Acche din continues
How does one measure the Modi government’s performance during its first three years? What kind of matrix should one apply to reach an objective conclusion? This is the first time in the history of independent India that a non-Congress government has got a clear-cut majority in Parliament (though BJP continues to be in a minority position in the Rajya Sabha). Modi came to power with a baggage of huge expectations. Has he lived up to them during his first three years of rule?
We feel that he has been able to live up to the expectations of the people on many fronts. Credit should go to Modi for running a reasonably clean government. There have been no scams involving the Modi government that one can think of. And, the government at the Centre has been firm in implementing its plans too. Here is a leader who knows how to manage his troops, unlike Manmohan Singh who, despite being the prime minister, had put his leadership under a question mark. The government machinery has been working at break-neck speed and crony capitalists have been more often than not weeded out. No longer has a businessman to be in the power corridor to get his work done. Mostly, things are moving online, having removed the need for human intervention, which had earlier opened the door to corruption.
India’s image in the global market has gone up. Modi’s foreign tours did come under attack by the Opposition but, after an initial flurry, the criticism invariably cooled down, as the opponents started acknowledging the fruits of his labours.
Today, India has become a power to reckon with globally. FDIs flows are coming in. The rupee has once again started strengthening against the dollar – a sign that faith in the Indian economy is on the rise. Also, there is high probability that India’s rating will be upgraded in the next 24 months. Reforms are being implemented, the biggest one among them being the Goods & Services Tax, which is now being rolled out, to possibly completely change the way the country does business. Modi’s government has moved ahead, despite being aware that GST could be inflationary in nature in the immediate future. And, this could be deemed unpopular, affecting the voters of states like Gujarat and Himachal Pradesh, where assembly elections are due soon.
This government has taken various other initiatives too, like doing away with the distinction between the planned and non-planned expenditure in the budget. Also, the advancing of the budget by one month and the merging of the railway budget with the general budget, etc, have helped the government’s cause – especially, gaining more time for the government machinery to deploy funds even before the monsoon begins. Recently, the government had announced a sale of assets of PSUs and, in some cases the PSU itself, to make them self-reliant and reduce government support to unviable PSUs.
Macroeconomic indicators
The positive effects of these government initiatives are visible in the economy today, with the macroeconomic indicators stabilising substantially. There is no policy paralysis in the country; inflation is under control; and it’s the same with fiscal deficits. The government has time and again shown that it wants to follow fiscal prudence. Fiscal deficit, as a percentage of the GDP, is on a constant decline, with the target for the current year being 3.2 per cent, as against 4.5 per cent in 2013-14. This government has also not announced any populist schemes that would have widened the deficits. Petrol and diesel prices are market-driven as, in the past, this subsidy bill was huge, creating a considerable drag on the economy. The subsidy rationalisations, along with the direct benefit transfers (DBT) are bearing fruit. The benefits of these measures will accrue not just for one year, but for many years to come – in a similar manner, the benefits of Aadhar (initiated by the UPA government) are still being reaped by the public and the Vajpayee government’s thrust on infrastructure is continuing to pay dividends.
India’s rank in ‘ease of doing business’ has improved. The latest report released by the World Economic Forum has put India at 39th place, as against 60th in 2014. India has also improved its rank of ‘being corrupt’ from the 85th place in 2014 to 79th in 2016 (it was 76th in 2015). This still does not read well but, at least, one may say that a beginning has been made. The ideal target for India is to be among the Top 25. The latest CII India Business Confidence Index is now at an all-time high of 64.1 per cent, as against 49.9 per cent in April 2014. While releasing the data in April 2017, Chandrajit Banerjee, director general, CII, stated in a press note that “The turnaround in business expectations, as indicated in the survey, gives credence to the belief that a new growth narrative is being scripted for the country, based on improved business sentiment and investor confidence. A sharp uptick in business outlook, at the onset of 2017, underpins the hope that the reform initiatives of the government would unravel a host of investment opportunities for firms, going forward”. The Private Capex Cycle has been muted but the government did well by putting money in capex to keep the economy rolling.
Inflation is an evil, which the common man is always fighting against. But the Modi government has been able to tame the same, to a great extent. Interest rates are falling, which is a big relief to the general public. Agriculture production is at an all-time high and some of the steps taken on the rural economy and agricultural production have been reaping benefits. The electrification of villages has spurred growth in the rural economy and all-weather pucca roads have better connected Bharat with India. The stock market, which is a lead indicator of the health of the economy, is at an all-time high, with the Sensex and the Nifty finding their mojo in the last few years, with more and more people shifting towards financial assets. FDI flows have improved India’s forex reserves, which today are at an all-time high. And, the rupee – it has been maintaining its strong position.
On the infrastructure side, railways, roads and ports have been areas of focus for the Modi government. In total, 10,471 km of National Highway has been constructed in the last two financial years. During the last financial year, a distance of 16 km of road building has been accomplished every day and, in 2016-17, the target has gone up to 20 km a day. India has improved on the Logistics Performance Index too, going up from 54 in 2014 to 35 in 2016.
Way ahead politically too
Modi has been able to keep his popularity intact, beyond a doubt. The way the Bhartiya Janata Party (BJP) has been winning elections in many state assemblies shows that the Modi charisma continues to appeal to voters and the results of the Uttar Pradesh assembly elections and the Delhi Municipal Corporation elections have confirmed the same. Looking at his popularity chart, many Opposition leaders admit that Modi is likely to win hands down in the next general election in 2019 too. In fact, they are thinking of working out a strategy for the 2024 election now. Recently, Nitish Kumar, chief minister, Bihar, who does not share a good vibe with the prime minister, stated that the people of the country have found in Modi a leader capable of filling the prime minister’s slot. He has ruled himself out as a potential PM candidate to be put up by a united Opposition.
“There is no leader today with a pan-India acceptability, who can take on Modi and the BJP in 2019,” tweeted Omar Abdulla, former chief minister, Jammu & Kashmir, and a National Conference leader, after the announcement of the UP assembly election results in March 2017. “At this rate, we might as well forget 2019 and start planning/hoping for 2024”.
It’s difficult for any leader to sustain his popularity for three years, after generating so much hope before an election. So, many people had feared that Modi too would crumble under the weight of the expectations which he had generated before the last Lok Sabha elections. But, on the contrary, he has proved the pundits wrong.
Many were of the opinion that the unexpected demonetisation of Rs 500 and Rs 1,000 notes in November 2016 was the wrong thing to do and could have impacted Brand Modi. No other political leader would have taken a step like this, especially when a few crucial states were about to hold their assembly elections. But Modi did it and justified the presumption that the people of this country are with him, despite many terming the move ‘unpopular’.
In recent history, we have not seen any political leader who can command popularity across the breadth and depth of the country. While Modi and his team are celebrating three years in the government, the Opposition seems to be clueless about how to attack Modi on his three years’ performance. There are no major points of criticism, which the Opposition can think of. Congress did attack Modi on his three years’ performance but it could not put forth anything substantial to draw the common man’s attention. Rahul Gandhi, the Congress leader, while attacking Modi on his three years of government, has been harping mostly on non-events. In one tweet, he qualified the Modi rule as, “Three years of broken promises, non-performance and betrayal of a mandate”; while another one commented on “the youth struggling to find jobs, farmers committing suicide and soldiers dying at the border.” What exactly is the government celebrating, Gandhi asked.
The problem with Rahul Gandhi is that people have stopped taking him seriously. His previous jibe of suit boot ki sarkaar did not yield the desired political results for the Congress. Even his comments on demonetisation, where he claimed that, if he was allowed to speak in Parliament, he would trigger an ‘earthquake’, was a damp squib for, when he actually spoke in Parliament, there not even a tremor, let alone
an earthquake.
On the one hand, the BJP has emerged stronger after the general elections of 2014 while, on the other, Congress, the main Opposition party, is getting weaker. Most regional parties too are fighting for survival. Take the case of BSP in UP; it has no MP in the Lok Sabha and its tally in the Rajya Sabha will also gone down, after the recent performance in the UP assembly elections. The Samajwadi Party is all set to split, with father and son having huge differences of opinion. AIADMK in Tamil Nadu has also split after the demise of its Chief Minister Jayalalitha. The Left front is struggling to maintain its relevance and is facing huge leadership crises. AAP’s Kejriwal has lost the trust of people, despite initially generating great hope. AAP, in all probability will split too in the coming months.
One party that is still going strong is the Trinamul Congress in West Bengal, led by Mamata Banerjee. But she does not have national appeal and, hence, can’t offer a serious challenge to the Modi government.
Areas to concentrate on
The messy NPA issue with banks is an area which has to be worked on. During the last financial year, India’s credit growth was a mere 5 per cent. While the RBI and the government did some work to resolve the NPA issue, it seems more needs to be done before this is sorted out.
Also, there must be more flow of money to the SME segment at a reasonable cost, so that it can sustain its businesses. Job generation is another cause of worry. Many sectors including it, financial institutions and new start-ups are in a lay-off mode, with automation and artificial intelligence reducing the need for new recruitment. Today’s youth needs to be employed in a productive manner. While the ‘Skill India’ initiative is a good move, more needs to be done on this issue, if a solution is to be found for its problems. Even after passing through ‘Skill India’, young people are not able to find jobs, as there are not enough jobs available in the market. This is where the government should think out of the box and find some answers.
Modi’s promise of getting a demographic dividend has not yet materialised. The key for this government is to somehow ensure that private capex starts kicking in, which will help employ more people. Despite the GDP growing at a healthy trot, India Inc’s earnings growth has been subdued. Try as one does, demand is not picking up as much as it should. Many employees today are living in fear of either losing their jobs or not having enough increments to sustain their standards of living. Another area where the Modi government is struggling is foreign relations – especially, our border tension with Pakistan.
Aggravating the situation is the turmoil in Jammu & Kashmir. Indications are that the situation there is deteriorating day by day. School-going children throwing stones at army personnel and the police reflect the gravity of the situation. The mutilation of Indian soldiers’ bodies has also caused anguish to the common man. The people want Modi to give a fitting reply to these kinds of provocations. If, for some reason, perceptions develop that Modi is not managing the issues in J&K and with Pakistan effectively he is in real danger of losing his popularity. This may cost him the next
general election too.
Overconfidence about winning the next election can boomerang, the way it did in 2004, when Vajpayee lost the general elections. That time too, NDA had advanced the dates of the general elections, as they had done well in a few state elections and thought that the time had come to seek a fresh mandate from the people. But the people’s mood had changed in six months, despite the India Shining campaign. And, the rest is history. The nation’s mood is fickle and can change at any time. This is one lesson Modi has to learn from history.
One criticism that keeps coming up is that Modi’s style of functioning is quite authoritarian. Some ministers even complain that their views sometimes do not get heard. But none of the ministers will come out with a statement openly. Even India Inc’s captains have realised that speaking against Modi may not be in the best interest of their business. India Inc normally goes with the party in power but, this time, they are extra-cautious about what they say about the government.
There is also some concern about finding a successor to Modi. In Gujarat, Anandiben Patel, who succeeded Modi as the chief minister, did not live up to expectations. Many claim that Modi doesn’t nurture a strong second line, for fear that such a person could potentially challenge him at a later date.
Russia’s queen Catherine had once said: “Power without a nation’s confidence is nothing.” Today, Modi has the nation’s confidence. He must ensure that he continues to have it till the next general elections and after. He need not resort to populist measures at the cost of the health of the economy; but, he must push reforms to give India a better future. Right now, achhe din is prevailing; Modi should ensure that it continues.