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Modi’s governance makeover is real

opinionModi’s governance makeover is real

Despite the less than adulatory commentary in the media about the overall performance of his government, Narendra Modi’s government is miles different from that of his predecessor. However, whether intentionally or accidently, the transmission of information about the changes being effected by the chaiwalla-turned-pracharak from Gujarat has gotten refracted through perception prisms that shrink the actual gains, much as trick mirrors convert tall people into short. An error was the initial economic survey of the new government, which gave an upbeat report card on the performance of the last government. This was clearly because both were written by the same set of bureaucrats, who naturally did not want to admit that the measures they adopted during the last six “disaster years” of the UPA drove the economy very close to what had been the case in 1991 when P.V. Narasimha Rao took over the job presently being held by Modi.

Certainly, fiscal and monetary policy needs to better serve the indispensable objective of generating enough additional jobs each year in India to prevent an “Arab Spring” (i.e., a descent into populist chaos) taking place in cities across India even before the next Lok Sabha elections fall due in 2019.

North Block babus have long been conditioned to view each budget in single year terms, rather than design tax structures that may suffer a notional loss in revenue over the first year or two, but which would subsequently more than compensate through higher growth. Lower taxes, gentler compliance, and the CBI desisting from arrogating to itself the role of an Anna Hazare-style all-powerful Lokayukta of the banking system would improve investor confidence sufficient to make companies sitting on huge piles of cash spend once again, besides sending share prices higher so that any dilution of equity by the state would garner much higher returns than taxes lost for a short while by lower rates. Had the Black Money Bill, for example, adopted lower tax rates and penalties, it would have raked in many times more than the revenue it has. In the case of direct taxes, a penalty of 300% will usually result in the bankruptcy of an individual or a company.

Destroying a company, as took place in the case of Nokia in Tamil Nadu, or sending a businessperson to prison, helps the people not at all.

What does, would be an injection of money through disclosure made easier by a climate of trust and lesser penalties.

Those who have watched the manner in which Narendra Modi ensured steady growth and stability in Gujarat will be hoping that the Prime Minister moves ahead with speed on doing away with irksome administrative procedures, whose sole function is to generate bribes for corrupt officers. They will be looking to a chopping off of the thicket of colonial laws (including several introduced since 1947) that are each suffused with colonial contempt and mistrust of the citizen. When a citizen comes face to face with an official, the silent message too often conveyed in the latter’s manner is that the citizen is either a fool or a knave, and therefore undeserving of discretion and consideration. Each layer of anti-corruption legislation and consequent agencies has generated more, not less, graft, and such filth will get reduced only when procedures get introduced that are fair and transparent. Unless a process generates product, unless systems generate an outcome of value to the people, they are useless. In India, many, if not most, processes block product and outcomes rather than facilitate them, and voters are looking to Modi to examine and implement ways by which the present colonial system of governance gets replaced by a 21st century construct that recognises the right of individuals to freedoms and autonomy of action that are commonplace in many of the countries the Prime Minister has visited over the past year.

India is also expecting a foreign policy attuned to the need of the country for growth and security than an adherence to cosmic principles that deflect attention away from the former two objectives. In this context, the Prime Minister appears to be fine-tuning a balance between the two largest economies on the globe, the US and China. In the case of the first, Delhi needs to make Washington its primary partner in matters of security, and a good start would be to sign the three Defense Foundation Agreements that have been delayed for far too long by bureaucrats and politicians seeking to atone for sending sons and daughters to the US by deciding against necessary linkages with that country in specific fields. Where China is concerned, that country has the potential over the next five years of emerging as the largest investor in this country, both through FDI as well as by providing our corporates with loans. Certainly, Beijing will look askance on a close security relationship between the US and India, but just as India’s unease has not prevented China from continuing to shower Pakistan with sensitive technologies, nor should its displeasure stop India from closer military to military ties with the US. When ISIS attacks India, this country will need to respond via attacks on locations controlled by it, and in such circumstances, entering into mutually beneficial pacts with the US would greatly increase this country’s options for retaliation. At the same time, earlier barriers on Chinese investment and tourism into India need to be dismantled so as to transfer jobs to India rather than keep them overseas.

Despite the naysayers and the admirers-turned-critics of the Prime Minister, it would be safe to predict that the next two years will make obvious the transformation which the unique governance style of Modi is making in our country, a change that will become obvious by the time he enters into his mega electoral test in 2019, even if his party loses every state election till then. What counts most of all to take transformation forward is victory in the Lok Sabha polls.

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