Friday July 25, 2014, 07:42 AM
The left-liberal carping at Narendra Modi’s economic agenda is symptomatic of a larger problem within the community. Having proved themselves singularly inept at predicting Modi’s rise and in capturing the extent of his appeal across in the country, Modi critics have now trained their eyes on his economic agenda. The criticism so far has been broadly along the following lines. One, the Modi agenda lacks any vision or new ideas and is heavily dependant on the policies of the previous government; The budget was very uninspiring and therefore a missed opportunity for the government to put its best foot forward. Third, the agenda will fail as inflation will remain high and projects will not take off.
The point I am trying to make is that criticism so far of Modi seems to be relying too much on a narrative built around what a certain section of intellectuals think is the right way forward. These intellectuals, largely academicians, journalists, other assorted opinion writers and former bureaucrats, have formed a narrative about the economy and its ills and the measures needed to tackle it.
Let me elaborate. Much of the criticism that you hear is from people who believe that certain things have to be done in a certain way. For instance, they think economic growth is all about having a vision, a grand overarching strategy. This is irrespective of the fact that the economy needs quick implementation of existing ideas rather than brand new vision. There is this strong belief that reforms in the economy is all about bringing in FDI and more FDI into various sectors. Allied to that is this equally strong belief the only sectors that matter are the formal, corporate sector and that the rest of the economy is not so important.
As we approach the two-month anniversary of Modi sarkar, it is perhaps a good time to deal with these shibboleths and demolish them once and for all. Here are four important initiatives that have already been launched in the first two month. If implemented well, it could help deliver robust 7-8% GDP growth.
Speed up clearances and lift investment. Modi and his team have correctly identified that the biggest roadblocks to growth are lack of investment and long delay in securing clearances for projects. The first two months have been largely spent in clearing projects. The backlog is huge (According to the Business Standard, about 394 projects are waiting for environment ministry nod) and it will take a bit of time but nobody can find fault with the emphasis on quick clearances. So far, about 50 projects have been given environmental clearances. The Economic Times reported on June 20 that six major projects, including one held up for 30 years, have been cleared.
Cut red tape, reduce hassles. In his campaign pit stops, Modi spoke eloquently on cutting unnecessary procedural hassles and his government is focused on it for all the right reasons. ET did a story a few days ago citing the number of small measures announced by the government which are likely to have a big impact. The emphasis appears to be on making things simpler and easier for ordinary people, entrepreneurs, businessmen. In the next year or two, don’t be surprised if you find fewer complaints about delays and governmental red tape.
Cutting subsidies maintaining fiscal credibility: Like other things, this still remains work in progress and a lot of will be known once the Arun Jaitley-appointed expenditure commission submits its report. This government’s credibility and its commitment to rein in the fiscal deficit will be tested on its willingness to drastically prune expenditure. Otherwise, minimum government, maximum governance will remain just a slogan.
Execution, Execution and more execution. India’s bane is not its lack of laws or its unwillingness to promote entrepreneurship, but its woeful track record in executing projects and programmes. Thousands of crores of rupees have been spent on various welfare programmes with uncertain outcomes. Crores marked for infrastructure, afforestation have not been properly spent. What the country needs is proper execution of all projects. The Modi sarkar seems to realise that this is a problem and that is a good beginning.
Naysayers will and should have their say but let us not forget we had a similar stream of negative reports in the run-up to the elections. It was said that BJP will not get a majority, that the Dalits, and minorities will not vote for it and that there is a massive consolidation against the upper-caste-OBC dominance in the heartland. What these pundits missed out was the consolidation in favour of the BJP. Similarly, the Modi critics may just miss out on the sweeping change ushered in by these so-called small measures and realise that the government’s priorities were right all along.