Modi Can’t Rely On Incremental Change
The Narendra Modi regime is focused on the grand post-Nehruvian narrative, replete with quintessential symbolism, poignant rhetoric, and majestic moves. Government supporters would have us believe that a veritable revolution is imminent which would soon do away with the baggage and relics of the past. The reality, however, does not appear to be so radically different. Certainly not from the worm’s eye view. Neither from the perspective of the intellectuals who supported Modi in his journey to 7, Race Course Road.
The Prime Minister, it seems, believes in incremental change, howsoever substantive it may be in consequence. He wants to speed up clearances, especially for infrastructure projects, and oil the government machinery rather than go for big-bang economic reforms. Similarly, in matters pertaining to governance—administrative, judicial, and police reforms—there is little that the man in the street can see happening. Modi did try, though: he urged the Supreme Court to fast-track adjudication in the cases of Parliamentarians and state legislators, but the request was denied. Not much has happened beside that.
Focus on low-hanging fruit
In the economic arena, too, there has been no major perceptible change. The idea seems to be grabbing the low-hanging fruit, a relatively less controversial exercise, instead of (what he seems to be viewing as) scoring brownie points with passionate reformers and foreign investors. So, his government has allowed ministries to clear projects up to Rs 1,000 crore without the Cabinet nod—a five-fold hike in the upper limit. The efficacy of the move can be tested only after some time. Multinational corporations are not quite pleased, though.
So, on September 12, Road Transport & Highways Minister, Nitin Gadkari, gloated over the removal of various regulatory hurdles to highway projects worth Rs 1.5 lakh crore and the imminent launch of infrastructure projects totaling Rs 2 lakh crore. “We have cleared bottlenecks. It is easy to construct express highways but difficult to get environment clearance,” he said, addressing the annual convention of the Society of Indian Automobile Manufacturers.
Gadkari’s optimism emanated from his reliance on efficiency, which he believes is his government’s strength: “We are fast-tracking the decision making and weeding out corruption and red-tapism from government functioning besides introducing innovation.” The belief in efficiency is not ill-founded, for Modi is not known as a good administrator for nothing.
But the markets, international business, and liberalisers did not root for Modi just for efficient administration. Nor did they support him for pusillanimous action—euphemistically called ‘calibrated change’—and continuity with (infinitesimal) change; they didn’t want him to be the second edition of Atal Bihari Vajpayee, who was at peace with the Nehruvian system. They wanted and want him to be the anti-Nehruvian as he appeared to be during the election campaign and before; they want him to exorcise the ghost of Nehru from the nation. This is what he has failed to do so far, the most important failings being the pro-Hamas stance at the UN, the anti-trade posturing at the WTO, and the disgraceful Budget.
Supporters getting frustrated
The frustration of erstwhile Modi cheerleaders is to give way to exasperated outbursts. A couple of days after Gadkari made the self-congratulatory remarks, Vodafone India chief executive Marten Pieters termed the country’s telecom sector “simply a mess”. At a conference in New Delhi organised by The Economist, he went on compare China with India: “Last year China invested $50 billion in its networks. We did five [$5 billion].”
And, of course, he also elaborated about the trials and tribulations his own company has faced in our country. Nine months ago, it sought an advance tax ruling—and hasn’t got any till date. “Few days back,” Pieters said, “I got the news that the officer dealing with the file has retired.”
Financial Times of London reported, “Indian and foreign business leaders who backed Mr. Modi in May’s election because he offered a change from a decade of corruption and indecision. Yet many now fear he is squandering his strong mandate. They are also appalled by his government’s failure to rescind retrospective legislation and rulings that have left multinationals confronted with surprise tax bills running into billions of dollars.”
Like the overseas investors, the aam aadmi also seems to be getting impatient, as evident from the by-election results.
It would be unfair, though, to say that the Modi government has not done anything to do away with the Nehruvian legacy. It has cleared amendments to three pieces of labour legislation which symbolised some of the worst features of Nehruvian socialism—the Factories Act (1948), the Apprenticeship Act (1961), and the Labour Laws (Exemption from furnishing returns and maintaining of registers by certain establishments, 1988). It may be recalled that the labour regime has seen virtually no change since economic reforms began in 1991. There is a great chasm between the imperatives of liberalisation and the laws governing industrial relations; the proposed flexibility will surely improve the investment climate in the country.
The amendments to the Factories Act, 1948, are aimed at letting women work at night duty, provided there is adequate safety and transportation after work. The textiles and garments sectors, some of the largest employers, are expected to benefit from the change. The amendments will also alter the overtime rules. Other provisions pertain to safety norms, facilities like canteens and restrooms, and so on.
The Apprenticeship Act, 1961, will be amended to give a fillip to skill development and training, a key electoral promise and a prerequisite for industrial development all experts emphasise upon. The move also intends to do away with the restrictive clauses for employers.
Ending green terror
On the front of green clearances, which had become a headache for businessmen during the UPA rule and a source of rent-seeking, important measures have been adopted. At its first meeting, the PM-appointed ministerial committee on infrastructure paved the path for railway and road projects, Environment Minister Prakash Javadekar told Road Tran-sport Minister Nitin Gadkari and Railways Minister Sadananda Gowda that his ministry would soon delegate power to the state government and regional offices of Ministry of Environment & Forest (MoEF) to clear linear projects involving forest land up to 40 hectares, a news report in The Times Of India (August 13) said. Quoting unnamed sources, it said, “This would mean almost 70-80 per cent of ‘not-so-big’ projects need not reach Delhi for clearance.”
In another measure of decentralisation, the MoEF is considering the proposal to allow state governments to give permission for sand mining up to 20 hectares as against the existing norm of five hectares, the report said. At present, all such proposals beyond five hectares are referred to Central government. Further, Railways agreed to do away with a host of charges and fees it collects for each rail over bridge (ROB) and rail under bridge (RUB).
These steps are a direct result of the Prime Minister’s intervention. He had written a letter to all key infrastructure ministries to expedite environmental clearance processes. “It is essential to make the clearance processes and mechanism consistent and transparent. In this regard, the ministry (ministries) may undertake a quick review of difficulties being faced by undertakings/companies in securing environmental, coastal, wildlife and forest clearances for their projects.”
Apart from goading government departments to show more urgency, Modi has commenced the task of saving the environment from environmentalists. After reconstitution, the National Board for Wildlife (NBW) has much fewer activists than they were earlier. These activists, mostly closet commies, are ideologically opposed to any kind of industrialisation. Under the patronage of Sonia Gandhi, they wrought havoc on development, torpedoing many projects and delaying many others. They also provided an excuse to politicians to block approvals. The latter would tell industrialists, ‘Look, it is so difficult to okay your file.’ Such difficulties can only be cleared by—well, you know what.
Evidently, Modi has been very busy—be it the task of improving governance, expediting economic reforms, upgrading national security (greater FDI, more emphasis on military preparedness, etc.), or enhancing ties with major nations (the Japan visit, the interaction with China’s Xi at home). But the results of all this are yet to be seen on the ground. Modi’s supporters argue that it takes time to clean up the Nehruvian mess. That’s right; it was the mythical Hercules who, in a day, cleaned the filth that had accumulated for 30 years in Augean stables. Modi is a man, not a mythological hero (though he was presented as such), but he has to make a start—and people should know that he has done so. That, sadly, has not happened.
Destined to fight
Modi wants to control the pace of change; problem is that people at large and businessmen in particular are becoming restless with the slow pace, despite their obvious fondness for the man.
Having fought many a battle after the 2002 Gujarat riots, perhaps he is a tad combat-weary and wants to rest a bit—rest on his laurels, even if for awhile. And make no mistake about it, he has many more wars to fight, in the domains as varied as economy, governance, defence, and foreign affairs.
Unfortunately for him, prioritisation according to his own convenience or caprice is not a luxury that he can afford. He may not like to fight all the battles all the time, but this is his destiny, a destiny he has chosen himself for himself—by his tall claims, big promises, and grand rhetoric. He may be interested in the low-hanging fruit, but nothing grows in a wasteland—neither the low-hanging nor the high-hanging fruit. The Nehruvian Consensus, especially its revival during UPA rule, has polluted the business environment so much that doing the same thing in a better way will not do. Incremental change won’t do; the need of the hour is total change and complete breach from the past.
By Ravi Shanker Kapoor