The BJP government came to power at the intersection of a political and economic crisis. It has missed the opportunity on five fronts to induct long-term transformation.
Shankkar Aiyar | May 24 2018, 2:32 PM
For a quarter of a century, India’s voters elected governments which were born with an alibi — the lack of a majority which ‘allegedly’ hampered change and transformation. In May 2014, the voters delivered a mandate, a brute majority that left the opposition decimated and the new government with no alibis.
The mandate was fuelled by hapless frustration with the Congress-led United Progressive Alliance regime and, more pertinently, the idea of solution-oriented politics — promised in words and in the presentation of the Gujarat Model as an alternative. The campaign, the slogans, the rhetoric were populated with words and sentiments that the people of India wanted to hear. The 50-plus page Bharatiya Janata Party Election manifesto was as crisp as a promissory note, listing imperatives and approach to solutions.
A year before the next round of hustings it would be fair to ask if the BJP government has done what it said it would do. The short answer would be, the intent has been executed. The many issues India faced have been articulated with smart slogans and programmes. The gap between intent and execution, between success and the slippery slope of sloth, has been about lack of ministerial capacity.
Successful execution of intention has depended on the might of executive action and investment of personal political capital by Prime Minister Narendra Modi.
On the social front, the successful implementation of the Jan Dhan Yojana with over 315 million accounts opened, the rural electrification of 18,000 villages, the building of toilets under the Swachh Bharat Mission, the Ujwala Yojana for LPG connectivity to poor homes in rural India, the acceleration of rural road connectivity and the newly launched Saubhagya Yojana for rural household electrification are manifestations where the regime came together.
On the economic front, opening up of FDI in defence and insurance, the passage of the Goods and Services Tax, and the Insolvency and Bankruptcy Code would merit applause. Of course, there are inadequacies — the dormant Jan Dhan accounts, the lack of water for toilets, the replacement gap in Ujwala — and the fact is both GST and the IBC are yet work in progress.
The larger question that begs to be asked is whether the BJP-led NDA, which for all intents and purposes has been a BJP government, has leveraged its mandate and the historic majority to deliver what it lured voters with, in its manifesto.
The BJP government came to power at the intersection of a political and economic crisis. Its mandate was an illustration of the need for rebooting the way government functioned and the manner in which development policies were authored. It had the opportunity on five fronts to induct long-term transformation but has been rather tentative.
1. Getting The Sarkar Out Of Business
Earlier this week, State Bank of India reported its largest ever loss in a quarter. It was the fifth successive public sector bank to report a loss, a rise in provisions and a higher level of bad loans. PSBs account for the bulk of bad loans worth over Rs 9 lakh crore in the system. At least five defaulters of the Nirav Modi kind have absconded in the past four years. In every debate, the BJP strains its sloganeering sinew to assert that the state of the public sector banks has been the result of corrupt practices of the previous regime. Manifest in the argument is the reality of systemic issues. Every third public sector undertaking or 75 of the 244 PSUs are in the red, losing over Rs 25,000 crore. In the past five years, PSU losses add up to over Rs 1.06 lakh crore. The issue is about government ownership, but more about political management of government enterprises.
This government has reasons to not subscribe to the idea of privatisation. But must it invest in the idea of ministerial management of public enterprises?
Why not disinvest in favour of the public — the stupendous rise of stock markets offered an opportunity to do so — and create a Temasek or a Sovereign Fund for the government’s holdings so that the PSUs are corporatised and professionally managed? Must the PSUs await the fate of Air India?
2. Enabling Farming To Be A Business
Farmers in Ahmednagar, Sangli, Satara, and Kolhapur are giving away milk for free, in protest. Some weeks ago, farmers were dumping tomatoes on the highway. Elsewhere those who grew tur dal at the exhortation of the government find no takers or poor remuneration for their crop. Parties, regional and national, are promising farmers loan waivers at every assembly election — at last count, over Rs 1 lakh crore has been paid up.
Every land owning community across the country — Jats, Marathas, Patels and others — is up in arms for reservations in government jobs.
The approach to resolving the agrarian crisis must go beyond the charity of politics, a nod for a waiver or a nudge of the support prices. At an average holding of under 2 hectares, farming is simply unviable. The option is collective farming or contract farming. As early as in the 1950s, Vithalrao Vikhe Patil, the father of the sugar cooperative movement, installed the power of the collective. Four years into its term, the government released a model law this week on contract farming for states to adopt, and the punctuating ifs and buts of implementation will follow. It is a start but a law is only a string of words unless championed politically, followed with investment in the ecosystem and dismantling of the political stranglehold over markets and pricing of exports and imports. Agriculture is a business and requires to be enabled by both forward and backward linkages — inputs, credit, investment in technology and access to free markets. It demands liberating India’s largest private sector.
3. The Idea Of Team India
One of the issues haunting India’s economy is centralisation of ideas and lack of decentralisation of initiative, funds, functions and functionaries. Given the diversity and diverse aspiration, the BJP in its 2014 manifesto identified the need for Centre and States to work together. It said “Team India shall not be limited to the Prime Minister-led team sitting in Delhi, but will also include chief ministers and other functionaries as equal partners.”
Yet the discourse on the economy yet revolves around what the Centre has done or not done. The promise of ‘regional councils’ has not quite taken off. Inadequate investment is haunting the economy yet permission raj reigns — investors are plagued by a plethora of clearances at central and state levels.
The BJP has since 2014 has won elections and is now in power in 20 states, with allies and on its own. It is in power in the most populated states, the largest states, the most industrialised and those rich with mineral resources. To borrow from cricket, the players have not come to the party yet. The manifesto also declared that “the moribund forums like ‘National Development Council’ and ‘Inter-State Council’ will be revived and made into active bodies.” For sure, the NITI Aayog is supposed to play a role in enabling collaboration and cooperation, but the harsh reality is that the propulsion must come from political initiatives from chief ministers.
For instance economic cluster zones are known to drive investment, employment and growth. Why can’t Bihar and Uttar Pradesh tie up for a special agricultural zone? Why can’t Maharashtra and Gujarat create a Shenzhen like zone leveraging the human and material resources of Mumbai-Surat-Nashik? Must the states await the Centre to draft a model labour law or contract farming law?
4. Administrative And Civil Service Reforms
There are good reasons why three decades after the British show Yes Minister was wound up, the line “Paperwork is the religion of civil service” is widely and wildly popular in India. Principally the humour, the inherited legacy, and then there is continuity.
In its 2014 manifesto, the BJP declared: “Administrative reforms will be a priority for the BJP. Hence, we propose to implement them through an appropriate body under the PMO” and that it will “generate ‘Kartavya Bhavna’ among public servants as lives and productivity of people is dependent on the quality and efficiency of public services.” Road Transport and Highways Minister Nitin Gadkari once narrated an incident where he found payment clearances to road developers passing through many tables and asked, “must everyone have Lakshmi Darshan”? On the ground services in some areas have improved but the general complaint of denizens is about drift and graft. There has been some movement — the digitisation of processes, an online system to assess probity and performance and action against officers — but the overhaul is yet to be, and not just for the central government.
Officers deserve a system that distinguishes doers with rewards and the incentive system needs to propel innovation in systems and procedures.
The idea of minimum government, maximum governance demands reforms for institutional and individual efficacy. Incidentally, the British government has pushed through four phases of civil service reforms beginning with the ‘Next Steps’ in 1987.
5. The Promise Of 100 New Cities
If there was one item on the 2014 manifesto that had omnipotence — social, political and economic — it was the promise to “initiate building 100 new cities; enabled with the latest in technology and infrastructure adhering to concepts like sustainability, walk to work etc, and focused on specialised domains.” Urbanisation is well established as a growth multiplier. The many failings of governance owe their genesis to access — education, healthcare and the shifting of farm workers to factories and services. By 2015 the idea of ‘100 new cities’ became 100 smart cities.
In December 2017 of the Rs 9,860 crore allocated, barely Rs 645 crore was utilised and the rest awaited plans, sanctions, and implementation.
Urbanisation currently is amoebic growth ratified post facto with poor infrastructure and connectivity. The worsening state of affairs is reflected in data on waste management, water supply and air pollution. There is no disputing that existing cities require capacity enhancement but more importantly, India needs new cities — at least twin cities or satellite towns — to take the pressure off large cities. The point is not to build another Mumbai or Delhi but new cities well designed and smarter habitats offering citizens a choice. It need not have been 100 cities. Even 10 cities would have created a demonstration effect, for instance, one near the new Navi Mumbai airport alongside the Special Economic Zones. The May 2016 Urban Development Ministry advice to states to convert 3,894 census towns into urban local bodies remains that. New cities could have been carved out of the suffering 3,800 census towns. Nearly half of India’s billion-plus populace will be living in urban areas — in new cities or census towns or undefined agglomerations. They deserve better.
John F Kennedy once said, that the two brush strokes “in Chinese for crisis or ‘Wei Ji’ stand for danger and opportunity. In a crisis, be aware of the danger — but recognize the opportunity.” Issues faced by India require leveraging crises into opportunities for true transformation.
Shankkar Aiyar, political-economy analyst and Visiting Fellow at IDFC Institute, is the author of Aadhaar: A Biometric History of India’s 12-Digit Revolution; and Accidental India. You can email him at firstname.lastname@example.org and follow him on Twitter. Previous columns can be found at Thought Capital. This column was first published here.