Millennium Post

100 days of hits and misses

100 days of hits and misses
Uncomfortably, for the Modi Government, despite full command of power at the national level and BJP’s majoritarianism, the first 100 days have fallen short of expectations, at national or global levels, of an economic resurgence or of promise of  ‘change’ of atmospherics towards greater transparency and accountability in governance.

On the other hand, despite tight enforcement of Prime ministerial authority, cracks had begun to surface recently at the top ministerial ranks while the BJP outfits, reinforced by the party’s stronghold on power at the Centre, have been stepping up the Hindutva agenda, not excluding calls to turn India in a Hindu Rashtra, and seek changes in the educational system and text-books to promote a far from inclusive ideology.

Growth, inflation, corruption and jobs were the themes that guided a vast segment of the votes that went in favour of Mr Narendra Modi at the head of BJP as its Prime ministerial candidate, given the widespread disenchantment with UPA’s performance. The outcome reflected specially the aspirations of the middle class and the youth, the worst to suffer in a climate of slowing growth, prolonged inflation and rising joblessness.

Granted there are no overnight solutions for all these problems, neither the first budget of Finance minister on July 10 nor the Prime minister’s own addresses including the celebrated Independence Day speech have so far laid out  any road map for time-targeted growth, employment generation or price stability. FM Mr Arun Jaitley has no doubt projected an indicative fiscal balancing path but the arithmetic can go haywire by impending developments - like the 7th Pay Commission report, a revised scheme of devolution of resources to states under the 14th Finance Commission and recommendations from the new Expenditure Commission.

The Modi Government with all bravery on display has not found it politically convenient to tackle subsidies, leaving it safely to the Expenditure Commission, and this raises question on Mr Jaitley’s commitment to peg fiscal deficit to 4.1 per cent of GDP in the current fiscal year. There has already been fiscal slippage with the deficit exceeding 62 per cent of the budget estimate in the first four months  of April-July.

Government has no doubt announced with fanfare enhanced caps for FDI in insurance, defence undertakings and railways, tinged with certain conditions, which may not readily attract investors.
Untapped subsidy issue and  high inflation, which has led to decline in domestic savings and
investment, and project clearance, land and mining problems have all contributed to keeping India’s credit rating at lower levels.

For MNCs, the issue of unresolved retrospective taxation, despite the Finance minister’s assurances about guarded use of the extant provison, is deemed an additional constraint. Global investment firms also cite the lack of product and land market reforms. Nor domestic corporates while applauding Modi governance seem ready to swing into reactivating investment programmes, with all the talk of strong business sentiment.

PM Modi has been putting forth laudable ideas and objectives related to economic and social transformation, all in disaggregated fashion on different occasions. He prefers to tweet rather than talk directly to the media by which he could clarify his approach on vital issues of public welfare and thereby strengthen credibility in his style of governance.

The game is so vastly different at the Centre for an innovative Mr Modi who could create a model of governance in Gandhinagar, and even though he is applying himself tirelessly to the job and commands a global reputation as a preceptor of new ideas and for his leadership qualities, he has to contend with a series of hurdles as they occur at home or abroad. The ‘change’ that he spoke of his flamboyant electoral march is not something that could be ushered easily in the near future.

What Mr Modi and his government  are doing, therefore, is to take up the threads where the UPA left due to its inherent weaknesses and repackage reforms with more catchy slogans, which incidentally should also suit the times when more states are going to polls this year, like Maharashtra and Haryana. At one stroke, Mr Modi seems to think, some of the age-old curses that have blotted India’s nationhood, can be wiped out in the Digital India he wants to map out.

For, has he not made a big bang launch of a ‘Modified’ Financial Inclusion (in which UPA’s progress was too slow) as ‘Pradhan Mantri Jan-Dhan Yojana’ (PMJDY) with added-on benefits like a Rupay debit card, an accident insurance policy and a life insurance cover, and styled it as the instrument to get rid of ‘financial untouchability’.   After all, Mr Modi would not have let the first 100 days pass off without any major breakthrough. So he had to announce it in the Red Fort Independence day address, along with another accomplishment in the dissolution of the Nehru-era Planning Commission.

On  PMJDY, there are many imponderables, for the finance ministry and for the account-holders, with 15 million bank accounts opened on the first day against a target of 75 million to be opened by January 26, 2015, as against the reported 61 million under UPA regime in 2013-14. There is bound to be some cost for Government as certain subsidisation will also be involved. The problem is also one of keeping the accounts opened alive in the light of past experience, though presently the numbers of accounts opened are highly impressive. Mr Modi also sees the scheme as one to break the vicious circle of poverty and debt in rural areas. How far it becomes easily operable for the largely illiterate or semi-literate people in rural and semi-urban areas, if attracted to open accounts, is also an open question.

Certainly, the scheme takes banking to hitherto unbanked areas, urban and rural, and should help to mobilise savings available in those areas. Above all, UPA-and the Modi government as well look to bank accounts as the best way for DBT (Direct Transfer of Benefits) for the targeted sections under the rural employment and other social welfare programmes, and for reaching other subsidies like LPG to those entitled.

At last, the ‘100 days’ have something to show up, the more than expected rise in the first quarter GDP (April-June) of fiscal 15 at 5.7 per cent, as against on top of 4.6 per cent in the previous  quarter and 4.7 per cent in the first quarter of 2013-14. The 5.7 per cent quarter growth is the highest in two years but it has much to do with the low base effect. However, manufacturing has shown signs of reviving (3.5 per cent as against -1.2 per cent in Q1 of 2013-14). Electricity and construction sectors have done better.

The data for the second quarter (which would be available by November end) has to be gauged to determine whether the revival is gaining ground, also perhaps impacted somewhat by the new Government’s fiscal and other policy moves to promote investment. On this trend, the economy should achieve the envisaged 5.5 per cent though Government hopes are built around 6 per cent. IPA

S Sethuraman

S Sethuraman

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