Well Started, But Be Careful

While Modi is reclaiming India’s position as Vishwaguru and his economic inclusion programmes are necessary for citizens’ dignified living, the Finance and Commerce Ministries must not talk in two voices and the government must keep the WPI and CPI in check.

Before analysing the performance of the government during the last one year, it is important to keep two facts in mind: One- the comparative advantage of 10 years of an almost paralytic predecessor government. Two, which is to some extent closely associated with the first- hype of expectations generated during the parliamentary elections. This works to the government’s disadvantage because Modi came out like a messiah as the general public saw in him as an ultimate solution to all problems — be it of national security, inflation, corruption, sexual harassment of women or the country’s standing in the comity of nations.

To be fair to the government, compared to the non-governance of the previous decade, definitely much has been done during the last one year.

The greatest contribution of Prime Minister Modi is making every citizen proud of his identity as an Indian. Irrespective of senseless comments by the opposition, the prime minister’s visit to a number of countries within a year — covering a wide spectrum in international diplomacy from China to the US to Russia to Japan and many smaller nations in between — created a space for India, reminding one of the golden era of leadership which had, till recently, remained a part of history textbooks serving the purpose of motivating growing school children.

Modi has proved that India is capable of being treated on par with the top nations of the world. Of course, he has the advantage of the growing economic clout of India and at the same time the diminishing economic clout of industrialised countries. Today, the so-called advanced nations can no longer afford to ignore India. Modi has rightly recognised our inherent strength and started interacting with world leaders with an assertive body language unlike his predecessors.

The Swacch Bharat Abhiyan is another major step initiated by the government which, if taken to its logical end, will help in realising the citizen’s purpose of living in dignity. At least, it will create a sense of dignified living as a matter of right. Its economic impact is a spread-effect that cannot be ignored.

Continuing with the recognition of the common man’s right to live with dignity are two other noble schemes, namely the  Jan Dhan Yojana and Atal Pension Scheme. The former is not only a step in the direction of empowering the neglected, but also a major economic reform measure as it would ultimately result in the rationalisation of subsidies. Without making noise about the intention to withdraw subsidy support to the undeserved, he has taken a decisive step in this direction.

A comfortable life beyond retirement has been the privilege of government employees and their families till now. The Modi government has identified the need to secure living of the workforce in the unorganised sector. Hereafter, anybody within the age group of 18-40 can ensure a pension of Rs 5,000 a month on attaining 60 years of age. We are also moving towards the comfort zone of developed countries in terms of social security.

Another great step initiated by the government is in the functioning of the government machinery. By ensuring that his ministers set an example, he has succeeded in ensuring that government employees are in their seats on time.

Unfortunately, neither Modi’s ministers nor party spokespersons are articulate enough to carry the government’s message to the general public. In a democracy it is not enough to initiate the right measures. More than that, it is important to ensure the publics confidence.

There have been certain developments that the government cannot ignore. Developments in the US, the Euro zone as well as oil-exporting countries are bound to have adverse effects in terms of the external value of rupee, current account deficit and, possibly, employment in certain export-dependent industries unless corrective measures are initiated in time. Curiously, conflicting signals are coming from related economic ministries. For instance, while Finance Minister Arun Jaitley shows concern of attracting investors, the same is not reflected in Commerce Minister Nirmala Sitharaman’s stand. The Economy cannot be run through isolated approaches, let alone by confining oneself within silos.

Another development that needs urgent government attention is the negative trend in the Wholesale Price Index. This phenomenon is more dangerous than inflation. A trend in price level of around 2-3 per cent is crucial for the economy to move forward. It appears, those in the government and the ruling party are taking it as an achievement! Worse is the negative inflation in terms of the WPI continuing with the Consumer Price Index rising at around five per cent. To put it bluntly, this would mean a likely adverse effect on the employment front while consumers are made to pay higher prices in the market.

Similarly, industrial production has been continuously showing a decelerating trend for the last six months. Whatever may be the reasons behind this, the fact is that investors still have a wait-and-watch approach despite their continuing confidence in the Prime Minister. There is an urgent need to address the concerns of investors- both domestic and foreign. Corrective steps in time may still help in preventing impending ill effects on economy. Let us sincerely hope that Prime Minister Narendra Modi will measure up to the expectations and lead the country towards a respectable place in the international community.