Last Updated: 29th May 2015 08:21 AM
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S Gurumurthy is a well-known commentator on political and economic issues. Email: comment@gurumurthy.netAlso Read: Neutral Media and Narendra Modi's 365 Days in Officehttp://www.newindianexpress.com/columns/s_gurumurthy/Narendra-Modis-365-Days-%E2%80%93-from-Minus-5-to-Plus-7/2015/05/29/article2838322.ece
As Narendra Modi took over as Prime Minister three biggest challenges confronted him from day one. One, demonisation of him by the media and others abroad. Two, national economy in ventilator. Three, lakhs of crore of bank funds locked in the stalled projects, most of them hit by scams of the UPA. The aggregate effect of the negatives meant that Modi Government began with a minus score of 5 if not more on day one. The only plus point that he had had was the absolute majority that the voters had given to the BJP. But that also proved to be an additional challenge as, having given him that kind of mandate, the people expected a 10/10 magic from him on the back of a (-)5/10 backlog. See how with this triple handicap at the start, Modi has fared in his first 365 days.
Minus Score Abroad Turned Positive
Taking on the challenge of undoing the demonic imaging of him outside India by the media over a decade, and turning the opinion of the world powers in his and his government’s favour has been the greatest achievement of Narendra Modi in his first year. More. He has reversed the negative score about him built over a decade into high positive scores -- in just days, weeks and months. Unless Modi won the respect of the world, the very neutral media, which destroyed his respect in the world, would say that the world does not respect him! He started the correction process with his brilliant strategy to invite and successfully get all Saarc leaders to attend his swearing-in ceremony. By this master stroke he dispelled the perception particularly in the US/West that a government headed by him would not focus on good relations with neighbours-- read Pakistan. Every geo-political move of Modi thereafter has been an outstanding success. Here is a glimpse of the takeaways for India from his global thrust. Modi visited Canada 42 years after the last visit by an Indian Prime Minister. His visit to Nepal, India’s closest neighbour, was decades after his predecessor’s. It was more or less so with Australia, Fiji and Sri Lanka.
The kind and range of economic and strategic benefits that India has gained in the last 12 months had been rare for a long time in Indian diplomatic history. Australia and Canada will supply 3,500 tonnes of uranium to India. Canada will give visa on arrival to Indian tourists. The US will stop tracking India’s nuclear fuel. It has accepted India’s position on nuclear liability, which has opened up investment in billions for 16 nuclear power projects. Japan is investing $35 billion in India. China $20 billion. France $2.2 billion. Airbus will up its outsourcing to India to $2 billion. To contain trade deficit with China, India will be free to use genuine anti-dumping measures. India will get Iran oil against rupee payment. It will also build Iran’s Chabahar Port and get exclusive access to its Naval ships. India will also construct four Hydroelectric dams and power stations in Bhutan and share major part of the green energy that they will yield. Again, India will build the world’s biggest dam in Nepal and share over 80 per cent of the green power generated for free. Vietnam is giving oil exploration contract to ONGC-Videsh. India has persuaded Saudi Arabia to stop charging”on-time delivery premium charges”. It will save thousands of crores for India. All these gains have accrued in just 365 days overcoming the huge negative scores at the start. Modi’s rallies of people of Indian origin in the US, Australia and Canada were unprecedented in geo-political history. Tens of thousands with Indian blood sang Vande Mataram and Jana Gana Mana on foreign soil demonstrating their ethnic and national pride and confidence. Without the geo-political thrust would the minus scores abroad have turned hugely positive? Yet sections of media have tried to undermine his global thrust and even made fun of his frequent foreign visits! His Yemen relief operations and Nepal earthquake relief emphasised his growing global stature.
Qualitative Paradigm Shift
On the domestic front where Modi had had the minus scores with the economy in ICU and the scars of the scams, he quickly effected qualitative changes. He had promised good governance. Even the adversarial media unanimously agree that there is no ministerial corruption now. Corruption is crass. But favouritism is insidious. It operates stealthily and through lobbies and friends. Modi has come down hard on snooping corporates--the high and the mighty-- for prying into government’s functioning, stealing documents and surreptitiously moulding government decision-making. Modi has hedged against any industrialist, however, powerful and mighty, from overawing the system. Ambani could not get from Modi the gas prices okayed by the previous government. Instead, they had to face penalty of Rs 3,500 cr. A newspaper not best known for its positive views on Modi studied and reported “industrialists and lobbyists are no more seen around in government buildings”. A colleague of Modi gloated,”The parade of industrialists outside the South Block and North Block is over. The corridors are empty. The silence is cheery.” A paradigm shift. Not just change. Is it not surprising to hear the charge that Modi Government is pro-businessmen!
Rs 4 lakh-cr Unlocked
Undoing the scams of the UPA Government and new policy initiatives have been Modi’s twin thrust on the domestic front. The two UPA scams-- the spectrum scam and the coal scam--have been corrected by a faultless auction route. The spectrum auction yielded a revenue of over Rs 1,00,000 cr. The coal auction to private parties and allotments to state owned entities, covering 67 of the 217 blocks gifted away by the UPA, has yielded Rs 3,35,000 cr royalty to the state governments and Rs 69,000 cr as tariff benefits -- unlocking a gain of Rs 4,00,000 cr to the public. But those, who fraudulently passed on the valuable resources to handpicked businessmen, are charging Modi Government which has got back Rs 4 lakh cr from them, as pro-business. Ironic.
India-specific Initiatives
The socio-economic initiatives of Modi Government are innovative and varied. The prominent among them are: the Jan Dhan Yojana [JDY]-- banking for unbanked; MUDRA Bank-- funding the unfunded; payment of subsidies through bank accounts; accident insurance of Rs 2 lakh at a throw away premium of Rs 12 per year; life insurance for Rs 2 lakh at an annual premium of Rs 350; public pension scheme with government contribution; gold monetisation scheme; black money law; Make in India initiative; marking LIC funds for Railway infra. These initiatives are based on the Niti Aayog philosophy to adopt what works in and for India and not simply import economics in SKD and CKD form not adaptable for India. Just take two innovative ideas. The JDY is India-specific banking solution. No foreign expert would approve of bank account for some one, who has no money to deposit. But in India bank account is needed to target relief to the poor, who cannot open a bank account. The success of JDY opens the possibility of the success of all pro-poor schemes. Over 15.6 crore bank accounts have been opened under JDY in less than 10 months. A stunning record.
Accounts with nil balance, 76 per cent in September 2014, were down to 54.6 per cent in May 2015. In the past the cashless accounts used to top 95 per cent. The most promising initiative is the MUDRA Bank --an India-specific financial model. It is devised to fund the hitherto unfunded 57.7 million micro and small business entrepreneurs, who are the backbone of Indian economy. More than half of them operate in villages. They generate 128 million jobs, over half in rural India. They include carpenters, blacksmiths, masons, auto-mechanics, cycle mechanics, vegetable vendors, washermen, small traders, electricians and hundred others of that type. They pay exorbitant interest rates ranging from 30 per cent to even 360 per cent as banks do not fund them. The moment MUDRA refinanced low rate loans are available in the market, the interest rates charged to them by existing private lenders too will crash. . Not many are aware that long term LIC funds are invested in short term stock market investments. LIC holds stocks of Rs 15 lakh cr. Its funds are meant for long-term infra investments. Modi Government has persuaded the LIC to invest Rs 1.5 lakh cr in Railways in three years. Again a huge shift in economic thinking. Manufacturing jobs had fallen by 5 million instead of rising in the UPA rule. Modi is attempting a correction through the Make in India policy. Manufacturing has potential to generate 90 million jobs in 15 years. The thrust seems to be having a positive effect on jobs. Online recruitment in the manufacturing sector shows a 62 per cent rise April as compared to the earlier year. Inflation has come down substantially. Half the fall is due to soft oil prices, but the other half due to anti-inflationary policies. The world is noticing India’s turnaround. The Economist magazine, which virtually wrote off India in 2013, now says that, according to the World Bank, Indian growth story will be fastest for the next 15 years, with India soon replacing today’s topper China. Modi Government started with a score of minus 5. His first year score is not to be calculated with Zero as the base, but with minus 5 as the base. He has risen from minus 5 to plus 7. A caveat: Two serious concerns remain. The BJP did not do proper home work on the Land Bill. It did not judge the mood of the Opposition, failed in its communication to people and began changing the Bill in instalments allowing the Opposition to consolidate itself. This has certainly cost the BJP couple of points. Two, the investment cycle largely remains stalled. Result: Banks have funds which they cannot lend; business needs funds which it cannot get. This catch-22 situation has to be handled to release the investment energies of the economy. The sooner the Land Bill is sorted out and the investment cycle starts, the better it is for Modi Government-- and the country.
S Gurumurthy is a well-known commentator on political and economic issues. Email: comment@gurumurthy.netAlso Read: Neutral Media and Narendra Modi's 365 Days in Officehttp://www.newindianexpress.com/columns/s_gurumurthy/Narendra-Modis-365-Days-%E2%80%93-from-Minus-5-to-Plus-7/2015/05/29/article2838322.ece