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Business News/ Opinion / Views/  Opinion | A hundred days that shook the country
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Opinion | A hundred days that shook the country

In its first 100 days, the Modi 2.0 government has made some dramatic political decisions to shake up the status quo. That boldness, however, has been missing on the economic front

 (Photo: Reuters)Premium
(Photo: Reuters)

As the Narendra Modi government completes 100 days of its second term in office, armed with the confidence of an enhanced majority in Parliament, it’s time to sit back and catch your breath. Such has been the whirlwind of decisions taken. It is also an occasion for some bewilderment that a government which knows exactly what it’s doing in politics and external affairs should be at something of a loose end over the economy. The big bang move, so to speak, has been the withdrawal of Jammu and Kashmir’s autonomy provisions under Article 370, executed with a boldness unseen in Independent India. Hearts and minds in the Valley are still to be convincingly won over, but full integration of the northern-most region with the rest of the country is now non-negotiable. This is what Modi’s Bharatiya Janata Party had promised, and it has been delivered—to popular reception across India. To fulfil other promises, action has been stepped up against corruption, most dramatically in cases involving high-profile individuals, though the legal processes being followed could do with more transparency. Together with stricter legislation against terrorism and a flurry of enactments, big and small, the government has lost little time in reshaping Indian laws towards its vision of a “new India".

Unfortunately, the boldness and ingenuity displayed in politics has been marred by signs of dithering over what needs to be done to achieve the country’s goal of a $5 trillion economy by 2024-25. Modi’s first term might largely have been spent on creating a framework for a rule-abiding India, but the second one called for a closer embrace of market economics. This is missing. The Union budget of 5 July was expected to unleash animal spirits among private investors. It ended up doing the opposite, with a heavier burden of taxation and mandatory responsibilities imposed on them, even as trillions of rupees were poured into a clutch of social welfare schemes, many of them unproductive. While much of the specific damage has been undone since, the economy’s travails have grown more apparent, even as business sentiment struggles to recover.

The earlier government of Manmohan Singh had suffered not just from policy paralysis, as critics called it, but also from different administrative arms talking in various voices. The Modi government can never be accused of any kind of stasis. However, its coherence on matters of policy has begun to reveal some cracks, notably on the issuance of sovereign bonds abroad and the proposed transition of India’s transport system to electric vehicles. No less odd are the unclear explanations offered for some of its decisions that do have good economic justifications. Its case for the transfer of excess central bank reserves to the exchequer, for example, could have been better made. It has only been 100 days so far, though, and there is time for the government to improve its communication. To its credit, it has shown some alacrity in getting to grips with a situation, taking corrective action, and responding to changed circumstances. The effort to present India as a manufacturing hub, aimed at global companies looking to shift production out of China, testifies to that. What the Modi 2.0 dispensation needs most, however, is a bold and cohesive plan for economic reforms, one that looks at the economy as a whole and not as a sum of its parts.

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Published: 05 Sep 2019, 10:29 PM IST
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