By Rekha B. Roy
“Maximum governance, minimum government,” was Indian Prime Minister Narendra Modi’s battle cry when he was campaigning for the general elections early this year – a message that resonated with many Indians who handed him an overwhelming mandate. With Modi in the top job, Indians had hoped for an end to the policy paralysis, slow growth and climbing inflation that had gripped the country for the last few years. The first 100 days of Modi’s premiership have been dotted with some hits and some misses. But one prime realisation has been that there are no quick fixes to India’s countless problems. Modi’s approach, to the problems he inherited from the previous government, so far has been cautious, a far cry from the vehemence he had displayed while campaigning for India’s top job. But it is far more pragmatic for sure.
There have been no big bang reforms yet and Modi, over the last three months, has ironically often been dubbed the silent prime minister (especially after he had failed to react to incidents of violence against women), a moniker he had often used to taunt his predecessor, former Prime Minister Manmohan Singh. Some of his hits and misses in the last three months follow below.
An opinion poll by Today’s Chanakya revealed that almost half of the people polled felt that Modi could have taken stronger steps to curb inflation as he had promised during his campaign during the general elections. More than two-third of the respondents felt that the government’s efforts to tackle inflation has been insufficient and even weaker than the previous government’s. And while 41 per cent felt the economy was getting back on track, 34 per cent disagreed.
Inability to bring down inflation, but more importantly coming up with a well thoughtout, long-term strategy, has undoubtedly been one of the big failures of Modi’s first 100 days in power. The Modi government had to agree to bring onions (after 10 years) and potato (for the first time) under the Essential Commodities Act to stop black marketing and hoarding. It also put curbs on exports and announced a $82 million food price stabilisation fund which is a pinch effort to feed India’s 1.2 billion. But apart from these knee-jerk reactions, there have been no well-thought out strategies to contain inflation. And yes, the Indian economy recorded 5.7 per cent growth in the April-June quarter (its strongest in the past couple of years), but can this growth be sustained without controlling inflation? Consumer price inflation was nearly 8 per cent in July while food inflation in India had averaged at almost 10 per cent between 2012 and 14. To curb food inflation, New Delhi will first need to reduce food wastage and bring its cold chain supply infrastructure up to speed. India is one of the world’s largest producers of fruits and vegetables but a third of its produce is wasted owing to insufficient infrastructure, which includes cold storages and refrigerated transport. The Modi-government has committed to invest around $822 million in the cold chain supply in its first Budget as against a requirement of almost $9 billion.
Sticking to his pro-business leader image, Modi relaxed a number of key environmental norms that previous governments had put in place to safeguard the ecology and indigenous people’s rights. Norms like mandatory permission from village councils or Gram Sabhas, for mining in forests, which were considered a big obstacle by businesses, especially in the mining industry, have been taken off. Modi’s government also decided to do away with public hearing required for the expansion of big coal mining projects to increase coal production. Midsized polluting industries can also now operate within 5 km of national parks and sanctuaries as opposed to 10 km previously. While these are good news for businesses, can they bode well for a country where development has to be cautiously balanced with people’s rights?
A recent report on the first 100 days of the present NDA government, compiled by Wada Na Todo Abhiyan (Don’t Break Your Promise Movement), a coalition of more than 4,000 civil society groups, including charities such as World Vision, Jagori, Water Aid India and India Alliance for Child Rights, don’t think so. The report, in fact says, that this is the most worrying trend in Modi’s otherwise optimistic, 100 days in office.
“The environment minister has declared that the environment ministry is no more the ‘roadblock ministry’, but one where decisions are being taken faster,” the report said. “The civil society is concerned that haste or efficiency could be at the expense of justice and the well being of the environment, natural resources and community.”
What is more worrying, however, is that Modi himself seems to have some skewed ideas about the environment and climate change. “Climate has not changed. We have changed. Our habits have changed. Our habits have got spoiled. Due to that, we have destroyed our entire environment,” he had said while addressing students through video conferencing during Teachers Day earlier this month.
The Wada Na Todo report had also expressed concern at communal trends that had surfaced during Modi’s 100 days in power. The report pointed out that many religious groups and leaders gained prominence after Modi came to power and openly made assertions that went against India’s secular fabric and threatened India’s Muslims, who account for about 15 per cent of its population. The Rashtriya Swayamsevak Sangh (RSS), BJP’s ideological parent, went on a campaign in Uttar Pradesh recently, alleging that Muslim men were on a “Love jihaad” to ensnare Hindu women and convert them to Islam. This could lead to communal tension and polarisation in the country, the report had warned.
Re-Energising the Bureaucracy
Modi, however, has been able to unclog the policy paralysis that had set in over the last few years in the country. He has fired up the implementation of existing projects, looked over by the previous UPA government, and amended existing rulebooks to ensure greater efficacy and transparency among the rank and file of India’s famed bureaucracy.
Beginning of August, the Modi government amended the All India Services (Conduct) Rules, 1968, and instructed all bureaucrats to maintain high ethical standards, integrity and honesty, political neutrality, promoting of the principles of merit, fairness and impartiality in the discharge of duties. It also exhorted them to maintain “accountability and transparency,” and “responsiveness to the public, particularly to the weaker section” and be fair to the underprivileged sections of society and deal with the common man with courtesy. It also spurred them to maintain integrity in public service, take decisions solely in public interest and use or cause to use public resources efficiently, effectively and economically and “make choices, take decisions and make recommendations on merit alone.”
Reorganising Government Institutions
And just a day before the bureaucrat’s rulebook was amended, the Modi government had also altered the role and scope of a key government group. The Project Monitoring Group (PMG), of the Cabinet Secretariat, formed by the previous United Progressive Alliance (UPA) government to unlock $255 billion worth of stalled projects in the country, has now been entrusted with the responsibility of not just setting deadlines but also following up on the timelines it sets for different ministries and state governments to provide clearances. The PMG has taken up 28 stalled projects at a combined value of Rs 20,830 crore and had cleared 163 projects worth Rs 5.7 trillion so far of the 450 projects worth Rs 22 trillion that have been brought under its consideration. Since, Modi took office, five projects worth around Rs 2,570 crore has been cleared. But with 394 projects still stalled, the task ahead of the PMG is still herculean. The PMG has also been entrusted with digitising clearances required for setting up an industry in India – 25 at the centre and 35 in the states – and put them on a common platform to ensure transparency and efficiency as entrepreneurs will be able to file and track applications online.
Modi has also decided to dissolve India’s planning body, the socialist style, Sovietinfluenced Planning Commission, which acted as a liaison between the Centre and the state governments and chalked up five-year plans for the country. It will be replaced most likely by the Monitoring and Accountability Commission, with lesser number of employees and greater responsibilities including monitoring accountability of various ministries and federal schemes and presenting reports to Parliament.
Foreign Direct Investment:
While the Modi government remains firm on not allowing foreign direct investment in multi-brand retail, Modi’s first ho-hum budget did talk of 100 per cent FDI for some railways projects. The government, on August 26, also allowed up to 49 per cent, up from 26 per cent earlier (and beyond if such investment results in access to ‘modern and state-of-the-art technology’) foreign investment in the critical defence sector. However, this might not mean much right away. “From the foreign companies’ point of view, the increase in the benchmark FDI cap to 49 per cent does not still give them management control of JVs [Joint ventures], which is the key to transfer proprietary technology,” says Laxman K. Behera, research fellow at the Delhi-based think tank, Institute for Defence Studies and Analyses. “This is also the main reason why the previous policy did not succeed in attracting big investment,” he adds.
Toilets For All
Almost 600 million Indians defecate in the open. Lack of toilets is as big a development problem in India as it is a taboo topic to discuss in public. Possibly for the first time, however, a national leader had addressed this topic from a venerable, public platform. Modi had promised during his Independence Day speech from the historic bulwarks of the Red Fort that India should strive to ensure every household has a toilet within the next four years. “We are in the 21st century and yet, there is still no dignity for women as they have to go out in the open to defecate. Can you imagine the number of problems they have to face because of this?” Modi had asked. Modi also committed his government to a 100-day plan under which it has set a target of constructing 12.5 million toilets in the 2014-15 period. While the target boils down to literally one toilet a second and has been panned by critics for its impracticability, it needs to be lauded purely because of the spirit of initiative. It has definitely encouraged the corporate sector to chip in. The Indian Overseas Bank has promised to build toilets in 59 schools while large corporate houses like Tata Consultancy Services (TCS) and Bharti too had committed Rs 100 crore each towards the programme.
Modi’s plan to give every Indian a bank account has been a landmark initiative to help the poor. Nearly 40 per cent of India’s poor have no access to formal banking institutions and are often at the mercy of moneylenders who charge high rates of interest. Through his Pradhan Mantri Jan-Dhan Yojana (the Prime Minister’s Public Wealth Plan), Modi aims to provide bank accounts to 75 million Indian households by 2018. While launching the project a couple of weeks back, he said that it will give the poor “renewed strength to fight poverty” and that “when a bank account is opened, it’s a step towards joining the economic mainstream.”
Under the plan, 75 million Indians – who till now had no access to mainstream financial institutions – will be able to open bank accounts along with a debit card and accident insurance cover of up to Rs 1 lakh ($1700) and an overdraft facility of up to Rs 5,000 ($850) by January next year. “There are millions of families who have mobile phones but no bank accounts. We have to change this scenario,” Modi had told the nation during his Independence Day speech when he had announced the plan. The scheme would allow the government to pay welfare benefits directly into accounts, eliminating middlemen and cutting out corruption. As the RBI Governor Raghuram Rajan had recently outlined, financial inclusion should mean “a safe place to save, a reliable way to send and receive money, a quick way to borrow in times of need or to escape the clutches of the money lender, easy to understand life and health insurance and an avenue to engage in savings for the old age.” On the first day of the drive, more than 15 million Indians opened their first bank accounts.
Modi’s trip to Japan and his bonhomie with the Japanese PM had not just grabbed many headlines but also got India an assurance of $33.5 billion public and private investment and financing. Another major foreign policy trump by the Modi-government came during the BRICS summit in Brazil in July, when India was chosen to head the Shanghai-based $100 billion Development Bank set up to fund infrastructure projects in developing nations. Modi also signed a deal with Australia to procure uranium from the country to meet India’s growing energy needs. Out of all these, however, Modi’s greatest foreign policy trump has been in resetting relations with ‘frenemy’ China, with whom it shared bilateral trade worth $65.85 billion in 2013-14. The Chinese premier Xi Jinping’s visit saw China pledge an investment of $20 billion in developing India’s infrastructure.
China will help bring India’s ageing railway system up to date with high-speed links and upgraded railway stations. It will also set up industrial parks in Gujarat and Maharashtra and has agreed to give more market access to pharmaceutical and farm products from India.
As chief minister of Gujarat, Modi had visited China four times and a maximum of China’s $900 million investment in India is centred in Gujarat. It is perhaps no coincidence then that Xi began his India visit from Ahmedabad, the capital of Gujarat. There is little doubt that under Modi’s leadership, the Sino-Indian relationship is set to enter a much more exciting phase. Modi has also not balked at flexing muscle in his foreign policy dealings, be them border disputes with China and Pakistan or rejecting the World Trade Organisation’s (WTO) Trade Facilitation Agreement.
But for now, Modi’s single-most big achievement, has been to keep up the renewed enthusiasm about India as a land of opportunity. Recently, the Economic Times newspaper reported that a leading international risk-rating firm has told its global clients that India is now the world’s best growth-market bet as the risks of doing business in the country have declined with the Narendra Modi government having completed its first quarter in power.
Modi’s last three months in power have reflected a slow and cautious approach to development but that is probably only because he is just testing the waters, preparing for a long haul.