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PM signals growth mantra for new govt: the end of incrementalism

Prime Minister Narendra Modi at the Red Fort on Thursday (Pradeep Gaur/Mint)Premium
Prime Minister Narendra Modi at the Red Fort on Thursday (Pradeep Gaur/Mint)

  • Modi says he is committed to improving the ease of living for all, will ensure 100 trillion investment in infra
  • He says within weeks of his government taking charge after parliamentary elections in May, it struck down 60 obsolete statutes and announced new schemes such as pension for shopkeepers

NEW DELHI : Prime Minister Narendra Modi in his Independence Day speech signalled what would be the guiding principle of his government’s pursuit of development and better living standards for people—end of incrementalism.

Speaking from the ramparts of Red Fort, Modi listed out the big tasks that he wanted to do, including everything from making Indian farmers a force in global markets to building houses for 20 million poor people and ensuring access to clean water to 150 million rural households to making India a $5 trillion economy over the next few years. This, and numerous other development targets, according to Modi, cannot be achieved with a business-as-usual mindset.

“Our nation must march forward, but the country cannot now wait much longer for incremental progress, we will have to take a big leap. We will have to change our thinking too," Modi said.

Indicating an appetite for quick and far-reaching decisions, the Prime Minister said that his government was committed to ensuring 100 trillion investment for modern infrastructure and 3.5 trillion investment on improving people’s access to drinking water.

One of Modi’s achievements as an administrator is to energize India’s vast, steely and once slow-moving bureaucratic machinery into one that can quickly be manoeuvred. One of the ways in which he achieved this is by allocating different ministries with inter-linkages to the same minister. Modi is also known for his strong oversight of policy-making which forces different ministries to bury their differences and agree on policies, a move that critics find as a centralized decision-making process.

Modi said that within weeks of his government taking charge after parliamentary elections in May, it struck down 60 obsolete statutes and announced new schemes such as pension for shopkeepers to improve ease of living. He also said that in his previous term, 1,450 laws had been struck down so that people are not burdened by the presence of the state in their lives. One area the National Democratic Alliance (NDA) government could not make much progress is land reforms, something that it may try again once it gets majority in the Upper House. At present, the NDA regime is in minority in Rajya Sabha.

Experts say making 100 trillion of investments into infrastructure is a big task. “What the Prime Minister has articulated is that we need to have policy measures which will help boost the growth trajectory of the country structurally through increased investments as well as through ease of living. While the current government’s ability to execute schemes for the poor has been demonstrated convincingly in its previous term in office, more clarity is needed on how we go about in realizing the goal of making massive investments in infrastructure," said N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy, a think tank.

Modi also sought to reassure businesses that they will be treated with respect. “Wealth creation is a great national service. Let us never see wealth creators with suspicion. Only when wealth is created, wealth will be distributed. Wealth creation is absolutely essential. Those who create wealth are India’s wealth and we respect them," the Prime Minister said. Modi’s assurance of respectful treatment to businessmen comes amid charges levelled by a few industry executives about harassment by tax officials, a charge that the income-tax department refutes.

“The Prime Minister made it a point to talk positively about wealth creators. His encouraging words on the ease of doing business and 100 trillion infrastructure missions will go a long way to reassure entrepreneurs about growth prospects," said Chandrajit Banerjee, director general of industry chamber Confederation of Indian Industry (CII).

The Prime Minister said he was committed not only to improving the ease of doing business in India but also to improving the ease of living.

Modi also said that while there should not be excessive presence of the state in the lives of individuals, who should be free to live their lives without any interference from the state, people should also not feel the absence of government when they need it.

In recent weeks, the Modi government has shown willingness to reconsider policy measures that have backfired. That includes a rethink on the harsh penalty provisions for corporate social responsibility obligations proposed in the Companies Act through amendments cleared earlier this month. The government has also launched a crackdown on corrupt tax officials.

The Prime Minister also flagged in his speech a new priority for his administration’s second term in office—controlling the explosive growth in population—a trend that, if left unchecked, could go against the efforts to bring millions of people out of poverty and undo the benefits of higher welfare spending for the poor. This is the first time the government is acknowledging the need for a discussion on the need for checking the population growth rate in recent history.

A report from the United Nations said in June that around 2027, India will overtake China as the world’s most populous country. The country now has a population of about 1.37 billion people.

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