. They started dancing to the party’s victory song Ache Din Aanewale Hain.

As mentioned in the first part of this series, titled Rajiv and Narendra: A Tale of Two Mandates”, the hope generated amongst Indians by Narendra Modi was similar to the one generated by Rajiv Gandhi about 30 years ago. While, Rajiv’s fate is known to everyone, Modi’s will be known only in 2019. Although I had mentioned about the need for Modi to learn from Rajiv’s tenure to not repeat that history in 2019.

Modi’s Message: Development and Good Governance

The thrust of Modi’s whirlwind 8-month long campaign—one of the largest mass outreaches in the electoral history of any democracy —was about communicating the message of development and good governance to voters in every corner of the country. And, the subtle message, that the Congress Party was responsible for wasting 56 years, was also not lost on anyone either.

modiThe scale of Modi’s victory proved that the verdict was both a vote of confidence in the positive appeal of the decisive Narendra Modi and a vote against the misrule of the Congress Party-led UPA Government. The Congress party was punished for the mega scams and mismanagement of economy and voters saw in Modi a decisive leader who was capable of undoing all that.

The 2014 verdict has also to be seen as continuation of the trend where voters give decisive mandates to the winner party so that the government will not be constrained by the pulls and pressures of coalition politics. Inherent in these decisive mandates is an implicit warning that voters will not entertain excuses for their non-performance.

Narendra Modi: An Outsider and Ministry Formation

Unlike Rajiv Gandhi, Modi, an outsider, entered Delhi carrying on his shoulders huge expectations of his voters. Modis’ hard-sell of ‘achche din’ had delivered the historic win and it was now his turn to deliver the promise. Verily, the clock for 2019 began to tick on May 16, 2014.

To fulfill that mandate, Modi began working on the formation of his cabinet. Many names were mentioned as probable ministers. There were lots of discussions amongst supporters about the need for the outsider Modi to have a ‘Lutyenised insider’ to learn the tricks to operate in Delhi and run the government.

And who would fit that slot better than Arun Jaitley, who emerged as his backroom operator for this task. Despite losing his own election even in the Modi wave, his stature would only grow in the days and months to come.

On the eve of the cabinet formation, a statement was released from the Gujarat Bhawan that said-

…focus is on convergence in the activities of various ministries where one Cabinet minister will be heading a cluster of ministries working in complementary sectors”. The statement further stated that, in keeping with Modi’s belief in ‘Minimum Government and Maximum Governance’, the Prime Minister Designate is “eventually aiming at Smart Governance where the top layers of government will be downsized and there would be expansion at the grass-root level….

The historic moment arrived when on 26 May 2014 Narendra Modi took oath of office and secrecy as the 15th Prime Minister of India, thus culminating a process that had begun on 15th September 2013 at Rewari. From the composition of cabinet, it was clear that the Gujarat Bhawan’s statement was largely not followed in the distribution of portfolios; no organic ministries were formed, notwithstanding the possible exceptions of Piyush Goel and Nitin Gadkari.

A notable exclusion was of the much-speculated case of Arun Shourie. Also, the 75-year age limit criterion was cited as the reason for excluding other names with experience in the erstwhile BJP-led government at the Centre.

An interesting aside: when asked to explain the reasons for Rajiv’s failure, one insider said that-

Rajiv Gandhi was faced with those who needed a job and those who deserved a job. He accommodated only those who needed a job and not those who deserved it.

Modi’s Beginning: Bold and Dynamic

Modi’s first day in office began with meeting the Afghan President Karzai and later other leaders of the SAARC, including Pakistan Prime Minister Nawaz Sharif. This was kind of a diplomatic coup, especially considering the fact that opinion makers were apprehensive about his ability to capably steer India’s foreign policy. The trend of diplomatic achievements, set on the very first day, is still continuing: Forbes magazine placed him at 9th in its 2015 list of World’s most powerful persons.

Burdened under the weight of the ‘achche din’ slogan in a stagnant economy marred by so many negatives — uncontrolled inflation, stalled projects, falling investments in social and infra sectors, lack of employment opportunities, red tapism, corruption, etc. Modi laid out a 10 point blueprint of action to be followed by his ministers during the first 100 days in office. Focus was clearly on reviving the economy by removal of policy paralysis in the government.

Cautioning the citizens about the necessity of swallowing a bitter pill for reviving the economy, the Modi Government hiked railway fares and freight rates (although forced to partially roll back within next few days). Government also took important measures such as restrictions on export of essential commodities and action on hoarders to check the rising food prices. Amidst fears of a bad monsoon, Modi instructed the administration to prepare an advance action plan so as to be proactive in dealing with the same.

mishraIt is important to mention the controversies that the government had to grapple with during its first month in office. Within two days of assuming charge, Modi cabinet brought an ordinance to make changes in the TRAI Act 2009 to pave the way for appointment of Nripendra Misra as the Principal Secretary of the Prime Minister. However, both the Congress party and its sycophants in the media made it a huge issue.

Other controversies fuelled by media were about the alleged abolition of the Article 370, veracity and lack of education qualifications of Smriti Irani, the circular for use of Hindi over English in social media, and appointment of Nihal Meghwal as a minister in Modi cabinet. At the same time, media completely ignored the decision to set up SIT to probe black money (something UPA had been ignoring for years).

In hindsight, it is now clear that the Modi government’s refusal to learn lessons from ‘manufactured controversies’ in the first few months is hurting both its image and agenda severely. Had it not allowed media and opposition a free run then, the path of the government wouldn’t have been paved with sharp stones and carpeted with thorns.

In short, the Modi government’s first weeks in office was characterised by the dynamism of an active leader, determined to break the governance log-jam of the previous UPA government, but also marred by many controversies–mostly manufactured.

The Roadmap

Highlighting the new government’s commitment to its mantra of ‘minimum government maximum governance’, President Pranab Mukherjee spelt out, at the first joint session of the Parliament after the formation of the 16th Lok Sabha, the government’s agenda, pledged the government to the principle of “Sabka Saath, Sabka Vikas”, and urged for active participation of everyone in that mission.

The Modi Government came out with an interesting “5Ts, 3Ds, 3Ss” formula where the five Ts are Tradition, Talent, Tourism, Trade and Technology; the three Ds are Democracy, Demography and Demand, and the three Ss mean Skill, Speed and Scale.

Powered by the three Ss, the government hoped to transform India into a globally competitive manufacturing hub. The government promised to revive Brand India using the five Ts, and expressed confidence in the power of 3Ds to help push India on a trajectory of higher growth to meet the aspirations of the citizens. Addressing Parliament for the first time as prime minister, Modi emphasised his resolve to not leave any stone unturned in implementing the roadmap outlined by the President.

Modi Government and India’s Economy

As discussed above, the Modi Government inherited a tattered economy, infected with so many problems. The decisions taken by the new government in the first few months, helped along by falling global commodity prices initially showed positive results–inflation under control, an uptrend in the stock market indices, CAD at manageable levels, hike in FDI inflows, rising forex reserves, encouraging growth prospects in the coming years, etc.

The scam-impacted mining sector has been turned around with faster environmental clearances for stalled projects. The government also successfully concluded the Coal block and telecom spectrum allocations in a fair and transparent manner. Another sector that has seen some pickup in activity was roads and highways, where government has set itself a target of average construction of 15 km (subsequently raised to 30 km) per day by the year end.

However, the first budget presented by the Government failed to keep up with that momentum and can be termed as a lost opportunity; the government failed to utilise its honeymoon period to push major structural reforms. It also needs to be noted that government’s laudable push for reforms through many policy initiatives in the key sectors such as defence, roads, railways, infrastructure are yet to bear fruits and provide significant boost to the economy.

Greenshoots of economic recovery are visible but the non-stable economic data make it difficult to establish a clear trend. The IIP numbers, after fluctuating for the last 18 months, have again started to decline. Inflation was subdued for some time but prices have risen for three months in a row now.

The divergence in economic data is evident from the fact that while demand for consumer non-durables (highlighting rural stress from two weak monsoons) has seen some contraction, the demand for consumer durables (mainly urban consumption) remains strong. The fall in foreign trade (arising from lower oil prices and global slowdown) is also pulling down the IIP numbers. The net FII outflows – a first in past seven years – are not a positive indicator either.

Even the supposed globe-beating 7% growth in GDP is a distorted number (the methodology was changed last year but without providing the revised series for earlier years). The buoyancy in tax revenues, mainly on account of higher indirect taxes and duties, has not been able to keep pace with the expenditure; the fiscal deficit for the six months of FY 2015-16 has already touched 68% of the annual estimates. The 7th pay commission recommendations are expected to further strain the government’s budgets and finances.

Two major reforms—GST and Land Acquisition Bill—are still stuck in the parliament and are unlikely to be taken up and passed any time soon. The slow pace of divestment and the problem of the Public Sector bank’s’ NPAs still remain major cause of concern for the economy.

In short, the economy is still not out of the woods and half-hearted reform measures in fits and starts are not helpful in leading to faster recovery and growth.

Reform Push in Other Areas

In keeping with its promise to strengthen the federal structure, the Modi Government decided to increase the budget allocation to the states and replaced a “top-down” body like Planning Commission with a “bottom up” think tank type Niti Aayog.

The Modi government has a firm belief in the power of information technology. Therefore, it has launched the Digital India initiative to optimize governance and delivery of benefits of the schemes. The welfare initiatives such as Pradhan Mantri Jan-Dhan Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Prime Minister Suraksha Bima Yojana and Mudra bank are claimed to have been received well. DBTL, a direct benefit transfer scheme, was launched and is being successfully implemented with good results.

The success of the Swachh Bharat Abhiyan has been mixed: the government has been successful in providing toilets in every government school but much is required to be done in other areas. Similarly, the government’s clean Ganga initiative is yet to see any notable movement even after 18 months of its launch.

While government has shown intent and purpose to address the neglect of the past by launching welfare schemes targeted at marginal sections of the society as also the long pending problems, there are still question marks about the scope and capacity to generate funds for all these welfare schemes, which is going to be an uphill task.

With the SC striking down the NJAC Act, the efforts to launch reforms of appointment in higher judiciary have come to naught, at least for the near future.

Foreign Policy Push: Relaunching Brand India

Modi’s diplomatic achievements have silenced all the naysayers who had questioned his ability to steer India’s foreign policy. As a firm believer in India’s soft-power, the Modi government’s aggressive diplomatic outreach, leveraged with economic diplomacy, saw him visit 30+ capitals across the globe.

modiModi, by establishing personal rapport with world leaders, gave a new and different meaning to Indian diplomacy. His hard-sell of India as a land of economic opportunities saw many world leaders reach out to India, with the hope of being a stakeholder in the great Indian economic growth story. Building on his image abroad, he has successfully established himself as the “man who can be trusted to deliver”. He also reached out to the Indian diaspora, both to harness India’s soft-power and attract them back to working / investing in India.

As with Rajiv Gandhi’s case, Modi’s foreign policy push also became an object of ridicule and fun by his detractors in India, to the extent that media and opposition began to scrutinise him for his clothes and even his supposed penchant for camera angles. However, unlike Rajiv Gandhi’s case, Modi still has three and half years left to work on capitalising the benefits accruing from all these foreign policy forays and engagements.

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But, not everything is hunky-dory and there remain many challenges facing Modi in foreign policy area. There is no clarity on government’s Pakistan policy as evident from the stalled talks on one hand and talks of resumption of cricketing ties on other. Pak’s relationship with China was always a cause for concern and now Russia has also started being chummy with Pakistan.

The worsening situation in Nepal and Maldives are two other major problems in the near-abroad. The change of regime in Myanmar is a positive development but there remains the issue of balancing our equation with the Military and the political leadership. Success of “Act East” policy also hinges on how his government performs hereon.

What is Stopping Modi Government from Realising its Potential?

An objective analysis of the past 18 months of Modi Raj now calls for determining the issues that is stopping the government from realising its true potential despite a fantastic start and goodwill:

  • Narendra Modi wants to bring a massive change but we do not know who are going to be his change-agents to convert his ideas into measurable outcomes on the ground.
  • It is a PM’s prerogative to choose his ministry but still it won’t be out of place to question his decision to keep so many experienced people outside the government; especially given the fact that the bureaucracy is full of landmines left behind by the Congress Party.
  • Conflicting signals emanating from the economy remain a cause for concern. And yet, many low hanging fruits available for fixing economy have been ignored.
  • History records examples of many great leaders who squandered their mandates because of an overdependence on coterie which filters messages and views.
  • A large segment of Modi supporters believes that his regime’s image is suffering due to poor media management. Even more baffling is the fact that the government is led by one of the greatest communicators of our polity.
  • Both government and party have been extremely slack in dealing with the lies perpetrated by the media and apologists / beneficiaries of previous regime.
  • There is a lack of coordination between government and party. It is the party’s responsibility to educate masses about the work of the government but this is not being done. Both have lost control over the narrative on social media and are now seen to be mostly reacting as against earlier norm of being the trendsetters.
  • Delay in holding Delhi elections proved to be costly and no lessons were learnt from it, resulting in a major setback in Bihar. And, no efforts were made to silence the motor-mouths of the party and allied organisations.
  • The Modi government needs to improve its parliamentary strategy by reaching out to the Opposition to break the legislative logjam. Mocking Opposition by one-liners is not likely to help the cause of Modi Government.
  • The Modi Government has failed to utilise the vast army of its informed supporters, his biggest ambassadors and votaries/managers for his 2014 campaign and subsequent victory. Related to this weakness is government’s inability to begin working towards developing its own ecosystem of supporters and sympathisers. Additionally, his firebrand vocal supporters also remain his biggest challenge: satisfying them would mean alienating rest of the lot; balancing them both is where his leadership skills are going to be tested the most.

In short, after his 18 months in power, PM Modi is faced with the two choices: to recognise and act decisively on all the issues confronting his government or ignore them at his own peril. As a firm believer in Narendra Modi and his political acumen, my bet is on him choosing the first option: to act decisively and soon as the clock is ticking away fast.

(This article is the second of a three-part series analysing the Modi government’s performance so far.)

Alok Bhatt

The author is a Chartered Accountant by qualification. He is the founder of the adventure tourism venture, Nature Connect Outdoors. Alok has a keen interest in politics and economic development.