Two Years of Modi Government Scaling New Heights

When a new government takes over, people have a lot of expectations. The government’s success is measured in terms of initiatives it has taken to revolutionise the social, political and intellectual domains.  Seeds of such changes are mostly sown in the first year of the assumption of power. Rajiv Gandhi brought in Sam Pitroda and created C-Dot. The present telecom revolution owes a lot to that initiative of Rajiv Gandhi.  Narasimha Rao ushered in economic reform by de-licensing industries in his first budget presentation, the results of which were far-reaching. Barack Obama reached out to Muslims by giving a speech at Al-Azhar University, clearly making a policy statement that the US was no longer interested in continuing Bush’s foreign policy while hinting at the withdrawal of US forces from Iraq and Afghanistan. The Narendra Modi government which recently completed two years in office has scripted a new chapter by launching such revolutionary schemes as ‘Make in India, ‘Jan Dhan Yojna’, ‘ Digital India’, ‘Swachh Bharat Abhiyan’, etc. It has been an eventful period of policy change and fierce political exchanges amid global economic turmoil. Ever since the National Democratic Alliance (NDA) government came to power in May 2014, it has been dominated by the powerful personality of its prime minister. Today, Prime Minister Modi remains India’s most popular politician. He has an approval rating of 74 per cent, and despite what a certain section of Indian politics wants to believe about Nitish Kumar, there is no alternative—at least, none that is evident. Now with the Bharatiya Janata Party (BJP) going truly national (with a double-digit share of votes in Kerala in the south and West Bengal in the east in the latest state polls, not to forget its historic win in Assam), it will not be surprising if the party emerges as the single largest party if elections to the Lok Sabha are held again today.

PM Modi has benefited in many ways from the disarray in the ranks of the main opposition party, Congress, which ruled India for the better part of the past six decades under the leadership of the Nehru-Gandhi family. The party today is struggling to retain its relevance in a rapidly changing nation, mainly because the dynasty is no longer preferred by the young in the country and it has lost its sheen among the voters.

As a matter of fact, Congress vice-president Rahul Gandhi, despite the best efforts of his supporters, has been a total failure. Nor does he able to demonstrate leadership traits, but also fails in effectively challenging the Modi government. Other regional satraps who are being touted as the opponents to the Modi reign do not have the pan- India appeal, which PM Modi has successfully created using social media and emerged as one of the most formidable politicians of his generation.

If success can be measured by the shrinkage of the main opposition party, then the Modi government has clearly been successful in keeping Congress on the defensive by raking up a multitude of scams during its rule. Under Modi’s leadership, the BJP is expanding in parts of India where it could never set foot. In the North-East and in the southern state of Kerala, for example, the BJP’s base has been expanding rapidly, turning it into a truly pan-India party.

It will be the government’s economic performance that is likely to determine its future trajectory. India’s economy seems to be doing well at the moment, with estimates suggesting that the country has overtaken China as the world’s fastest growing economy. At a time when major global economies are shrinking against the backdrop of a strong American dollar and falling commodity prices, India remains one of the few bright spots. When Modi inherited office in May 2014, retail inflation was 8.28 per cent; it is at 5.39 per cent in April this year. According to Moody’s country’s economic growth is expected to reach 7.6 per cent this year, compared with the 7.2 per cent in 2014. India also replaced China as the top destination for foreign direct investment last year, largely on account of the push from the Modi government to increase manufacturing through Make in India initiative.

However, there has been disappointment in some sections that the Prime Minister has not introduced any big-bang reforms, as he seemed to have promised during his election campaign.

One major reform initiative, the Goods and Services Tax bill (GST) – to subsume all indirect taxes such as excise duty and service tax into a single standard rate – has not been implemented all because of  Congress disrupting the Lok Sabha and stalling its passage in the upper house of parliament. Although the bill was the brainchild of Congress, the party resorting to disruptive techniques is based on the feeling that through this it can deliver a blow to the Modi government by refusing to ratify it.

Nevertheless, the government has introduced other measures that will have a long-term impact on the economy. The insolvency and bankruptcy code, for instance, will make it easier to do business in the country because it will ensure time-bound settlement of insolvency. It also makes it easier for the financial sector to address loan recovery (a Vijay Mallya effect). Other initiatives include the direct benefit transfers scheme, like Jan Dhan Yojna which aims to transfer subsidies directly to the recipients through their bank accounts. This means that crediting subsidies into bank accounts will reduce leakages and delays which had been rampant in the UPA days. Also, for the first time, the government has resolved to bring LPG cylinders to these households. The government has launched Pradhanmantri Ujjawala Yojna under which 5 crore BPL [below poverty line] households will be provided subsidised LPG cylinders over the next three years. The target for the current fiscal year is 1.5 crore households. The scheme is being financed in part from the savings generated through voluntary surrender of LPG subsidy by existing richer households. At Prime Minister’s call, one crore richer households have already given up this subsidy.

The Budget 2016-17 announced three major initiatives related to health: Insurance, Jan Aushadhi Yojna and dialysis programme. Under the health insurance scheme, coverage for Rs. 1 lakh is provided against hospitalisation expenditure. For senior citizens, there is additional coverage of Rs. 30,000. The government will cover eight crore families from economically weaker section free of charge through an Aadhaar-linked programme. Under Jan Aushadhi programme, the government will open 3,000 stores nationwide to provide low-cost generic drugs. With 2.2 lakh end stage renal disease patients added each year, the government has also announced a programme to provide dialysis services in all district hospitals.

For the last two years, Modi has practised his mantra of ‘maximum governance, minimum government’ and focussed ensuring bureaucratic accountability that bodes well for the future. Because of the government’s tough stand on corruption, crony wealth in India has come down from 18 per cent of GDP in 2008 to an estimated 3 per cent this year. Not a single iota of corruption was visible in the last two years.

On the foreign policy front, the government has been successful in leaving its unique imprint in a short period, making clear its objective of positioning India as a leading global player. Gone are the days of non-alignment. Instead, the focus is on building strong partnerships with like-minded states to enhance India’s economic and diplomatic profile. From giving greater operational autonomy to the military in border areas to re-envisioning the country’s defence policy as an integral part of diplomacy, Indian strategic evolution has entered uncharted waters. Apart from this, Prime Minister Modi has used – culture and pragmatism- in his foreign policy objectives very cleverly, particularly in Asia. Under the banner of India’s ‘Look East’/’Act East’ policy, Modi has used culture to appeal to the peoples of Asia. By adding spiritual substance to the idea of economic and political-strategic calculations in the international arena Modi is trying to project India to the world as a civilisational entity with accumulated wisdom of millennia that is the solution to today’s global crises. Toying with what Swamy Vivekanand envisaged in 19th century, Modi is projecting an India which is a microcosm of the world, a broad multicultural platform and a moral force.

What has been considered controversial in the past due to China’s aversions, the country under the Modi regime has resorted to undertaking military exercises with states in Asia and beyond, Japan, Vietnam, Australia and the US. Centre has also decided to move ahead and deliver attack helicopter gunships to Kabul to buttress Indo-Afghan security ties. By calling for freedom of navigation in international waters, but also agreeing to cooperate with the United States in safeguarding maritime security and ensuring freedom of navigation and over-flight throughout the region, especially in the South China Sea, India is trying to wade into the South China Sea dispute between China and its neighbours. Engagement with Pakistan is always a shaky subject in Indian politics, but now it’s using its clout with Gulf country’s particularly Saudi Arabia, which is a traditional ally of Pakistan too put pressure on Islamabad too rein in militant activities from its soil.

This story is by no means complete. There is much else being done via housing for all, Prime Minister’s Krishi Sinchai Yojana, Kisan Beema Yoojna, livelihood mission and much else that touches people’s lives. The distinguishing feature of the policies under the present government is that they promise to sustain high growth in the GDP, revenues and social spending and deliver social services more efficiently and effectively. Surely, these are still early days for the Modi government. In this age of rapidly rising expectations, it will be the outcome of its policies over the next three years that will determine its fate in the general election of 2019.

By Nilabh Krishna