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Wednesday, December 31, 2014

Project Modi is underway

By Swapan Dasgupta

 

As a rule the media thrives on hyperbole and generalisations. Often, this is most pronounced in the wrap-up that is obligatory at the end of the calendar year. The tendency to characterise a year that is entering into the past as ‘momentous’, a ‘landmark’ or ‘turning point’ and even—to use the description employed by the British monarch in 1992—‘annus horribilis’ is often irresistible. 

 

catch-all label does occasionally serve an immediate need for aggregation. However, as history has only too often demonstrated, the importance of a year can only be gauged in hindsight. The many thousands of young men who flocked to the recruiting centres in August 1914 probably imagined that their noble endeavour to serve the King and Country (or, indeed, the Kaiser and Fatherland) would involve a short adventure that would end by Christmas. Contemporaries were scarcely aware that what began as competitive patriotic euphoria would result in a horrible four-year war that would devastate Europe, lead to the annihilation of an entire generation and destroy an entire way of life. Little did they realise that the Great War would also sow the seeds of another conflict that would usher a fearful atomic age. 

 

When millions of Indians queued before their local polling booths all through April and early-May this year, they were exercising individual political choices born out of very different compulsions and considerations. For some it was exasperation with a state of affairs marked by economic under-performance, listless leadership and shrinking opportunities; for others it was the heady expectation of change, an inspirational leader and even peer group pressure; and for still others it was the sheer excitement of being able to determine the country’s rulers. The post-May 16 rationalisation of the vote as either a ‘conservative revolution’ or a conclusive rejection of dynastic politics was inevitably post-facto. Till 10.30am on May 16 neither the people nor the pundits who pontificated in the studios were sufficiently aware that India would break a jinx and create a single-party majority government for the first time since Rajiv Gandhi swept the board 30 years ago. 

 

Pedants will doubtless argue that there was a mismatch between the collective sentiment and the outcome. The BJP and its allies won a comfortable majority in the Lok Sabha with just over 38 per cent of the popular vote and benefited from the first-past-the-post electoral system that exaggerates majorities. Simultaneously, the Congress was so conclusively defeated that it couldn’t muster the necessary 54 MPs to claim the Leader of Opposition post. 

 

The hair-splitting apart, the verdict was truly spectacular in one major respect: for the first time Indians elected a party that had no organic relationship with the Congress and was in fact bitterly opposed to the old consensus. Subsequent state elections appear to have reinforced the pattern of the general election. The BJP is gradually easing out the Congress as India’s principal national party.

 

The belief that the results of the 2014 general election marked a revolutionary rupture and heralded a new beginning resonated throughout the political world. International leaders who had become accustomed to viewing India through the prism of a dynastic democracy suddenly woke up to the need to discover and understand the outlanders in Lutyens’ Delhi. Prime Minister Narendra Modi responded to this curiosity by encapsulating his mission into two unexceptionable themes: improve the ease of doing business and ‘Make In India’. To this he added a social mission: swachch Bharat. And in his maiden Independence Day speech from Red Fort, he pleaded for a 10-year freeze on contentious issues—a message that a clutch of impatient Hindu nationalists have chosen not to heed in entirety. 

 

After six months of being in office, there is a growing realisation that comparisons of Modi with Margaret Thatcher or Ronald Reagan are facile. It is indeed possible that a decade later Indians will look back to 2014 as a decisive turning point. For the moment, however, the revolutionary impulses appear to be subsumed by a generous dose of incrementalismModi, it would appear, is proceeding with extreme caution—much to the irritation of his more ideologically-inclined supporters some of whom feel that the moment is opportune to settle some old scores

 

It is not that India has effortlessly reverted to the ‘chalta hai’ attitude that many feel constitutes the essence of the Hindu way of life. There has been a greater emphasis on efficiency and a purposeful language of modern management has entered the lexicon of governance. The lavish disbursement of patronage to reward political support has been lessened drastically. But overall, the thrust has been on laying the foundations of a capacity building exercise. There are many facets of governance that seem to exasperate the Prime Minister but for the moment he has chosen to not bite more than he can chew. 

 

Has the incremental approach been necessitated by the BJP’s uneven bench strength? Is Modi preparing the groundwork for a show of audacity after mid-2016 when the balance of forces in the Rajya Sabha begins to tilt in his favour? How do we reconcile the fact that while the government is still fixing the leaks in the system, the BJP under Amit Shah has moved into top gear and audaciously preparing for political expansion in hitherto uncharted territories? Is there a rationale behind the modesty of change in government and the aggressive designs in politics?

 

As India moves into a new year these are still unanswered questions. Project Modi is still a work in progressWe are at that awkward point when 2014 could well be the initiation of a decisive turning point. At the same time, there are often moments when history just refuses to turn.


Hindustan Times, December 31, 2014

 

 

 

 

Monday, December 29, 2014

Why riddle promotion of faith with hate?

By Swapan Dasgupta

The past fortnight has witnessed a spirited and even unruly debate over religious rights in India. Before probing this lofty question, it is instructive to recognise a banality that underpins all concerns over religion: the undeniable fact that for an overwhelming majority of people, religious identity is a matter of inheritance. Most people belong to a faith because they were born into it. It is only a very small minority that deviate from a formal commitment to identities that were determined by their parents, if not forefathers.

Recognising this simple truth does not in any way undermine the reality that individuals determine how this inheritance is played out in their own lives. This is particularly true of the large body of beliefs that have been artificially described as ‘Hinduism’ but to which the term sanatan dharma is more appropriate. A man or woman may have been born in a family that perceived itself as, say, Shaivite or where the principal commitment was to the rites and rituals associated with a kul devata (ancestral God). In the course of life, they may come into contact with a guru who would have steered them into a very different theological orientation and form of worship. Alternatively, they may choose to become completely irreligious or even experiment with traditions that have no roots in India.

Would they be regarded as converts?

The answer is an emphatic no for a variety of reasons. First, it is more than likely that in their modest engagement with officialdom — such as filling a form or answering the Census enumerator — they would still declare themselves Hindu. By this they are asserting their Hindutva in terms of either faith or culture, or both.

Secondly, the belief structures of the sanatan dharma are numerous, inconsistent and even contradictory. Even atheism can be accommodated under the umbrella of the eternal way.

Finally, and this is important, the absence of codification or even a desire to attempt it has meant that an individual can effortlessly and without qualms possess multiple faiths.

I have cousins who are practitioners of Soka Gakkai, apparently a derivative of Buddhism that originated in Japan. At the same time they are not lacking in their commitment to the Durga Puja that is conducted in the ancestral village. The Western tradition of codification to suit a statistical purpose can’t cope with the complexities of faith in the Indic tradition.

Theologically speaking, this muddle can perhaps be explained by the absence of the notion of a jealous god from Indic traditions. Indians, by and large, have a loose attachment to the sacred that cuts across denominational boundaries. The average puja altar of an Indian, for example, contains a mix of gods, goddesses, portraits of gurus and even deceased members of the family. This mix of symbols of sacredness and veneration would undoubtedly argue against the traditions of the Reformation in Europe where icons and sacred relics were brushed aside for one austere symbol of one god.

The emotional and political upheavals these caused in the 16th and 17th centuries have now largely been forgotten. But recalling history is important insofar as it informs us that there was a time when Europeans too had their own eternal way that was snuffed out over time by force.

The debate over conversions wouldn’t have triggered either emotional outbursts or a political storm had the issue been one of an addition to the pantheon of sacredness and changes in the forms of worship. Unfortunately, conversion has become a volatile issue on account of the intolerance that is often seen to accompany it.

To begin with, there is the inflammatory rhetoric of religious preachers. Preaching the virtues of one tradition and one god is entirely legitimate. However, when it is accompanied by fierce and often tasteless debunking of existing patterns of belief and worship — the condemnation of ‘false gods’ and the accompanying threats of hell fire and eternal damnation — preaching also become riddled with hate. This was quite pronounced between the 18th and early-20th centuries when evangelism seemed to have the backing of state power.

The writings of Swami Dayanand Saraswati, Swami Vivekananda and Mahatma Gandhi resonate with distaste over the insensitive and intemperate rhetoric of European missionaries. In today’s India, there is profound anger — particularly in southern India — at the hateful propaganda of preachers who draw their inspiration (and, often, their resources) from evangelists based in the US. Their advocacy of faith is often plain expressions of hate.

Evangelism also has socially disruptive consequences. It is understandable that faiths often seek to create a community of believers. However, when this is accompanied by a conscious determination to stand aloof, rebuff and view with disdain the traditions of the community and their own ancestors, social tensions are inevitable. The warnings against changes of faith being accompanied by a change in nationality weren’t a piece of Savarkar-ite propaganda. No less a person than Mahatma Gandhi, whose deep religiosity was plural and non-exclusive, expressed his concern over the detachment from the wider community that evangelists often promoted.

To the extent that ghar vapsi reconnects people to their history and inheritance, it is a positive step. But it would be retrograde if it became inextricably linked to changes in belief and forms of worship.

The right to preach and propagate one’s faith is among the larger freedoms guaranteed by the Constitution. However, just as an individual has a complete right to change his form of worship and even connect with a different God, there should be an equal freedom to retain one’s faith. This is as much a fundamental human right as the right to convert. The rights that accrue to minorities cannot be denied to the majority.

Sunday Pioneer, December 28, 2014

Sunday, December 28, 2014

Muddled J&K verdict calls out for a grand embrace

By Swapan Dasgupta

 

 

The easiest way out of the highly fractured verdict in Jammu and Kashmir would have been for all the parties to stick to their individual positions and leave it to the Governor to assume direct charge of the administration. One of the reassuring facets of this J&K election that was marked by a sharp in crease in voter turnout is that this is route few—and certainly not the elected MLAs—wish to take. The people, it is clear, voted for government formation and they must have it. 

 

The choices before the four parties that have a stake is, however, daunting. The unclear verdict suggests that the aggregate popular desire is for a combination of parties to meet each other at least half way. Political and ideological compromise is inherent in the result. 

 

The verdict also suggested a deep geographical schism. The PDP led by Mufti Mohammed Sayeed won a clear majority of seats in Kashmir but drew a blank in Jammu. Likewise, the BJP swept the Jammu region but performed dismally in the Kashmir Valley where, for the first, it tried hard to secure representation. 

 

There were also two half-losers. The Omar Abdullah-led NC may have defied media speculation of a total rout but while winning 15 seats it also lost 13. Equally, the Congress’ tally of 15 seats was less than the 20 it secured in the previous election. 

 

In terms of an arrangement that involves making the least compromise, the PDP can restore an earlier alliance it had with the Congress and, with the aid of Independents, form a government with a very slim majority. This remains the default option that can be exercised if all else fails. 

 

Common sense could also prompt Mufti to extend a hand of friendship to the Abdullahs and forge a coalition of regional parties. If Nitish Kumar and Lalu Yadav can bury the hatchet in Bihar, there is no reason why—in theory at least—the two principal political families of Kashmir to end their blood feud and come together under a common roof for five years. Yet, as everyone is aware, such an arrangement involves unsettling a turf war that is at the heart of competitive politics in Kashmir. Since there is no perception of a rising common enemy in the constituencies, a coalition between the PDP and NC is near impossible. 

 

The fact that the BJP is not considered a threat to the PDP and NC at the constituency level has, ironically, enhanced the bargaining clout of the saffron party. Judging from the trusted grapevine of Lutyens’ Delhi, it would seem that both parties have made overtures to the BJP to explore the possibility of a coalition government. There was a time when the BJP would have preferred to retain its majestic isolation content itself with the Leader of Opposition post. But the emphatic nature of its Jammu nature has made that difficult. Opting out implies depriving Jammu and, by implication, the Hindus a stake in the power structure of J&K. 

 

Ideally, the BJP would like an arrangement with the NC that will ensure its own Chief Minister—a potentially dramatic development for J&K. The problem is that this will imply a disregard for the majority opinion for Kashmir—a dangerous development in view of the unspoken fact that there is a malevolent force waiting across the border to take advantage of any emotional alienation. 

 

In ideological terms, a PDP-BJP coalition will involve the maximum retreat from entrenched positions. The BJP will have to put Article 370 in deep freeze and the PDP will have to shed its commitment to porous borders and dual currency. More important, such an arrangement will necessarily have to be sold to the faithful from the top—through a grand embrace involving Narendra Modi and Mufti. 

 

The difficulties in the path of such a historic compromise are innumerable. But a grand reconciliation between the communities and regions of J&K—if only for a spell of “good governance”—would be as meaningful as Indira Gandhi’s 1974 agreement with Sheikh Abdullah. Through a muddled verdict J&K has actually created an opening for statesmanship. Big heartedness must be allowed to prevail over partisan considerations—if both sides are willing. 

Sunday Times of India, December 28, 2014

 

 

 

 

 

Thursday, December 25, 2014

Vajpayee an enlightened conservative in love with life

Image Title
In 1992, the government of PV Narasimha Rao honoured Atal Bihari Vajpayee with a Padma Vibhushan. The announcement coincided with the tense climax of the then BJP president Murli Manohar Joshi's Ekta Yatra that involved unfurling the national tricolour in a deserted Lal Chowk in Srinagar.

It was an astonishingly large-hearted gesture because state honours for politicians have invariably been on partisan considerations. Within the Congress, Rao must have drawn flak for honouring the tallest leader of a party that was waging a political war against the government.

Vajpayee wasn't part of the small group that was airlifted by the administration from Udhampur to facilitate a symbolic flag-hoisting-Narendra Modi. Street marches and agitations, indispensable features of life in opposition, wasn't Atal ji's style. Although compelled to make token appearances, he preferred the stage at a public meeting or the floor of Parliament to come into his own. His reputation as a public speaker far exceeded the influence of the Jana Sangh. As a 14-year-old, I recall making a special effort to hear him speaking at a modest sized public meeting in Calcutta in 1970. There's nothing of the subject of his speech I remember but two facets of Vajpayee the orator were etched into my consciousness: his word play, particularly the use of the double entendre, and his sparkling wit.

Atal ji's oratory reflected his political personality: he was big-hearted and loved life. That made him a tall leader but an awkward politician. A good politician has to be attentive to details and willing to imbibe an equal dose of drudgery and excitement. Atal ji was impatient of details. He barely remembered names and was bored by endless committee meetings. He survived long stints as presidents of both the Jana Sangh and BJP courtesy individuals such as Sunder Singh Bhandari, Kushabhau Thakre and, of course, LK Advani. As prime minister, he was disproportionately dependent on his Principal Secretary Brajesh Mishra to read his mind and do the needful.

So inadequate was his attention to detail that he often missed out on the cross-currents within the party. It is said that Nityanand Swami was appointed the first chief minister of Uttarakhand because that was the only name Atal ji was familiar with from the Jana Sangh days.

In one-on-one meetings, even those involving international leaders, Atal ji was tongue-tied, preferring to limit himself to cryptic observations that more often than not were razor sharp in precision. I once had the disconcerting experience of a 30-minute meeting where he spoke barely a few sentences, leaving me to hold forth on a range of subjects with an occasional grunt signalling approval or otherwise.

This, I was told, was nothing unusual. Atal ji's method of relaxation as prime minister was often to sit over a glass of masala Coke with close friends such as Bhairon Singh Shekhawat and Appa Ghatate. The gatherings were not marked by prolonged spells of utter silence.

However, underneath this seemingly reclusive individual lurked a very fine and astute political mind. Atal ji conducted his politics on the strength of instinct. Surveys and ideological posturing left him unmoved. At an election planning meeting in 1993 for the state election in Uttar Pradesh he glanced at the Ayodhya-centric posters that had been painstakingly prepared and asked: "Where is any reference to power, water and education?" He was right. An excessively Hindutva campaign cost the BJP that election. Long years of experience had taught him that voters were unlikely to be moved by abstract ideas alone. He was always mindful of the big picture.

Atal ji governed by instinct. He was an old-fashioned liberal who combined a commitment to personal freedom with a passion for economic freedom. At the same time he was also an enlightened conservative who believed that change had to be accompanied by an adherence to rootedness. This may explain his deep love for Hindi literature and his very old-world courteousness. Occasionally, just occasionally, and very strategically he threw a tantrum. But even these-like the famous "neither tired nor retired" remark that ended all speculation of a mid-term resignation-were marked with spectacular civility and, often, laced with a humorous aside.

Atal ji served India with commitment and oodles of style. It is only fitting that he has been honoured with a Bharat Ratna. Ideally, it should have come much earlier.

By Swapan Dasgupta

Hindustan Times, December 25, 2014

Friday, December 19, 2014

Turbulence ahead - Narendra Modi must shift the BJP's centre of gravity to governance

By Swapan Dasgupta

 

The past fortnight has witnessed a series of conflicting trends in the political arena that has seemingly jeopardised the clarity that was expected after the categorical verdict in last May’s general election. 

 

First, on the economic front—and despite the apprehensions of some of Prime Minister Narendra Modi’s more over-zealous backers—the government appears to have moved quite decisively. Apart from the popular achievement of having achieved near-zero inflation that was also a consequence of spectacular good fortune—the sharp fall in global oil prices—there has been positive movement on one of the government’s stated objectives: improving the ease of doing business in India. From managing a broad agreement on the contours of the much-delayed Goods and Services Tax to introducing a note of pragmatism in the Ministry of Environment, the Modi government appears to have largely satisfied the lofty expectations of the markets that had suffered from a prolonged bout of depression. 

 

Naturally, much more needs to be done if the improvement in the ease of doing business in India translates seamlessly into success for Modi’s Make in India policy. Domestic capital is particularly anxious that Reserve Bank of India Governor Raghuram Rajan modifies his inflation fundamentalism and effects a significant lowering of interest rates to prop up a sluggish manufacturing sector. There has been a difference of opinion between Rajan and the Ministry of Finance but this divergence has so far been marked by gentlemanly behaviour on both sides and hasn’t contributed to an ugly spat. Industry is also keen that Finance Minister Arun Jaitley act on his professed commitment to modify some of the more non-monetary dimensions of the neo-Luddite Land Acquisition Bill that was enacted by the Manmohan Singh government in its last year. 

 

Regardless of the formidable challenges in the path of India realising its true economic potential, it is heartening that the Prime Minister has not lost sight of the government’s principal task. In this context, Modi’s speech to the BJP Parliamentary Party on December 16 was significant. Angry with colleagues who had been speaking out of turn and raising extraneous issues in public, the Prime Minister had to remind MPs that they had been elected to raise people’s living standards, create opportunities and transform India into a global power of consequence. He was clear that he could not deviate from this agenda, not even if he wanted to. 

 

Modi’s outburst was occasioned by an emerging trend that, apart from disrupting Parliament repeatedly this Winter Session, has attracted speculation over the ‘real’ agenda of the BJP government. 

 

To a modest extent, the furore in Parliament over Sadhvi Niranjan Jyoti’s utterances at a public meeting, the ghar vyapasi programme planned by Hindu groups in Aligarh and the non-holiday for Kendriya Vidyalayas over Christmas was a result of media activism. The BJP cannot be entirely faulted for nurturing a conspiracy theory that the traditionally hostile and loosely Left-liberal leaning English language media will do its utmost to show the government in a poor light. Yet, while over-playing the utterances of loose cannons does distort the big picture, the government has to be mindful that there are tensions within the wider ‘parivar’ over what constitutes the primary agenda of the Modi government.

 

The larger consensus is that the electorate reposed its faith in the leadership on two counts. The Indian voter believed that Modi’s personal attributes—his fanatical dedication to a work culture and his decisiveness—were an answer to a decade of weak and unfocussed leadership. There was, at the same time, a shared confidence over Modi’s unwavering development agenda. As a rule, and unlike western democracies, Indian voters don’t like being cluttered with policy details and prefer generalities, leaving the leadership to attend to the nuts and bolts. The generalities that found favour, however, had very little to do with either questions of identity and assertive nationalism. 

 

In a large country, however, there are significant departures from aggregation. The BJP, like most mass parties, isn’t really cadre based when it comes to electoral politics. However, it is undeniable that the greatest chunk of its activists—the karyakartas that figure so prominently in the party’s political imagery—have a broad commitment to Hindu nationalism. The BJP’s victory in May and the good showing in the Maharashtra and Haryana Assembly polls has convinced some of the more marginalised sections of the parivar that the moment has arrived to press ahead with an ideological reorientation of the country. Viewing Modi as an instrument of convenience, this section is anxious to take advantage of a friendly Centre to press ahead with its pet schemes. Hitherto, Modi has placated this fringe with token, inconsequential sops such as appointments in bodies linked to education, but they now want more. 

 

It would seem that the experience of the Winter Session of Parliament is likely to trigger an internal rejig in the BJP. With the Opposition having a numerical upper hand in the Rajya Sabha—and this disadvantage will persist until late-2016—it is now clear that important economic legislation will have to be negotiated every inch of the way. The Opposition has realised that it possesses the ability to blackmail the government and it will be reluctant to relinquish that advantage. This in turn implies that Modi’s political managers will have to use a combination of persuasion and threat to keep the hotheads in check. In the longer term, Modi will have to shift the political centre of gravity in the BJP towards development and governance. The moves to making BJP membership more open—membership through a missed call—constitutes a small step. In the short term Modi will have to find imaginative solutions to the possible problem of matching the priorities of activists with that of the average voter. 

 

Economic growth presupposed a large measure of social stability; radical ruptures necessitate social turbulence. It is difficult to reconcile both, except through a process of regimentation that is so very un-Indian and even un-Hindu.

 

The final trend that has the potential of creating a political byway is the re-emergence of Islamist terrorism in a virulent form. It may be unduly alarmist to suggest that either the lone wolf attacks in Ottawa and Sydney or the ghastly massacre of schoolchildren in Peshawar could be replicated in India. At the same time, it is impossible to underestimate the grotesque impact of the brazen cruelty that is the hallmark of the Islamic State of Iraq and Syria (ISIS) on dysfunctional minds. The Bengali Muslim man arrested in Bengaluru for operating a pro-ISIS twitter handle may well be a loner, disinclined to pick up a gun. But there are nearly 100 or more Indian citizens who have signed up with the ISIS in the war zone, and not all of them are engaged in cleaning lavatories—as the lone defector was. The possible impact of their bravado on impressionable fed on a diet of victimhood is a source of worry. 

 

Security in India is uneven and the government is likely to step up efforts to plug as many loopholes as possible. This exercise is certain to give priority to pre-emptive policing, a phenomenon that creates localised tensions and a sense of victimhood—the aftermath of the Burdwan blasts being a case in point. 

 

For the Modi government the next few months are certain to be challenging. The government seems clear on its priorities but there are significant roadblocks that have to be negotiated calmly. It is important to ensure that subterranean currents remain firmly underground and don’t create diversions from the path the electorate voted to travel down. 

The Telegraph, December 19, 2014

Friday, December 5, 2014

Waiting for a big bang - The government cannot afford the patience of the long-term

By Swapan Dasgupta

 

Last Tuesday’s bi-monthly monetary policy review by the Reserve Bank of India was—by the stodgy standards of Central Banks—a little unusual: it was preceded by competitive proclamations. 

 

Finance Minister Arun Jaitley went public barely two days before the announcement pressing the RBI to bring down interest rates, now that inflation had fallen to a more benign level. India’s industry bodies that stressed the need to give manufacturing a boost by lowering the cost of money backed him vocally. RBI Governor Raghuram Rajan didn’t personally jump into the debate with the Ministry of Finance and the business community. However, there was an unmistakable impression in Mumbai’s financial community that a clutch of economists linked to foreign financial institutions were engaged in a proxy battle against the government on behalf of the Governor. A portrait of Rajan as the custodian of India’s long-term interests battling against neo-literate politicians and moneybags was disingenuously painted. 

 

There is absolutely nothing to suggest that Rajan was in any way connected to this counter-offensive by fellow economists who, in any case, were also concerned with appropriate strategies to bolster India’s credentials as a growth centre. Indeed, the Governor was very measured in replying to media queries about the Finance Minister’s plea for a cut in interest rates: “We are very respectful of the views of the government and we try and accommodate these views to the extent we can…We are not combatants; we are on the same side.” However, this tact wasn’t always on display by those who saw the RBI’s decision to defer a rate cut till 2015 as a turf war. Take the comments of Per Hammarlund, chief emerging markets strategist at Skandinaviska Enskilda Banken AB. According to this Swedish banker (as quoted in Mint) “Since Rajan became head of RBI, we see the central bank independence increasing… (and) he’s one of the few now definitely in a position where he can speak out more forcefully against the government.”

 

Whether speaking out “forcefully against the government” is part of the RBI Governor’s job description seems contentious. No doubt there are those in the political arena who would love to witness an ugly clash between the Narendra Modi government and the RBI Governor who was appointed by the earlier regime. For the moment, however, neither side is rising to the bait. From the government’s perspective, the RBI decision to put off rate cuts till early-2015 is disappointing but not catastrophic. The RBI has proclaimed its commitment to a low interest economy, which is encouraging. At the same time, the sharp fall in global oil prices has given the government sufficient elbow room to cater to its election promise of bringing down inflation. For a party that banks quite heavily on its middle and aspirational class supporters, the sharp fall in the retail prices of diesel, petrol and cooking gas has been a great bonanza, especially with three state Assembly elections underway. In hindsight, Jaitley may well savour the impact of a 100 bps cut in January or March, around the time of the Union Budget, rather than the nominal 25 bps reduction that may have resulted from any announcement last Tuesday. 

 

Overall, the Modi government has been extremely lucky in a number of ways. About six weeks ago, it seemed that that the GDP growth for the quarter would at best touch five per cent—a fall from the 5.7 per cent growth registered in the previous quarter. That the final figure was 5.3 per cent suggests that, despite the unending sluggishness of Indian agriculture, there has been a marked improvement in the fortunes of the services sector. As things stand, India seems decently poised to cross six per cent annual growth by the time the Modi regime celebrates one year in power. 

 

For the government, however, the GDP figures are a small consolation. In the summer of 2014, Modi received a resounding mandate on two counts: to bring decisiveness and coherence into the government and to bring about a discernable improvement in the quality of life of people. There may have been other factors but those were subsidiary to the main thrust of popular expectations. In particular, Modi was aware that the enthusiasm of the 18 to 35-year age group for him was centred on expectation of opportunities. With approximately one million new entrants into the job market each month, Modi cannot afford jobless growth. It is this silent but massive political pressure on the government that may explain why Jaitley can ill afford to share Rajan’s preoccupation with the long-term. Politicians need to deliver results fast, before disappointment sets in. 

 

After six months in power, the economic thrust of the Modi government can be very clearly discerned. It comprises two central (and interlinked) objectives. First, the government is seeking to dramatically improve the ease of doing business in India. Apart from reducing the procedural complications that accompany business, there is an emphasis on simplifying taxation and removing statutory obstacles in the path of entrepreneurship. The recent changes in labour legislation have made life easier for small entrepreneurs. 

 

Secondly, Modi’s “Make in India” mantra is geared exclusively towards domestic job creation. Reviving manufacturing is obviously at the heart of the exercise, but it extends to all other sectors that have the potential of generating employment. The easing of visa norms for visitors to India wasn’t, for example, only a ruse to draw cheers from Overseas Indians in New York and Sydney. It is inextricably linked to adding to India’s inward flow of overseas visitors that, in turn, creates large numbers of jobs in the services sector. Likewise, the new Defence Minister Manohar Parrikar has been entrusted with the lofty mission of creating a manufacturing base for armaments and ancillaries within India. 

 

For the moment, both industry and the markets have responded to the government’s economic thrust quite exuberantly. If the stock market graph and future projections are any guide, India is beginning to think big and attempting to make up for lost time. However, after six months, there is one major problem: the mood of optimism, indeed over-optimism, has yet to be felt on the ground. In Mumbai, for example, there is a nagging concern that capital expenditure of corporates (both indigenous and foreign) remains below expectations. In plain terms this means that capital is still adopting a wait-and-watch attitude. 

 

It is entirely possible that two major initiatives can change the mood dramatically. The first is the proposed changes to the Land Acquisition Act that Jaitley has often spoken about. The second is the expectation that the much-delayed Goods and Services Tax will be enacted and made operational by April 1, 2016. Yet, both these measures face political obstacles, not least of which is the government’s numerical deficit in the Rajya Sabha. The BJP and its allies will be in a legislative comfort zone by mid-2016. But 18 months is too long a time to persist with modest incremental reforms. The present political support for the Prime Minister could turn into exasperation if there isn’t evidence of forward movement in the next 18 months. 

 

What the government needs at this juncture is one big bang announcement of a landmark project, preferably in the manufacturing sector. It was the shifting of the Nano plant of Tata Motors to Gujarat in 2008 that proved a game-changer for the then Chief Minister Modi. He needs something equally big and dramatic in the next two or three months to demonstrate that the groundwork is beginning to yield returns. That is why the government can ill afford the patience of the long term. 

The Telegraph, December 5, 2014