It is a truth universally acknowledged that the pleasurable glow of a ‘honeymoon period’ yields ground inevitably to the daily rigours of a marriage; even a reaffirmation of marital vows after five years cannot quite recreate that same syrupy sentimentalism or that impulse to be forgiving of a partner’s lapses.
In that sense, after five years in power, the Narendra Modi government has, against the grain of the narrative, secured an emphatic revalidation of its mandate. However, even an adoring, old-faithful electorate — of the sorts it has evidently been able to marshal — may be less inclined to be charitable about its transgressions this time around. Of transgressions, there were many in the Bharatiya Janata Party-led National Democratic Alliance’s first term, but it says something about the feckless Opposition that it has proved incapable of capitalising on them.
As it takes fresh guard, therefore, the BJP, were it capable of reflection, would have many reasons to ponder with humility over the unlikely chance it has been given to set right the malefic effects of its policy failings. Not many political parties or formations that had such a patchy record of economic management are given an opportunity to redeem themselves, but the BJP, led by a muscular Modi, has been able to pull it off — largely on the strength of a last-minute change in the narrative to channel hyper-nationalist sentiments. The many welfarist schemes that the government delivered to the poorest citizens also appear to have helped shore up support, making in some instances a mockery of traditional politics based on caste arithmetic.
And while economic growth during the past two years may have faltered on the back of the disruptions wrought by the demonetisation measure of November 2016 and the imperfectly designed Goods and Services Tax regime, the NDA rode its luck — with low oil prices for much of its term in office — to deliver a low-inflation environment.
Even on the occasions when the BJP’s failings on the economic front were egregious — as with demonetisation — the party was able to win the narrative merely on the strength of the perception that while Modi’s method may have been flawed, his motives were pure. It is a testament to the fact that what Indian voters seek in their leaders is not perfection, but mere earnestness of purpose.
Modi’s image of being personally incorruptible could not be dented despite Rahul Gandhi’s shrill campaign centred around the #ChowkidarChorHai slogan. In the end, it was Modi’s persona that carried the day for the BJP, and the victory came about despite the NDA’s economic record, not because of it.
But this time around, the BJP will not have the luxury of a honeymoon period, and in its second term, it will be held to a higher standard of governance.
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The challenges on the economic front are self-evident. Although the NDA government has maintained a modicum of macro-economic stability, and has even managed to rein in the Central fiscal deficit, this has been achieved with a bit of sleight of hand. Disinvestment figures have been massaged by passing the buck to state-owned entities. Additionally, the combined deficit of the states has grown in recent years, to the point where the Centre’s good work risks being undone.
Additionally, although the dis-inflationary environment has much to commend, it has come about at the cost of rural distress, with farmers unable to secure a reasonable price for their produce. Although the Modi government’s market-based interventions in respect of crop insurance are credit-worthy, it has not yet made sufficient headway on its promise to double farmers’ incomes by 2022.
The challenges in setting right the financial sector are somewhat more strenuous. The build-up of non-performing assets in the banking system — which are a legacy of reckless lending during the go-go years of UPA II — has been compounded in recent times by the spread of the contagion to the non-banking financial companies. In its first term, the Modi government proved incapable of resisting the temptation to throw good money after bad in the futile enterprise of bailing out tottering enterprises. There is no reason to believe that it will summon up the reserves of resolve in its second term.
That, in a nutshell, is the limitation of this government, one that it will likely have to overcome if it is to avert a complacency that typically becomes manifest in a party’s second inning. It’s fair to say that Modi began his first term with a genuine effort at harnessing market forces, but he lost his nerve fairly early on, and never quite found it again. And even though his government made no effort to slide down the slippery slope to match the populism of the Opposition promises, it appears to have drawn the wrong lessons of political survival. Welfarism may well be what brings in the votes in the end, but unless it rests on a foundation of higher growth — unmassaged by data fudging — it is inherently unsustainable. The Modi government will have to rein in some of the impulses that contributed to its policy failings; only then can it rectify their impact in its second term.
Venky Vembu is Associate Editor, BusinessLine
E-mail: venky.vembu@thehindu.co.in