The Telegraph
Tuesday , June 10 , 2014
CIMA Gallary

FDI leeway hint in play to aspirations

New Delhi, June 9: If hope was the bedrock, flexibility lay in foreign direct investment.

The Narendra Modi government today sought to address the “surge in aspirations” with a cocktail of catchphrases like “election of hope”, “youth-led development” and “minimum government, maximum governance”, while hinting at a degree of elasticity on some policies so far opposed by the Rashtriya Swayamsevak Sangh.

The President’s address to the joint session of Parliament, seen as the policy-making statement of a new government, spoke of re-igniting the investment cycle, pushing up job-creation and restoring the confidence of domestic and international investors.

But it was the suggestion of suppleness on the BJP-RSS’s cast-iron opposition to FDI in multi-brand retail and on ushering in the goods and services tax regime that hinted Modi might chart an unyoked path.

“My government will follow a policy of encouraging investments, including through FDI, which will be allowed in sectors that help create jobs and assets,” President Pranab Mukherjee said in his morning address, which also spoke of making “every effort to introduce the GST while addressing the concerns of states”.

The GST could snuff out numerous state and central taxes and create a single, nationwide tax regime, cutting business costs and spurring trade and investment.

The RSS may have made Modi’s job easier. On May 29, Ram Madhav, a member of the Sangh’s national executive council, had told PTI the Modi government was free to take decisions for the “good of the country”, including on FDI. He also stressed that the RSS was “not an economic fundamentalist”.

“It is about economic sovereignty. The question is whether we will take decisions about what is good for the country or this decision will be taken by other countries. Our broad line is just that. Specifics are for the government to decide. Whether they have to bring in FDI and in what sector. Organisations like the Swadeshi Jagran Manch may raise their views on specific issues. Government will alleviate their concerns,” Madhav said.

The President’s address, the first major policy statement by the Modi regime and which saw the sensex rise by 183 points, described Election 2014 as one of “Hope”.

“This has been an election of Hope. It marks a turning point in the evolution of our democratic polity. The surge in aspirations and the belief that these could be realised through democratic processes, has been amply reflected in the record 66.4 per cent participation by voters, and a clear verdict in favour of a single political party after a gap of nearly 30 years.”

The word “hope” figured several times in the address, which sought to address the aspirational class, credited with decisively tilting the mandate in Modi’s favour.

Modi was expansive on his promises and programmes for his identified core constituents: young people wanting jobs and a good life, villagers yearning for parity with urbanites, the girl child, corporate India, the armed forces and the expanding diaspora.

However, Modi’s “vision” for the poor was circumscribed by verbal pieties that meant little: “poverty alleviation” became “poverty elimination”, Dalits and backward castes were assured of being mainstreamed in the arena of “emerging opportunities” without being told how, while tribal people were told their villages would be electrified and linked to highways. The one concrete programme he announced was the “Swachh Bharat Mission” that envisages equipping every home with a toilet.

The speech conceded the economy was going through an “extremely difficult phase”, but said a high growth path was a priority. The government, it added, would work towards a single-window system of clearances at the Centre and in the states through a “hub-spoke model”.

Modi promised a policy environment that was “predictable, transparent and fair” — a credo many businessmen claimed was followed scrupulously by the Gujarat government he headed before his shift to Delhi. The address said the tax regime would be rationalised and simplified to make it “non-adversarial and conducive to investment, enterprise and growth”. It said containing food inflation was the “topmost priority” and listed among its tasks improvement in the supply side of agro and agro-based products, “effective” ways of checking hoarding and black-marketing and reforming the public distribution system.

Among the new concepts for making agriculture more efficient was a National Land Use Policy to “facilitate the scientific identification of non-cultivable land and its strategic development” — an idea practised in Gujarat.

Modi’s foreign policy outlook began with working to make Saarc an “effective instrument for regional cooperation and as a united voice on global issues” but with the caveat that if bilateral matters had to be raised, they would be.

Its roll call of “energetic” engagements with other countries began with China, then Japan, followed by Russia and the US and ended with the EU. While China’s foreign minister is currently visiting India, Modi is expected to visit Japan next month.

The Indian diaspora found a special place in the address: the government will celebrate the centenary of Mahatma Gandhi’s return to India from South Africa in 2015 at the next “Pravasi Bharatiya Diwas”.

Some of the other highlights were:

• Promise to operationalise international civil nuclear agreements and kick-start nuclear power projects, two issues of interest to America;

• A “Diamond Quadrilateral project of high-speed trains”;

• A chain of “world-class” ports and low-cost airports;

• Policy to encourage FDI in defence;

• Transparent policies on allocation of critical natural resources such as coal, mineral and spectrum; and

• Industrial corridors and 100 new cities “equipped with world-class amenities”.

Disappointing: Cong

The Congress described the address as “disappointing”. “There is no new line of thinking. It is just jugglery of words. It does not give any sense of direction. There is no original vision of the government and the whole approach is superficial,” spokesperson Anand Sharma said.

He also reminded the Prime Minister that the BJP and the states ruled by the party had opposed the GST and that the most strident opposition had come from Gujarat, then ruled by Modi.