The time would come during Modi 3.0 for anchoring transformational change firmly within the administrative structure in a manner not attempted until now.
It has been a decade since the initiation of the Modi Transformation of what has been described as the Idea of India into the Reality of Bharat. As was witnessed in Gujarat during his years in Gandhinagar as Chief Minister of that entrepreneurial state, efforts have systematically been ongoing since 2014 to design and implement policies so as to ensure that PM Modi’s objective of a complete transformation is realised. The first term of the Modi government was spent in dismantling the post-1947 construct that was put into place by Jawaharlal Nehru in the 1950s, and which overall retained its pristine primacy. Only during the tenures of Lal Bahadur Shastri and P.V. Narasimha Rao was a conscious effort made to break away from the “Not the citizen but the Government knows best what to do” mindset that remained within the Lutyens Zone despite the replacement of the Union Jack with the Tricolour across the country. Shastri lost his life under circumstances which remain secret to this day, while Narasimha Rao was sought to get distracted from his economic reform agenda from the third year of his five-year term. This was through a revolt within the Congress Party, a mutiny that had the blessings of Sonia Gandhi.
While Prime Minister Vajpayee introduced several tweaks in policy, both domestic and foreign, overall as the Prime Minister he remained within the boundaries of the governance system that had been in place before 1998. Only after the BJP secured a majority in the Lok Sabha on its own in 2014 as a consequence of the pull of voters in India towards making Narendra Modi the Prime Minister was a process of systemic transformation initiated. This was led by Prime Minister Modi . He has been methodically working to a 15-year plan so as to reach his objective. Unlike packed noodles, transformation cannot be instant,for it needs to follow its own phases, each of which takes time. By 2019, the scaffolding began to get erected for what during a third Modi term would be the setting in place of a governance construct that may be characterised as being based on the Idea of Bharat replacing the Idea of India. To a foreigner, Germans are German and Japanese are Japanese, but to themselves, Germans are Deutschlander, while to themselves, Japanese are Nippongo. Domestically, it is Deutschland and not Germany, it is Nippon and not Japan to the people of these two countries. The difference with the world’s most populous country is that not just domestically but internally as well, within various layers of the domestic elite, India remains India and never Bharat. Should there be a third term for Prime Minister Modi in the 2024 Lok Sabha polls, the track would be cleared for an accelerated pace of transformation from India to Bharat. On the contrary, should opinion polls be wrong and a 2004 rather than a 2019 result take place, the processes of change initiated in 2014 and needing to be continued until 2029 would almost certainly be rolled back. Were this to happen, the Idea of India would continue to hold sway through much of the 21st century, while the Idea of Bharat would get cast by its detractors in a communal hue and shunned.
2014-2024 has not been easy. Resisting the temptation to abandon fiscal prudence during the 2020-21 Covid pandemic unlike the profligate way of the US, the UK and several other countries could not have been an easy decision for Modi to make. Avoiding income-tax cuts in the pre-election 2024 budget was unexpected. The restraint was emblematic of the Prime Minister’s determination to not get swayed from his task of institutional rebuilding by purely electoral considerations. Prime Minister Modi was clearly confident that in 2024 as well, voters in what is already becoming Bharat would understand his long-term plans, and give him a further five years so as to complete the transformation of India into Bharat.
Should such a confidence be borne out by the electoral verdict on June 4, the time would have arrived for anchoring transformational change firmly within the administrative structure in a manner not attempted until now. Among such changes could be an annual tax regime that moves from the primacy of revenue collection during the fiscal year to that of securing double digit growth accompanied by economic justice to the underprivileged. As was shown by Finance Minister Manmohan Singh in 1992, lower tax rates have the effect of generating greater rather than lower revenue through more growth and compliance. A surefire path towards greater compliance and increased direct tax base would be to reduce rates. Additionally, innovations such as ensuring depreciation benefits not just to the physical assets of companies but employee strength as well could be introduced. Over the decades, limiting the depreciation allowance to plant and machinery rather than getting extended to labour strength, added to archaic labour laws in India, has caused some shortfall in employment. Extending the benefits of depreciation to employees could result in a surge in employment, not to mention the advantage of rewarding those involved in occupations where employees rather than only machines are added. Extension of depreciation allowances to the workforce could be considered during Modi 3.0. and in Finance Minister Nirmala Sitharaman, the Prime Minister has an able and hardworking minister to implement this and other innovations.
At the same time, an audit conducted by actual practitioners who are experts in the fields examined could be done of different silos of government expenditure. Given the efflux of time and circumstance, some agencies may have too much to spend, others too little. This needs to change. As for GST, it was essential. However,the time has arrived to rationalise the rate structure, for example by ensuring that an individual who earns a little over Rs 20 lakhs annually does not pay the same GST rate as another who earns Rs 200 crores during the same period. Also, in the 21st century, more and more individuals are working out of their laptops or cellphones. Making a physical office mandatory may need to be reconsidered in such cases. Most importantly, what is needed is lower rates, so as to ensure greater compliance and higher overall revenue. The floor for income-tax and GST slabs needs to be raised and rates cut, while rates need to be progressive rather than fixed.
All this is possible during Modi 3.0. A hat trick by the Prime Minister in the Lok Sabha polls would ensure the country entering a period of double digit growth in GDP, and the complete implementation of transformational policies essential for transforming India into Bharat.