India under Narendra Modi: a midterm appraisal6 min read . Updated: 03 Jun 2016, 01:49 AM IST
Two years since riding to power on the back of an overwhelming mandate, panellists evaluate the NDA government's performance
Singapore: The National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi assumed office on 26 May 2014 after being voted to power by a large majority in the 16th general election to the lower House (Lok Sabha) of the Indian Parliament. It was an overwhelming mandate.
There were great expectations from the Modi government when it came to power, particularly in economic reforms, domestic governance and foreign policy. Two years since, the government has faced huge challenges, including difficulty in the passage of economic legislation in Parliament, rising incidence of religious intolerance, and the lack of institutional reform.
Signature initiatives of the Modi government such as Make in India and Swachh Bharat (Clean India) are yet to attract as much investments as they were expected to. While economic growth remains at a healthy rate of 7.6%, and India is attracting a record foreign direct investment (FDI) last year, the micro picture does not look as positive.
The Modi government’s biggest success, according to some, has been in an attempt to make India more business-friendly, reduce bureaucracy, improve transparency, and embark on a vigorous foreign policy path, yielding some results.
The Institute of South Asian Studies, National University of Singapore, last week hosted a timely debate—titled: India under Modi: A Midterm Appraisal of the Bharatiya Janata Party government—to do a critical evaluation of this government’s performance over the past two years.
Karan Thapar, president, Infotainment Television (ITV), moderated the discussion with Shashi Tharoor, member of Parliament, Lok Sabha; Vinod Rai, former comptroller and auditor general of India; Pratap Bhanu Mehta, president, Centre for Policy Research; Ashok Malik, distinguished fellow, Observer Research Foundation, and Surjit Bhalla, chairman, Oxus Investments, New Delhi.
The discussion kicked off with the hotly debated issue of rising intolerance.
Thapar pointed out that in the past two years, there was a common thread of intolerance in the country, including Ghar Wapsi (homecoming), Love Jihad, beef ban, campaigns against anti-nationalism and Bharat Mata Ki Jai (Victory to Mother India). He asked whether these were disparate unconnected events that happened coincidentally or was there a common thread to these troubling events?
“There is irrefutable evidence that the RSS (Rashtriya Swayamsewak Sangh, the BJP’s ideological parent), which represents a certain strand of Hindu chauvinism, is now given a free rein under Mr. Modi. This is derailing India, and the Indian economy," said Tharoor.
“The debate on tolerance will overshadow everything else because it is the lifeblood of Indian democracy," he said.
He added: “What is even more troubling is that when Modi came to power, the single biggest challenge India faced was a deep institutional crisis whereby most institutions of state had lost credibility," he said.
This trend has continued, according to him.
“Can we name even one institution of the state today that has improved—whether it is the courts of law, CBI (Central Bureau of Investigation), National Investigation Agency, or Parliament? The answer is no."
The issue of the vastly different picture between the macro and micro economic picture of India was also debated.
While the macro picture of the Indian economy looks positive today—with the nation growing at 7.6%, inflation at 5.3%; current and fiscal account deficits under check and India attracting a record FDI last year of $51 billion—the micro picture points out that private investment is flat, bank lending is negligible; corporate growth and earnings have been declining; and consumer demand and job creation is not growing adequately as expected.
“While private investment has been low, public investment has risen in the last two years," said Bhalla. “Private investment, too, will pick up soon."
“There is no doubt the Indian economy is on a positive trajectory," he added. “GDP growth and inflation has been the second best when compared with the past 20 years. This is no insignificant achievement."
Another panellist, Mallik, agreed, saying that things are getting better in India, in large part, due to a business-friendly government.
He pointed out that it was also important to take into account that the Modi government had taken the critical step of fostering a genuine competitiveness between states for ranks of ease of doing business.
“This is clearly paying dividends. What is more important is where Indian states rank vis-a-vis each other, and not where India ranks with the world," he said.
Besides secularism and institutional reform, a key theme that was probed was the difficulty Modi has faced in the passage of economic legislation in Parliament and his personal role in it as the leader of the ruling party.
“The BJP held up the Congress when it was in opposition and now the Congress is doing the same. Is revenge sweet?" Thapar asked.
“The obstructionism debate that the Congress is accused of is excessive," he said. “The BJP simply does not reach out enough and compromise enough to get things done."
An example he gave was the goods and services tax (GST) bill debate.
“They amended the GST for naked partisan political purposes. Their bill—if passed—would not even add 0.01% to the economy."
He added that it was preposterous that the BJP has proposed an additional 1% tax that producer states can levy on consumer states.
“The EU is one common market and 29 sovereign nations, while India is one sovereign nation and twenty-nine uncommon markets," he said. “The BJP has destroyed the single-market idea."
The issue of non-performing assets was also debated. Thapar asked the first chairman of the Bank Bureau why this issue had spiralled out of control, and if it could be resolved in the near future.
“This problem of non-performing assets is faced by many major economies across the globe and not restricted to India alone," said Rai.
“Based on telephone calls made to the top government officials in the previous government, companies that mushroomed out of nowhere took loans from banks, set up infrastructure projects in which they had no domain experience, overleveraged themselves and found themselves in corporate debt restructuring."
He noted that while the clean-up will take some time due to the extent of the mess left over by the previous regime, “India is slowly reversing the trend".
“We were ranked 142 after India’s Independence," he said. “If we can go up 12 positions in two years, that is a remarkable achievement."
Mehta disagreed. He said that ease of doing business was simply a parlour game and that there are real issues that make a country competitive.
“First, energy costs. The Modi government is trying, and has an ambitious plan to make 24x7 electricity available, but we are a long way off."
The second competitiveness indicator, Mehta pointed out, is infrastructure.
“The road and the port sector is indeed improving; railway governance is also improving; but the investment is just not coming."
The third critical variable, according to him, of a nation’s competitiveness, is human resources, and fourth healthcare.
“This government is a walking disaster in education, and does not know where to start in healthcare," he remarked.
Last element of competitiveness, Mehta argued, is quality of life.
“One key reason why Indian capital is moving abroad, like Chinese capital, is because we have heavily polluted cities. All these are real issues to benchmark Modi government’s performance in the last two years, and not surface indicators like the World Bank rankings of ease of doing business."