Modi and the year ahead

A year may be a lifetime in politics, but is a relatively short span of time to judge a government elected for five. Especially the Narendra Modi government, which swept to power with the largest mandate in a generation, on the back of a tidal wave of expectations unleashed by the charismatic but polarising persona of the Prime Minister himself. Delivering on expectations, which were raised sky-high during the election campaign, is his government’s biggest challenge. On the economic front, this has resulted in criticism about the lack of big bang reform, but Modi’s gradualist approach is pragmatic and possibly more effective in the long run in altering an economy the size of India’s. When it came to power, the NDA was faced with stalled growth, surging deficits, and investments, particularly in infrastructure, caught in a logjam of corruption scandals and bureaucratic delay. Since then, growth has revived and inflation is below even the Reserve Bank of India’s target. While extraneous factors have contributed in fair measure to this rebound, there is a positive undercurrent that is driven by structural changes. Natural resources like coal or spectrum have been auctioned through a transparent system, mining has been revived with the new Mines and Minerals Act, and there has been an attempt to alter the dynamics of Centre-State relations, with the reform of the Planning Commission and greater devolution of funds to States. Remarkably, corruption scandals have receded which, going by the UPA’s track record, seems like something of an achievement.

While his popularity remains very high, the mismatch between expectation and reality has caught up with Modi, his approval levels dipping below the 80 per cent-plus levels he enjoyed this time last year. The millions of jobs India’s youth were hoping for have not been created. Industry, which expected this government to slash lending rates and step up spending to revive their fortunes, has found the limitations placed by external factors and the government’s own fiscal constraints, difficult to digest. A poor monsoon could worsen the agrarian crisis. On the political front, the reform process has been stalled thanks to the Opposition’s refusal to play ball. Politically managing workarounds, including garnering issue-based support from regional parties, will be key to how the reform process moves forward.

Like batsmen who take fresh guard after scoring a century, the Modi government needs to focus, not on past achievements, but the task ahead. Foremost among them will be to revive manufacturing, which is key to creating jobs on the scale that is needed to sustain the growth momentum. Agriculture needs focused intervention, ranging from a reworking of subsidies to rural livelihood support, and winning consensus on the Land Bill. The promise of ‘Digital India’ has to be actualised and the foundation laid by the Jan Dhan Yojana needs to be built upon with concrete deliverables at the end of the pipeline.

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