Ticking all the right boxes

By announcing the creation of a “new institution” to replace the Planning Commission in his Independence Day address, Prime Minister Narendra Modi has virtually consigned to the flames one of the last vestiges of Nehruvian socialism. True, the Planning Commission itself isn’t what it was in the era of highly centralised, predominantly public sector-led planning. The Commission’s role is now largely limited to formulating long-term growth plans, devising sectoral targets for meeting these, and acting as an intermediary between the States and Central Ministries. Its approach, too, has changed to one of ‘indicative planning’, aiming at indirectly influencing decisions by market players rather than fixing mandatory production quotas. The “new institution”, according to Modi, will respect the country’s federal structure and emphasise public-private partnerships. In substance, this may not mark a radical departure from what the Commission has been doing. Yet, the symbolism in formally scrapping the 64-year-old body that smacked of dirigisme in an Independence Day address is unmissable.

Another notable takeaway from Modi’s speech was the stress on manufacturing, whose share in the country’s GDP has slipped to below 15 per cent. The Prime Minister’s stress on the need to make things in India and reduce import dependence, especially in electronic/IT products, cannot be faulted. While this may, on the face of it, suggest going back to the discredited import substitution policies — contradictory to the spirit behind dismantling the Planning Commission — Modi’s message was clearly more positive. Far from restricting imports, this was an invitation to foreign investors to “come and make in India” everything from automobiles, chemicals and pharmaceuticals to satellites and submarines — an advertisement of India’s nascent competitive strengths in manufacturing. Realising this potential, however, requires simplification of our current land and land acquisition laws, a nationwide goods and services tax regime enabling firms to claim credit for taxes paid on all inputs, and fiscal consolidation that would result in redirection of wasteful government expenditure into productive physical and social infrastructure. The responsibility for implementing these ultimately lies with Modi’s own government.

Modi’s speech had many other positives — the focus on toilets for girl students and rural women, a scheme allowing every poor Indian to have a bank account along with a ₹1 lakh insurance, promoting skill development among the youth to harness India’s potential demographic dividend, and putting a moratorium on communal and other divisive activities for “ten years” at least. The sheer range and importance of the subjects covered — and the fact that it was delivered extempore — made this one of the most memorable Independence Day addresses by a Prime Minister in recent memory. But like all good speeches with substance, this one too will eventually be judged by how it translates talk into action. And action is what the New India wants.

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