The five years that the newly-elected governments get to prove they can deliver is actually a piece of fiction. In the Indian scenario, where several states go to the polls almost every year, the party (or parties) running the central government can slip on a political banana peel almost any time after its first six months. And so it has been since May 2014, when Narendra Modi become the first leader to win with a complete Lok Sabha majority of his own in 30 years. The government will complete two years on 26 May, but this is effectively the halfway mark. Reason: we can safely assume that the last year in a five-year tenure will be about wooing voters. The UPA passed its worst laws in the last 12 months of its tenure, including a bitterly-fought law to bifurcate Andhra, and the growth-retarding land Bill.
The Modi government made big mistakes during the first seven months of its tenure: it presented a lousy first budget; it allowed the Sangh Parivar to wax eloquent on divisive topics, ranging from Ghar Wapsi to Love Jihad and beef; instead of gagging these loudmouths, the government tried to steamroll the Opposition by issuing ordinance after ordinance. It ensured that the political opposition would consolidate against the government.
There was a brief respite in the first half of the 2015 budget session, when Rahul Gandhi simply disappeared, causing confusion in Congress. Critical Bills to allow FDI in insurance and coal mine auctions went through, as states seeking mining royalties backed the government; but the background story was about the Modi government running out of political steam. Arvind Kejriwal dealt a blow in Delhi, Arun Jaitley presented another average budget, and the Modi government blew its goodwill away in less than a year. Its Achche din promise was riding on one single engine: luck. The global slowdown brought with it the good fortune of lower oil prices, enabling the Modi government to save the fisc, bring down inflation, and garner resources for public investment.
What it got wrong in the first year was its estimation of what needed fixing. It grossly underestimated the economy’s challenges. Banks were sinking under loads of bad debt, businesses weren’t investing, and the rural economy was in deep distress, with the drought in Year One about to be accentuated by another in 2015-16. The Land Acquisition Bill died an unsung death, and the Goods and Services Tax Bill meandered through committee, stuck in Congress nakabandi. Even as politics went largely right in the early assembly elections of 2014-15, the economic agenda was going off course.
Year Two contrasted with Year One as Modi suffered more political setbacks than he had bargained for — losing Bihar like Delhi, getting the National Judicial Appointments Commission law knocked out by the Supreme Court, receiving setbacks in its Pakistan policy, et al — but the economic agenda began falling into place.
The seed of inclusive banking planted in 2014 through the Jan Dhan Yojana was about to sprout into the most ambitious programme of subsidy rationalisation and social security ever attempted. The direct benefits transfer scheme is already a roaring success in cooking gas, and could conceivably be used to save leakages in kerosene and other subsidies, too. The third budget, presented under Modi’s supervision by Jaitley, was the government’s best yet, seeking to address some parts of the rural distress even while retaining the fiscal consolidation roadmap. Inflation stayed under control and the Reserve Bank rewarded this performance with cuts in interest rates. The markets cheered. The sensible decision to levy more tax on petro-goods when oil prices fell gave the government elbow room to restart the public investment cycle, with both roads and railways kicking in with large investments. Corporate performance is likely to look up this year, debt burdens are coming down, and banks are trying to put their worst behind them by writing off large portions of bad loans on the assumption of additional capital backing from government. A good monsoon in 2016 will be the icing on the cake, pushing the economy towards higher growth of around 8 per cent. The only big disappointment is: no jobs nirvana, despite a growth revival.
As 26 May comes upon us, the scorecard of the Modi government thus reads “satisfactory” and not good. There are many lessons to be learnt from the Modi government’s first two years in power. Among them…
One, don’t blow your honeymoon, for there ain’t another one coming soon. So get the most difficult pieces of legislation or executive decisions done in the first six months, when the voter will be reluctant to protest and opponents are still recovering from defeat.
Two, decide the most important objectives of the administration early, and put the most capable ministers in charge. Modi’s mistake was to put finance in weak hands, when this was the most critical portfolio for economic revival after serious mismanagement during UPA-2. HRD could have done better with someone other than Smriti Irani, and replacing Harsh Vardhan with JP Nadda was a boo-boo. The mistake in railways got corrected early, with Modi replacing the lacklustre Sadananda Gowda with Suresh Prabhu. Modi’s A-team comprises Prabhu (who has started making the railways perform better), Nitin Gadkari, who has got infrastructure and roads perking up, Piyush Goyal, who has begun fixing the power sector, Sushma Swaraj, who has quietly gone about doing the less-fancied jobs in external affairs while Modi did the headline-grabbing stuff, Manohar Parrikar, who is getting defence into shape, and Dharmendra Pradhan, who has piloted the oil sector very well. This is not an exhaustive list, but few governments need more than five to six great performers to deliver the goods.
Three, the link between good economics and good politics runs both ways. You can’t have one without the other. Good politics needs good state-level leaders, and this was the reason why Modi and Amit Shah failed in Delhi and Bihar. They didn’t create local leaders to run their campaigns. The most important lesson for the Modi government is this: one man can’t do it all. He needs good generals. The success of the remaining three years of Modi depends on taking this idea to the logical limit, in both states and at the Centre.
Guest Author
The author is editorial director of Swarajyamag.com
