Majoritarian behaviour will not help
One would hope that the Modi Government would step back from its self-righteous posturings in governance, challenged as it is on all fronts - political, economic, a truculent neighbourhood, and alarming rise in terrorism across regions. All this in the midst of a global economic turbulence and a new bout of inflation at home further dampening growth outlook.
Kashmir continues to be on boil taking a major toll of civilian lives, looking hardly controllable without a new Modi Initiative to launch a conciliatory political process, away from the sterile moves of the past or the Centre’s ongoing strong arm methods. The sooner it is done the better for saving lives and instilling a new sense of confidence and hope in the misguided Kashmiris.
Democratic credentials, and observance of Constitutional norms on the part of Prime Minister Modi, who rode to power on a highly popular wave in 2014, have come into question repeatedly in the first two years of its regime. Stoicism or lip service to democracy would not do. It is only lately that tolerance and dissent are seen to become more secure.
The government had, however, discredited itself, at the start of its third year, with naked attempts to usurp power first in Arunachal Pradesh and later in Uttarakhand through the actions of pliant governors. These must be seen as part of its strategy to accomplish a “Congress-mukt-Bharat” in the run-up to national election 2019.
Hopefully, the Modi Government has drawn lessons from the Supreme Court intervention in these two states, especially its strictures on the way the Governor in Arunachal Pradesh functioned and exercised his “discretionary powers”. In a landmark verdict, the apex court reinstated the earlier (Congress) Government in Arunachal Pradesh.
The restored Congress Government, now in a new garb, commands a big majority and it has turned out to be a humiliating experience for BJP. The outcome was no different in Uttarakhand earlier where the ruling BJP’s efforts to change the Congress regime through horse-trading were legally frustrated.
The Modi Government with a self-proclaimed record of achievements “on all fronts” in its first two years has thus entered the third year in even more difficult environment, both at home and abroad. Has the Prime Minister, always in a poll campaign mode, sobered down or his senior Ministers begun calling the right shots for more orderly governance?
The first two years showed up the gross inadequacies, despite some of the path-breaking reforms (mainly fast-forwarding FDI liberalisation in many key sectors, ostensibly to create jobs) and slogan-charged initiatives in disaggregated areas. But all these do not add up to any coherent national development vision nor is there any growing sense of change visible for the populace at large.
It is apparent that the Centre is struggling to restore macroeconomic stability and produce some jobs with the next cycle of state elections in 2017, especially Uttar Pradesh where Prime Minister Modi and BJP President Amit Shah would go all out to capture power so as to brighten up the prospects of retaining national mandate in 2019.
The Monsoon session on from July 18 with stormy days ahead must establish that the Modi Government has begun to reckon with the ground realities in every sphere and would seek a more consensual approach to tackling reforms, as is being belatedly exhibited in the case of GST, and for other national and centre-state issues as well.
Here again, on GST touted globally as the biggest reform of the Modi Government, the Finance Minister Mr Arun Jaitley was unrelenting to accommodate at least a couple of concerns of the Congress opposition in Rajya Sabha so far, and tried to make a propaganda of Congress “obstructionism” to change and development in the Modi Government agenda.
Realising that GST would earn some credit, even if other globally anticipated structural reforms (Land and Labour) are ruled out due to political exigencies, Government leaders began making approaches to Congress opposition to secure its support for passage of the Constitution Amendment Bill on GST with which to convince foreign investors. It would involve some accommodation for the concerns of the Congress, as the majority party in Rajya Sabha. To what extent it has succeeded would be known early in the monsoon session.
Whatever the Government’s gloating of macroeconomic stability and India acknowledged as the fastest- growing economy, it can hardly deny that overall, the economy is still in a morass, CPI (food inflation, in particular) has begun to soar, industry is yet to register a turnaround, and the stressed banking sector awaits the unfolding of ameliorative steps from Government/RBI for it to resume normal credit flows to productive sectors.
In this desperate situation and cautionary noises from credit rating agencies, Government realised that it should at any cost get the GST on the move and to what extent it has succeeded would be known early in the monsoon session. Not all states are on board yet for this tax which would unify India as a single market holding attraction for domestic industry as well as foreign businessmen.
The impact of GST on economic growth and jobs has to be gauged over time once it comes into force probably from April 2017. The Finance Ministry is confident that the tax at agreed rates would boost revenues and help the Centre in fiscal consolidation plan whatever the leeway it may have for other public spending programmes.
Tamil Nadu has serious reservations over the negative impact of GST on its revenue, being a manufacturing state and has also called for deletion of petroleum products from the purview of GST. The Prime Minister has promised Ms. Jayalalithaa that a task force in PMO would look into issues raised and suggest ways to resolve them. The NDA Government is heavily banking on the support of AIDMK with its 36 MPs, the third largest group in Parliament, for its reform and other legislative measures.
The Inter-State Council deliberations on July 16 must have demonstrated to the Prime Minister that States are yet to buy his version of “co-operative federalism”. T N Chief Minister Ms. Jayalalithaa heading a friendly AIADMK regime, asserted that the federal polity was getting more entrenched with hardly any dynamic change in the status of states.
Mr. Modi and his Government have been citing the higher transfers of tax revenues of Centre to states from 2015/16 as recommended by the 14th Finance Commission but the Modi Government has kept up the tradition of treating Finance Commission recommendations on devolution of centre’s tax revenues to states as award.
The Centre has virtually rejected the demand for special packages by financially distressed states which have to bear diversified responsibilities in social development not adequately funded by the Centre.
(Views are personal.)