It is hard to be critical and uncharitable to the Modi government on its first anniversary. When looked at dispassionately, one does get a feel of the dispensation willing to work hard and make a difference. The PM himself has been at the forefront of some real hard grind. And as newspaper reports suggest, he has been driving his ministers and the officers hard. With some luck from the global economy in the form of low oil prices, the FM has been able to contain both the fiscal deficit and the inflation to a certain extent. And foreign investors have not yet given up on the India story, though they do not seem to be as optimistic as they were a year ago.
Then what exactly is the reason, you may ask me, for the title of the story which is less than charitable ? Well, for me it looks like a case of spending too much time on chasing the low hanging fruit while ignoring (or only making half hearted attempts at trying) anything difficult. The NDA government did act on a lot of things in the last 365 days, but many of them need not or may not lead to the right results. I will go into the details now.
The low hanging fruit variety
- Many of the bills passed by the NDA Government in the last one year are those on which there was near political unanimity even during the UPA days. The insurance bill and the Indo- Bangla border agreements fall in this category. We need to remember that other bills like the GST bill and the Real estate bill which were also easier to push through are still to materialize.
- Deregulation of fuel prices: This was much easier to do when the global oil prices were at historic lows.
- Meeting divestment targets was another issue which while required efficient handling did not necessarily call for difficult decision making.
Things that NDA government could have handled better
- The first to come to mind is the land bill. While it is easy to blame the opposition for the mess that the issue finds itself in, it can also be argued from the other end. With the knowledge that it lacked majority in Rajya Sabha, would it not have been more prudent of the government to be more accomodative of the opposition rather than take a combative stance right through ??
- The same thing applies to both the real estate bill and the GST bill which have now gone to the committees.
- While the coal and telecom auctions have been transparent and efficient, the government shied away from the more difficult task of comprehensive coal mining reforms. If it could not do that in the honeymoon period while enjoying full majority, when else is it going to do that ??
Issues the NDA government did not even find time for
- First and foremost is the agrarian crisis. It is all very well to dream of a day when more and more Indians have an opportunity to chuck farm work and find alternative employment. But the hard reality is, that day is still very far off. Meanwhile you need to take care of the people working in the farms and can not shirk that responsibility.
- Make in India is a very attractive slogan. But you can make in India either for the domestic market or for exports. Exports are actually shrinking. And domestic consumption is coming down. So what is the government doing beyond mere sloganeering ?? It is clear that “Make in India” has not moved an inch from where it was a year ago.
Things that call for some urgent change of mindset of the government
- NDA seems to feel that any opposition to its functioning needs to be nipped in the bud. The way NGOs are being treated calls for some immediate change of mindset. You need diverse opinions in a country even if that is unpalatable to the rulers.
- There are reports of too much centralisation. Almost all decisions are said to be taken by the PMO. It is said that even senior ministers and officers hesitate to take radical decisions for fear of retribution.
Having said that, many burning issues which have not come to the fore are going to haunt Modi Sarkar in future primarily because nothing has been done about them so far.
- Number of youth aspiring to join the work force will peak in the next 7-10 years. By one account more than 120 lakh youth will seek jobs every year, for the next 10 years. The number of jobs available is less that 5-6 lacs.The government does not seem to be understanding the gravity of the problem.
- Mass job creating sectors like Agriculture and construction are being neglected. Agriculture by commission and construction by omission.
- Lack of efforts to revive exports will prove extremely costly. Do not forget that exporting sectors like gems and jewellery, apparels and garments etc are labour intensive and create a lot of jobs. The government does not seem to be doing anything for these sectors. Also be aware that the other exporting sector – IT – is also going through tough times. So what is the government’s plan on jobs. None so far.
- Lower fiscal deficits have been achieved by Jaitley because the oil bill was dramatically low. What is the plan if oil prices go up again ?
- Divestment proceeds are being used up for routine fiscal expenditure. It is like selling a house to eat biryani. Why not the government keep these funds separately to create other form of infrastructure assets ??
- There have been budgetary cuts on government spending on many rural programs such as MNREGA, rural education, health etc. If rural incomes are hit hard and rural economy collapses, the whole economy is bound to see a collateral damage. This is already visible in sectors which are more dependent on rural spending like motor cycle sales etc. Why is the government neglecting rural economy even before alternative means to make it stay afloat are in place ?
This list goes on and on. I am tempted to think that the government is chasing wrong action plans. It is probably being misguided by “eminent” economists with examples of growth in other South -East Asian countries. But the most important difference is being ignored. India with its 125 crore citizens is very different from a Thailand ( 7 cr people), South Korea ( 5 cr), Malaysia( 3 cr ) or a Singapore which has even lesser people than Hyderabad.
Or probably, the government is totally confused on what needs to be done. A doctor has to be sure of what he is going to do when he enters the operation theatre. Neither can he spend time on searching for scissors nor is he allowed to cut the wrong body part !! And no selfies please, till the operation is successful.