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Modi government report card: Key achievements and failures

Rural electrification, road building have been major policy successes.

 |  6-minute read |   22-04-2018
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Four words changed the political mood in 2015: “Suit-boot ki Sarkar”.

Rahul Gandhi, still derided as lacking in political acumen, had struck a nerve. Till then, throughout his twelve-and-a-half years as Gujarat chief minister and his first year as prime minister, Modi was regarded as a friend of big business. His economic policies were expected to be pro-capitalist: liberalisation on steroids. He dressed the part in monogrammed bandh galas and seemed more comfortable addressing NRIs in London and New York than in his constituency Varanasi (he visited the city for the first time, following his May 2014 landslide win, only in November 2014).

The suit-boot ki sarkar taunt from Rahul Gandhi made Modi take a sharp Left turn in 2015. The suit-boot ki sarkar taunt from Rahul Gandhi made Modi take a sharp Left turn in 2015.

The suit-boot ki sarkar taunt changed that overnight. The expensive suits gave way to cotton Nehru jackets; big business was shunned; economic policies were increasingly aimed at the poor; the middle-class and small traders, the BJP’s core vote base, were sidelined

Modi had taken a sharp Left turn.

Povertarian politics, mastered by Indira Gandhi in the early-1970s, was back. Privatisation of PSUs? Off the table. Tax reform for the salaried middle-class? No longer a priority. Less bureaucracy? More.

Turning Left on economic policy didn’t mean Modi had entirely abandoned his natural reformist instincts. FDI was liberalised across sectors, start-ups encouraged, and big global defence deals signed.

Next month, Modi completes four years as prime minister. How has he done? Here’s an assessment of the government’s achievements, failures and works-in-progress.

Achievements

The Insolvency and Bankruptcy Code (IBC) was legislated in 2016. By taking bank NPAs head-on, the IBC is proving to be a game-changer. Total bank NPAs are around Rs 9 lakh crore. The interest shown by leading Indian and global business houses (Tatas, Birlas, Vedanta and Britain’s Liberty House among others) in buying bankrupt companies with large bank NPAs but good underlying assets could, given sensible implementation of the IBC process, restore Indian banks to good health, enable them to restart lending to the corporate sector, and boost private investment. Clearly a blue-ribonned reform.

Rural electrification has been a major policy success. While last-mile connectivity has left many villages without power, the pace of rural electrification has been quickest in India’s history – pre- and-post Independence.

The pace of road building has been another outstanding success. Under the UPA regime, around 17km of roads were built per day. Currently, over 40 km of roads are being constructed daily. Moreover, if the methodology of counting road mileage constructed is changed to the globally recognised model of counting both lanes of a road and not just one, the figures would double under both NDA and UPA governments.

The National Health Protection Scheme (NHPS) is one of the boldest initiatives of the Modi government. It will provide medical insurance cover of Rs 5 lakh to 500 million low-income Indians. The scheme is budgeted to cost around Rs 10,000 crore annually (though critics say the cost could exceed Rs 80,000 crore).

Set to roll out on October 2, 2018, it is a long overdue step towards providing universal medical care. Setting up tertiary rural healthcare centres is obviously crucial for the scheme to work on the ground. It is a challenge the government faces given the rudimentary health clinics in rural areas and the shortage of qualified doctors.

The other key achievement during the NDA government’s first four years in office is Mudra Yojana, under which loans are given to small entrepreneurs with little or no collateral. The scheme is designed to produce an army of self-employed who in turn will create employment through their entrepreneurial ventures.

Other standout successes have been the Jan Dhan Yojana, which has created over 312 million new bank accounts, the direct benefit transfer (DBT) scheme, which has significantly cut pilferage, and subsidised LPG cylinders for the poor. Beyond these is the absence of corruption in the higher echelons of the government.

That’s where the good news ends. Corruption at lower levels remains endemic. It proliferates at state and local levels

Failures

A slew of governance failures have meanwhile taken the sheen off the Modi government. India’s defence budget has not kept pace with the country’s need to be prepared for a two-front war. Well below 2 per cent of GDP, a majority of the defence budget goes towards pensions, salaries and overheads to run a military of nearly two million men and women.

Many of the Modi government’s missteps have originated in the ministry of finance (MoF). Demonetisation was poorly executed by the MoF. GST is burdened by an unnecessarily complex architecture. New income-tax forms require details never sought before. The raid raj is back. The result: an alienated middle-class, aggrieved traders and unhappy businessmen. All this would have a silver lining if tax collections rose sharply. They have increased but not significantly compared to previous years.

The Make in India scheme has been a mixed bag. Private and foreign investors have reacted cautiously. To get things moving, the government is focusing on defence JVs in India, beginning with the Rafale deal.

Many of the government’s other schemes have been stalled by bureaucratic inertia. Some of the most poorly conceived policies have again come from the MoF: for example, the regressive long-term capital gains tax (which has slowed inflows into mutual funds) and a tax on angel-funded start-ups over Rs 10 crore whose shares are “over-valued”, according to the income-tax department (which, not being an investment bank, has no business determining the fair valuation of a start-up’s shares).

Works in progress:

Aadhaar, Swachh Bharat Abhiyan and the Ganga clean-up are three critical missions. Each has suffered a setback, but is back on track. Railway modernisation too is gathering pace. Several other initiatives remain to be activated: an enhanced MSP for farmers, rural housing, job creation, social inclusiveness, and law and order.

In its last year in office, the government must re-jig its communications strategy. It has talented professionals who could conduct daily briefings on current issues. A panel comprising the following could brief the media on a daily basis by rotation: Bibek Debroy (economics), MJ Akbar (foreign policy), Sanjeev Sanyal (banking), Amitabh Kant (governance), Piyush Goyal (investment) and Smriti Irani (politics). Perception is key. It will play a big part in 2019.

Overall, the Modi government has done well in patches, but failed in significant areas. Its electoral machinery is formidable. But after four years, judicial and police reforms remain in limbo, while a Lokpal is only now half-heartedly being put into place. Were it not for a fractured Opposition, the Modi government would likely be voted out in 2019.

It will take the combined efforts of Rahul Gandhi, Mamata Banerjee and Sitaram Yechuri to help the BJP escape that fate next year.

Also read: The politics behind move to impeach chief justice of India Dipak Misra

Writer

Minhaz Merchant Minhaz Merchant @minhazmerchant

Biographer of Rajiv Gandhi and Aditya Birla. Ex-TOI & India Today. Media group chairman and editor. Author: The New Clash of Civilizations

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