One year of the Narendra Modi Government: An assessment
Last year’s General Election was a mandate for hope, and the promise of a truly post-Congress India, shown by just one man: Narendra Modi. The current Prime Minister rode to power on the back of his image as a disruptive reformer with not just the ability to charter new legislative directions but also to ensure that legislative changes translate to ground-level implementation.
On completing one year, it is clear that the people of India want more from Prime Minister Modi and fast. It’s time to look back and observe the direction in which this Government is headed on 10 different parameters and try to assess it-
- Foreign Policy & National Security
Mr. Modi’s foreign policies and conviction on national security is clear headed and visible. A foreign policy in simple terms is clarity on one’s own national interest, both in terms of national security and economic goals.
But mere economic relations do not guarantee peace and security, especially if your neighbours are Pakistan and China. Ignoring Pakistan diplomatically while not compromising the security at the LOC is the best way to go about it, and this government is moving exactly along those lines. We cannot afford to lose out on US and Chinese investments.
A Modi-led India is trying a balance between closer partnership with America and improved ties with China. India’s relationship with its other small neighbours is even more important. China is courting almost all of our smaller neighbours right now and building a position for itself in the India Ocean.
The visits by the Prime Minister to Bhutan, Nepal, Japan, then to Seychelles, Mauritius & SriLanka have all been strategically successful in indicating that India will now be more focused on the implementation of its commitments.
The rise of global terror (ISIS, Al- Qaeda etc) has eyes on India for recruits as well as operational exhibition. The focus and key positioning of personnel in the security and intelligence systems of India is emerging a masterstroke of this Government .
This comes with the frequent criticism that Mr Modi is more engaged with the world than India. The uncomfortable truth is that the world had given up on India thanks to the disastrous UPA-ruled decade. Mr Modi has renewed the world’s interest in India. This is an extraordinary feat. The great powers clearly see a resurgent India which is looking more confident to assert its space on the global stage.
On economic reforms, some robust results are visible in these 12 months. The economy has generally witnessed all round growth. To test the change in the economy, the best way is to do a ‘before-and-after’ test (because numbers don’t lie): that is, before and after Mr. Modi.
On the internal front, fiscal deficit is better though marginally. Against a fiscal deficit of 4.1 per cent with which the UPA government signed off, the BJP government has held it at slightly lower number, 3.9 per cent. At 7.4 per cent GDP growth, according to the CSO’s advance estimates, is higher than the growth achieved in 2013-14 (6.9 per cent). If one takes growth in the latest quarter, for which we have actual numbers rather than estimates, GDP growth in the Sept-Dec 2014 quarter was 7.5 per cent compared to 6.6 per cent in the comparable period of the previous year. True, the higher GDP growth numbers must be taken with a pinch of salt, as some of the increase is courtesy the CSO’s new methodology.
On the external front, the current account deficit (CAD) for Q3 of 2014-15 was only 1.6 per cent of GDP, and is expected to fall to less than 1 per cent for the year as a whole. The exchange rate has been relatively stable. Foreign exchange reserves are higher; $340 billion against $309 billion in May 2014, and capital inflows have been the highest since 1991-92.
On inflation, the second-most defining macroeconomic fundamental, the verdict is indisputable. While consumer price inflation in March 2015 is 5.17 per cent well below 8.31 per cent recorded in March 2014, the improvement in the wholesale price index (WPI) is even more dramatic. From 6 per cent in March 2014, WPI inflation in March 2015 fell for the fourth consecutive month to 2.06 per cent.
Industry is back in business. Indian companies raised Rs.56,801 crore in equity capital against Rs.29,381 crore the previous year. For the first time, there is a Mudra Bank, which will give loans to the informal sector, to small business units like vegetable vendors, from an estimated resource base of Rs.1,00,000 crore. A new railway vision won applause from everybody in the Parliament. But still, the economy is still nowhere near realizing its full growth potential.
- Domestic Politics and Center-State Relationship
You are only so strong abroad as you are domestically powerful. Domestic politics is messy but unavoidable specially for Mr Modi who enjoys unparalleled domestic popularity. People want Narendra Modi to engage more with them.
Involving the non-Congress opposition in his plans, Modi has made some sharp moves. What has really helped is that Modi is aware of the struggles he faced as a reformist chief minister. He knows, if states grow and prosper, so will India. Without a moment’s hesitation, Modi made higher tax devolutions to states as suggested by the Finance Commission. How fairly and equitably Modi deals with chief ministers will determine in some measure Modi’s success with reforms.
The BJP-PDP government in Jammu & Kashmir is a pain in the neck, and will remain. But knowing Congress and National front, you never know who would ally with Mufti just to remain in power. That would be a disaster. In my opinion, ignoring electoral brownies and remaining part of the J&K Government as a check is in the national interest.
Personally the key achievement of this government so far has been engagement with the North Eastern states. The seven sisters have largely struggled to integrate with the mainstream India. Successive central governments have failed to devise specific plans and policies to economically develop this region. In the first year of office, the Modi government has earmarked about Rs.60,000 crore for the North East states. With respect to the betterment of the North East states, this government has undertaken some symbolic and some potentially high-impact measures in the very first year.
The horror story of UPA’s top-to-toe corruption and also brazenly protected by zero-loss theories finally comes to an end. Modi’s administration is the cleanest by far. There is not a hint of scandal. Manohar Parrikar, easily the most trustworthy minister in the Union cabinet, has cleaned up the defence ministry.
Arms brokers and corrupt bureaucrats find no purchase. But the culture of corruption has grown such deep roots in Delhi that the middlemen are not giving up since that has kept their tribe nourished. Delhi is a different city for barons who worked their way through the opaque corridors of power under Congress rule, ordering the appointment of ministers and transfer of bureaucrats (recall the Radia tapes). Not anymore!
The very first decision of this Government was setting up of an SIT to bring back Black Money. Additional revenue has been collected by the IT department, taking the total amount of income brought to tax after investigations in these cases to about Rs.7,000 crore. A black money bill has been passed, despite tremors among the elite.
The Modi government ’s PAHAL Yojna is among the largest cash transfer schemes in the world. It aims to reduce diversion and eliminate bogus LPG connections. Modi government ’s PAHAL scheme registration has already crossed the ten crore mark. It’s a unique method to eliminate corruption.
A Rs.174,000 crore loss in coal mines has been transformed into a Rs.200,000 crore profit from the auction of just 10 per cent of mines, to provide only one instance. His signature sentence, “Na main khaoonga, na khaney doonga”, needs no amplification.
- Key Reforms
Having set its house in order, the government embarked upon a reform process, which requires difficult passage through a Parliament where the Congress has repeatedly used its numbers in the Rajya Sabha to wreck what it can and will do what it can, to sabotage India’s growth. Despite the Congress’s tantrums, the government has pushed through key legislations. The new FDI norms in defence, railway infrastructure and insurance bill are no minor reforms.
Two key legislations, both the GST and the Land Bill, which will find essential space for employment and rural revival, will pass by the next legislative session. Frankly, I have no clear clue if anything is happening on crucial subjects like Police and Judicial reforms. I am not doubting that this Government is not serious, but if the Government is not bringing a clear cut well defined reforms in these areas, all the wealth creation will not help.
- Flagship Programs
The Jan Dhan Yojana brought some 300 million impoverished Indians into the banking sector. Those who take a bank account for granted can never truly appreciate how much it means for a person who has never had one. It is also the first substantive challenge to chit funds, which mop up cash from the poor and divert it into unsavoury directions. The first stage of a comprehensive social security network for the poor is in place, with a Rs.200,000 life insurance policy at a premium of just Rs.330, and accident insurance for a mere Rs.12 per year.
Swacchh Bharat Abhiyan is attracting lots of citizens towards cleanliness and transformed many of the places. Apart from creating an awareness for cleanliness, with this system, the government aims to attain a 100 per cent open defecation-free India and so far a total of 32 lakh plus toilets have been built between April 2014 and January 2015.
Beti Bachao, Beti Padhao is one of the most ambitious schemes in the direction of women empowerment. The aim of the program is to stop the inhuman practice of female foeticide and to encourage education and development of the girl child.
Thanks to E-Visa, yet another milestone achieved by this government, Indian tourism rose by 400 per cent last December.
The achievement at WTO that ensured that India can now help its farmers in giving agricultural subsidies through minimum support price and public stockpiling on its own terms is major breakthrough to help the millions of our poor farmers. There is a serious question in the minds of people that despite reduction in Petrol/Diesel prices, it does not correspond to the steep fall in international crude oil price.
Saving money on Petroleum subsidy and benefiting farmers by fertilizers and poor by food was an awesome idea. Yet there is much to be done in this area and clearly speaking, there is nothing that is visible to our farmers on ground in this reference. With passage of Land Bill, key initiatives will be seen in both irrigation and farming.
- Health Care and Education
These are key issues which build the foundation of any society, any country. With the Modi government’s focus on human resource development (HRD), a slew of directional measures and announcements to improve access to education, enhance quality of delivery and spur innovation in science and technology, is a breath of fresh air. By focusing on skill-building and awarding academic equivalence to vocational qualifications, the government has articulated a desire to help the youth in the interiors of the country. The speed with which HRD Minister Smriti Irani is working is a strong indication that the government is aware of the magnitude of the task.
Modi government, in its new draft policy on national health said that it would consider making health care a fundamental right and ensure that its denial is punishable by law. This is significant but no major steps have been taken so far. Much is to be done in both these sectors.
- Power and Infrastructure
The best performing ministry so far has been the Power and Infrastructure ministries. Power output has soared to 22,566 MW, against a targeted 17,830 MW.
Road construction, reduced by the Congress to a crawl of 2 Kms a day, is now 10 km a day. Electricity, gas and water supply industries grew by a record 9.6 per cent in 2014-15 compared to stagnant 4.8 per cent in last few years. Around ₹380,000 crore worth of projects were stuck. This Government had cleared 80 projects worth ₹140,000 crore.
Next year on Independence Day, India will have the world’s largest 750 MW solar power plant in in Rewa, Madhya Pradesh. Ganga cleaning, river interlinking, are many projects which are on full swing along with massive infrastructure creation for the Railways. By and large, the sector is in a much better shape now. It is only expected to grow further with more privatization and attached investment in this sector.
- Communication and perception building
For a prime minister who won the general election on a hugely successful communication strategy and delivery, this is a mystery.
It’s no secret that Narendra Modi and the media have had troubled relations since 2002. All this while, insofar as Modi was perceived to be the staunchest opposition to the Congress-ruled Centre, media’s antagonism worked to his advantage.
Now he is the establishment. People have a right to know what the government is doing. The demands made of Modi are exceptionally high. Which is true. Because people feel a special affinity to him, they demand more. The Modi government has shown a high degree of commitment towards accountability but there is no communication to put it on solid footing. Modi expects his good work to show up by itself. But it’s not working because of the UPA’s rotten legacy.
Mr. Modi hopes that Mr. Jaitley with close ties to the media would be able to plug the gaps. Which couldn’t be more ironical. Indeed communication lies at the core of politics. Prime Minister Modi currently faces serious problems in this area. If anyone can correct that, it’s only Mr Modi.
The electorate’s patience will begin to wane and public demand for the change Mr Modi promised, will become more and more pronounced.
One year of the Modi Government does give us mixed pointers. It’s impressive on foreign policy and in infrastructure and energy sectors. It’s done a fairly good job in economic management, fiscal and monetary policies despite the hurdles. Swachh Bharat, Smart Cities etc are great ideas and Mr Modi has been genuine in his effort towards changing the character of the nation, but they are poorly designed and executed.
Much is to be done towards real change in education, healthcare, police reform, speedy justice and service delivery. We cannot expect miracles in one year in a vast, complex, and a state made dysfunctional by successive Congress governments. You need to be blind or biased to suggest that nothing has happened. Much has been done. Much more remains to be done.
As long as the Prime Minister rediscovers his reformist verve and ensures effective implementation of his flagship programs, he will continue to defy the critics who find a new reason every few months to predict his doom. The key to India’s progress depends on continuation and, if possible, acceleration of the Modi government’s reform programs.