A VISION YET TO EMERGE - Ninety days of the Modi government

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By COMMENTARAO: S.L. Rao The author is former director general, National Council of Applied Economic Research
  • Published 18.08.14

The prime minister, Narendra Modi, is the best orator in India. He has spent 90 days considering ways forward. He has very few experienced people in his party — Sushma Swaraj, Arun Jaitley, Ananth Kumar and Rajnath Singh, whose experience as chief minister and later as cabinet minister was very brief. Lacking a majority in the Rajya Sabha is a limitation. Oratory cannot overcome the disadvantage of inadequate talent.

Modi has rightly got an awesome reputation for being a quick learner, a good listener, a quick study, a voracious reader, and a forceful implementer of policies. He had had long experience as chief minister and as part of the Bharatiya Janata Party central committee.

Given the inexperience in his ministry, he had, like a headmaster in a boarding school, laid down rules for his ministers. They are not to talk freely and at will to the media. Their personal staff must not be related or be very close to them. The appointment of their senior officers would be approved by the prime minister’s office and the officers should not have worked for the previous United Progressive Alliance government’s ministers.

After the early missteps, ministers now are under control. V. K. Singh’s criticism of the confirmation by the defence minister of the appointment of the new army chief, or the comment of another Singh in the PMO to the media that the new government would revoke Article 370 that grants special status to Jammu and Kashmir were thoughtless. Neither minister has opened his mouth since nor have such missteps been repeated. The home ministry asked that all social media used in government should be in Hindi, forgetting that there are other languages in India. The language issue can haunt this government in the coming months, as the agitation from Uttar Pradesh and Bihar against the Union Public Service Commission has shown.

Modi’s Independence Day speech was remarkable for its emotion, personal references, sweep and decisions. But belying his reputation of thinking far ahead, he has not yet appointed people to key ministries. The most important among these are defence and corporate affairs, which are a combined charge of the finance minister. The government’s first budget, presented 45 days after taking office, was a turgid bureaucratic dream and seemed to be read for the first time by the minister. It did not signal any major reform, its presentation was pedestrian without a vision for the future. The prime minister has now depicted that vision: emphasis on manufacturing, foreign investment, women, skills development, transcendence of caste and communal differences, emphasis on sanitation, toilets and hygiene, development as a cause to unite the nations of the South Asian Association of Regional Cooperation, to name some highlights.

But the government’s actions till now have not made it different from its predecessor. The retrospective taxation that harmed India’s image for investors was not abandoned. In interviews, the finance minister has signalled that retrospective taxation is not BJP policy. An entrepreneur fund with Rs 10,000 crore was a good move, and it is to be hoped that it will be run independently, not by bureaucrats and politicians. This was not made explicit. The prime minister’s emphasis on large-scale manufacturing did not give the necessary primacy to the stimulation of small-scale and cottage industries, the quickest and most promising of employment generators. While foreign direct investment caps were raised, the government did not allow management control for foreign investors over joint enterprises. If high technology defence manufacture is to be based in India, this is necessary. After all, Indians who work in such enterprises will absorb the technology. In any case, once the manufacturing is on Indian soil, it is Indian. Some of the taxation measures were backward and contrary to the BJP’s promise that taxes would not be raised for industry: for example, the dividend distribution tax, debt mutual funds.

With the dearth of ministerial talent in the BJP, if it is not to become a prisoner of the bureaucracy like the UPA, it must induct many experts into government. This is what Manmohan Singh as finance minister did in his first two months. (He also slept in the office since he had a budget to present in a month. It was a pathbreaking budget. Jaitley does not even have economic advisors who share the Modi vision. Modi could have ignored political affiliations and, for instance, re-inducted the Aadhar chief to implement and apply the system, especially in the direct cash benefit transfer, an important ingredient of any attempt to control expenditures. It could then be speeded up. Modi was rumoured to have had E. Sreedharan (Mr Konkan Railway and Delhi Metro) in mind for the railway ministry. But instead the government gave railways to a regular politician.

To be effective we need administrative reform. We must ensure individual accountability, severe penalties for government servants for misbehaviour, incentives for performers, the laying down of target outcomes for each officer and measuring officers on their achievement. Recommendations of the administrative reforms commissions and of police commissions on restructuring and compensating the police forces could have been implemented. No legislation is required. The intelligence agencies need better coordination and leadership. So far, Modi has only encouraged the bureaucracy to be free and frank and to be at work in time, and laid down 19 other general rules but there is no basic administrative reform. He has begun implementing Debroys’s 20-year-old report on amending or deleting old laws, and to use the Manish Sabharwal recommendations on wording of labour laws. So something is happening on some fronts.

There are however, other emerging concerns about this government. The Congress had an active extra-constitutional authority in Sonia Gandhi, appointing all senior bureaucrats and every minister, and controlling and passing on all major decisions. It is clear that the new government has this in the Rashtriya Swayamsevak Sangh. All major ministerial appointments and decisions are approved by the RSS. The RSS stopped the government in its inclination to move forward in considering the introduction of genetically modified seeds for food crops, said by Modi to be important for increasing production. Bt cotton has made Gujarat rich. Then again, the new Gujarat government has made Dinanath Batra’s books into reading for school children, with antediluvian stories about India’s ancient achievements in science and technology. There is talk of a few RSS functionaries being inducted into ministries. All this is in contrast to our expectation that Modi, like Atal Bihari Vajpayee, would be too independent to allow himself to be ruled by an external agency, the RSS. One can only hope that he is biding his time and will be his own man and act according to his intellect and not the RSS influence.

This government’s Hindi-centric attitudes led to a bad compromise with agitating ‘students’ against the UPSC examination system. It devalues tests for admission to India’s ‘steel frame’. The agitation really targets tests in English and basic analytical skills. It opens the door to a revival of the anti-Hindi agitation that almost tore the country apart a few decades ago. This government is overwhelmingly Hindi-speaking. It strikes no chords, especially in South India. The government quickly withdrew a tactless home ministry directive that all officers must use Hindi in social media. Modi’s I-day speech gave no hint of how he plans to bring the country back together and uphold the integrity and independence of the UPSC. With the Hindi dominance, we can expect agitations to increase in the pro-Hindi stance. Reactions will follow in non-Hindi states.

Three months of the Modi government signals capture by the RSS, bureaucracy and the Hindi heartlands. Modi’s I-day speech depicts a holistic new vision. It is not clear how it will be implemented.