Arun Jaitley reflects on the 4 years of Modi government in a FB post

Arun Jaitley
Arun JaitleyMay 26, 2018 | 14:49

Arun Jaitley reflects on the 4 years of Modi government in a FB post

The change

The preceding ten years of the UPA rule had unquestionably witnessed the most corrupt government since Independence. Prime Minister Narendra Modi created transparent systems through legislative and institutional changes which have given this country scam free governance.

Unlike the UPA, the prime minister is the natural leader of both his party and the nation. We have witnessed a journey from indecisiveness to clarity and decisiveness.


India has transformed from being a part of the “fragile five” to the “bright spot” on the global economic scene. A regime of policy paralysis has been transformed into one of decisions and actions. India, which was on the verge of becoming a “basket case” has today been transformed into the fastest growing major economy in the world and is likely to hold that position in the years to come.

The country’s mood from despair has transformed into hope and aspirations. Good governance and good economics have been blended with good politics. The result of this has been that the BJP is more confident, its geographical base has become much bigger, its social base has expanded and its winnability has hugely increased.

The Congress is in desperation without the perks of office. From the dominant party of Indian politics, it is moving towards the “fringe”, its political positions are not of a mainstream party but one usually adopted by “fringe” organisations. Fringe organisations can never hope to come in power. Its best hope lies in becoming a supporter of regional political parties.

State level regional political parties have realised that the marginalised Congress can at best be either a junior partner or a marginal supporter. Karnataka had witnessed a telling example of this. A regional political party whose base at best is confined to a few districts was able to extract a chief ministership of the Congress to which the Congress meekly surrendered. It had even lost its bargaining capacity. It is today putting on a brave face in Karnataka where losers are masquerading as winners.


Scam free governance

Prime Minister Modi has institutionalised a system where discretions have been eliminated. Discretions lead to abuse of power because they can be misused. Allocations of contracts, natural resources, spectrum and other government largesse which were being distributed through discretions, are now allocated through a market mechanism.

Laws have been changed. Leaders of the industry are no longer seen repeatedly visiting the South Block, the North Block or the Udyog Bhawan. Environmental clearance files don’t pile up. FIPB has been abolished.

For cleaning up the economy, India has to transform from a tax non-compliant society to a tax-compliant society. The enactment and implementation of the Goods and Services Tax, the impact of demonetisation, effective tax compliance are all steps against black money, steps which are formalising the Indian economy.

The Insolvency and Bankruptcy Code has changed the lender-creditor relationship. The creditors no longer have to chase the debtors. If you cannot pay your creditors, you have to exit through a statutory mechanism.


The social sector priority

For the first time in history, the poor and the marginalised are holding bank accounts as part of the world’s largest financial inclusion programme. The MUDRA Yojana has made cheaper credit available to the weak and the marginalised. The biggest beneficiaries of this have been women, SC/ST, minorities and other weaker sections.


Rural roads with a hugely increased expenditure are a success story. That every village must be connected with road and electricity, affordable rural housing, toilets and gas connections in all homes, are intended to change the quality of life in villages. The Crop Insurance Scheme and the government’s decision that farmers must get 50 percent above cost are steps intended to eliminating agricultural distress.

The UPA government had sanctioned Rs 40,000 crores under MGNREGA but with budget cuts spent only Rs 29,000 crores. Today that expenditure has been doubled. Under Food Security Programme, the expenditure has been increased to Rs 1,70,000 crores to ensure cheaper food-grain availability to the eligible.

On the healthcare front, the destiny of India’s poor will change when 40 percent families at the bottom of the ladder will get treatment up to rupees five lakhs for hospitalisation at the cost of the government scheme.

The economic management

During the UPA government, India had fallen off the global radar. In its initial years when the world economy was booming, India grew on the strength of global tailwinds. When the global situation became challenging, the UPA’s decisiveness and performance collapsed.

The last two years of the UPA had witnessed substantially lower growth rates. From the very first year of NDA, India is the world’s fastest-growing major economy with the highest GDP growth rates. This is also the global projection for the next few years.

The Current Account Deficit (CAD) saw an unprecedented 6.7 per cent deficit in the year 2012-13. The NDA has consistently maintained a CAD of under 2 per cent on an annualised basis. The poor economic management was visible when under the UPA fiscal deficits remained alarmingly high. The Government was spending more and earning less.

We witnessed fiscal deficits of 5.8 per cent, 4.8 per cent and 4.4 per cent in the UPA’s last three years. Having inherited the mess, the NDA, year after year, has brought it down to 3.5 percent and shall, this year, try and deliver a 3.3 percent fiscal deficit.

The UPA’s economic management was such that even when fiscal deficits were high, expenditure cuts of over rupees one lakh crores were done in order to make fiscal deficit optically look slightly better. Cut in expenditure means cut in growth. During the NDA years, revised estimates of expenditure have always been higher than budget estimates.

The UPA provided India in its last years an inflation figure up to 9 per cent and at one stage even crossed into double digits. The NDA has tried to contain inflation and on most occasions has remained within the target of 3 to 4 percent. The poor economic management of the UPA resulted in the high cost of borrowing for the Centre and the State governments.

The bond yields had touched an incredible 9.12 per cent in April, 2014. We have been, on an average, able to contain it between 6 to 7 per cent with a low of 6.3 per cent on one occasion and rarely in the 7 per cent range only when global factors impacted either the currency or the crude prices.

From the last year of the UPA, the infrastructure expenditure to this year has increased by 134 per cent during the current year. The Congress president must remember that taxes don’t go into the pocket of the government. They go back to the people for better infrastructure, better social sector expenditure and poverty reduction programmes.

The social sector expenditure has seen a substantial increase by both the Central and the State governments. The road sector programmes have witnessed a 189 per cent increase between the last year of the UPA and the current year of the present government. Resources are transferred to the states with 42 per cent devolution of taxes, finance commission grants and assistance through the CSS schemes.

Notwithstanding the perpetual grumbling, last year of the UPA witnessed Rs 5,15,302 being transferred to the states. This year the proposed transfer is 145 per cent higher and will be at Rs 12,62,935. crores. This is over and above what the states earn from the GST where they have been constitutionally protected with a 14 per cent annual increase. The states independently levy their own taxes.

Institutional changes thus being enacted and implemented are putting the Indian economy on a far stronger wicket.

The fifth year debate

As we enter the fifth year of the government, the NDA’s priorities are clear. This will be our year of consolidation of the policies and programmes which we have implemented. In our prime minister, we have a strong leader with a mass appeal. His capacity to change India’s destiny is globally recognised.

His insistence on integrity, his indefatigable capacity to work, his clarity of policy and direction, his boldness in taking steps in larger national interest gives the NDA a natural political advantage. Clarity and credibility are hallmarks of the NDA government.

The last few days have witnessed a discussion about a “fictional alternative”. A group of disparate political parties are promising to come together. Some of their leaders are temperamental, the others occasionally change ideological positions. With many of them, such as TMC, DMK, TDP, BSP and the JD(S), the BJP has had an opportunity to share power.

They frequently change political positions. They have supported the BJP claiming that it is in larger national interest and then turned turtle and oppose it in the name of secularism. These are ideologically flexible political groups. Stable politics is far from their political track record. Some amongst this disparate group have an extremely dubious track record of governance.

Some leaders are maverick and others include those who are either convicted or charged with serious allegations of corruption. There are many whose political support base is confined to either a few districts or to a particular caste. To rule a large country like India through coalitions is possible but the nucleus of a coalition has to be stable.

It must have a large size, an ideologically defined position and a vested interest in honest governance. A federal front is a failed idea. It was experimented under shri Charan Singh, shri Chandrasekhar and by the United Front Government between 1996-98.

Such a front with its contradictions, sooner or later, loses its balance and equilibrium. Remembering 1996-98 as perhaps one of the worst period of governance, the aspirational India which today occupies the high table in the world shall never accept an idea which has repeatedly failed. History teaches us this lesson. Aspirational societies with vibrant democracies do not invite anarchy.

A strong nation and the requirements of good governance abhor anarchy. The political agenda for the debate this year appropriately will be Prime Minister “Modi versus an anarchist combination”. The 2014 election conclusively established that in the new India chemistry will score over arithmetic when it comes to deciding the country’s destiny.


Last updated: May 28, 2018 | 00:05
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