Over the last seven years, the Narendra Modi government did a lot of groundwork in improving the core competence of the Indian economy, improved regional standing and made India more secure from rising external threats. Even the Covid-19 pandemic years were used in injecting fresh blood in the long-forgotten manufacturing and export sector.
India expected such changes, and more, from a strong government. Going by the Chinese experience between 1980 and 2000, another decade of single-minded push can take the country to unassailable heights. Can India achieve that goal? Part of the answers will be clear in 2022.
The challenge ahead is not only in getting a strong government but also a government with strong resolve. Apparently, the ruling BJP face little competition at this juncture, and the Uttar Pradesh election will be a significant indicator of the results in the 2024 Lok Sabha. The rest is unknown.
No Coalition Please
From geopolitical perspectives, a single-party majority government is a necessity at this juncture. Leaving that aside, India has seen enough of the coalition experiments since 1977. True, some of the best decisions were made in this period. But, most of the time these governments were busy in the number game.
Focus on policy implementation and consistency were the two biggest casualties of this era, which in turn impacted India’s growth potential. The three-decade delay in de-nationalising coal mining since 1991, is a case in point.
P V Narasimha Rao-led Congress government was most blessed as it was 24-odd seats short of a majority. But, in the end, that small gap proved a nemesis for Rao. The architect of India’s economic freedom had to live with the ignominy of the JMM bribery scam. His government was replaced by a ‘third front’ circus that laid more foundation stones than ever.
The foundation stone of the recently completed Bogibeel bridge in Assam was laid by the H D Deve Gowda government in 1996. Implementation started in Atal Bihari Vajpayee-rule in 2002.
If Rao opened policy gates; Vajpayee created the template to make a modern, powerful India with shining infrastructure from the hinterlands to the border and beyond the border in Iran (Chabahar), Russia (International North-South Transport Corridor), Myanmar (Kaladan) and Thailand (Trilateral Highway).
The Manmohan Singh government needed to follow the template and implement the projects but it didn’t.
It is easy to blame the government in power for rising Chinese trade and investment in Nepal or Bangladesh. The truth remains, even the basic border trade infrastructure projects planned by Vajpayee were not implemented till Modi came to power. In the majority of the land borders, smaller neighbours had better infrastructure.
Less said about security is better. After coming to power in 2004, the UPA government backtracked from signing an umbrella defence pact with Sri Lanka. This was to please the state level coalition partner of its coalition partner in the Centre. Who helped China to consolidate its position in Sri Lanka and the Indian Ocean?
It is a pity that roads, tunnels, highways, rail connectivity planned by Vajpayee in the strategic northern and northeastern areas are implemented now. The nation should be ashamed that as sensitive a state as Arunachal Pradesh lived without a civil airport and round the year connectivity, until recently.
Since 2014 India has set up modern passenger and trade facilities in at least four gates with Nepal and Bangladesh. Road movement of auto-fuel was one of the major insecurities of Kathmandu. A pipeline was built in record time to deliver petroleum products in Nepal. The India-Bangladesh oil pipeline is expected to be completed this winter.
Need Strong Resolve
From the expansion of the gas grid (which was previously restricted to western India, parts of north and south); massive capacity building in the transport sector; policy focus in tapping digital opportunities and; targeted capacity-building in manufacturing through production-linked incentive (PLI) schemes — there has been ground changes in the economy in Modi-rule.
Piecemeal development (UPA enhanced power generation capacity, without capacity building in coal mining and power distribution) is replaced by holistic growth initiatives. It has brought some results as is evident in the net inflow of FDI (replacing the UPA era trend of net outflow) and the recent surge in exports.
But we need to go a long way in converting the logistics rush into a manufacturing-led growth paradigm that will add quality jobs. The key lies in tapping value addition. If we are setting up solar generation capacities, we must tap the potential in solar gear manufacturing. The consumption-led growth was the core reason behind low growth in quality employment.
This demands confidence-building among investors about policy consistency and sustained focus on removing the last vestiges of socialism to give a chance to private sector-led innovation and growth.
The recent bank merger paved way for the creation of half-a-dozen global sized government-backed banks and financial institutions for strategic interventions. This is the model China followed on course to acquire oil and gas assets globally, in the last decade.
However, we must not tolerate the status quo on State-owned Indian Overseas Bank that generates as little as Rs 3.52 lakh net profit per employee. The private sector does that job better. Net profit per employee of ICICI Bank is Rs 16.4 lakh and HDFC Bank Rs 25.9 lakh.
In short, the tempo we built with the privatisation of Air India must continue. The government must stick to its promise of having ownership in a few strategic areas and hand over the rest to the private sector.
Life Insurance Corporation has a limited strategic role left in today’s matured insurance market. It was used to bail out the government’s disinvestment plans. The public shareholding will make LIC more accountable.
India needs to be free from the ghosts of Indira Gandhi’s (and Janata government) nationalisation policy. BPCL must go back to the private sector. If the private sector can own electricity infrastructure; why cannot they run trains?
Will They, Won’t They?
Obviously, carrying out these reforms will not be easy. There will be protests. But the government has to negotiate that. That is where the resolution comes into the picture. The question is can or will the Modi government show that resolve or will fall into the grip of the number game?
The doubt was created by the recent backtracking in farm sector reforms, which already impacted the electricity sector reforms agenda. Worse, the development came on the back of BJP’s self-inflicted injuries in the West Bengal Assembly election.
Going one step backwards is no crime in a long-haul game. But what if this becomes a template? What if BJP makes compromises in policy implementation at the Centre, to protect interests in a particular state or states?
No one expects fireworks before the election, in 2023. But 2022 will hold the key to many answers. The Prime Minister enjoyed popular support for his show of determination in the past. Hopefully, he will not disappoint his supporters.
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