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The defeat in Delhi should bring back Narendra Modi's focus on big reforms

The NDA government has already lost some time in not pushing through the big reforms in its first six months of office - the so-called honeymoon period. After Delhi, the honeymoon is clearly over

Published: Feb 11, 2015 11:00:32 AM IST
Updated: Feb 11, 2015 12:30:02 PM IST
The defeat in Delhi should bring back Narendra Modi's focus on big reforms
Image: Adnan Abidi / Reuters

The BJP’s stunning defeat in Delhi at the hands of the Aam Aadmi Party (AAP) should focus Narendra Modi’s government less on politics and more on economics.

If the initial focus on winning state assembly elections was unavoidable since they came one after the other after the Lok Sabha elections, Delhi was where Modi and his party president Amit Shah seriously miscalculated. It should mark a turning point in their thinking.

While Shah should obviously take corrective action on the political front and fix the leadership issues in his party, Modi needs to focus largely on the economy. He can’t leave it all to Arun Jaitley, who appears to be a bit of a steady incrementalist. Elections may be won or lost, but the big election in 2019 will be won or lost only on the basis of his economic performance. 2015 should be the year of big-bang reforms. This is the year to take the big risks politically.

The NDA government has already lost some time in not pushing through the big reforms in its first six months of office – the so-called honeymoon period. After Delhi, the honeymoon is clearly over. But even now nothing is lost, if Modi can just focus on legislation and economic performance.

The budget needs to be super-good on the reforms front, and Modi and Arun Jaitley must stake their all to get key legislation through, especially the Land Acquisition Act. Even if they need to agree to some changes insisted on by the Congress or allies, the Act needs to be given top billing. Else, growth itself will slow down.

The second most important legislation involves allowing private mining in coal. An ordinance already allows for this possibility, but this must be liberalised further and legislated quickly. India can’t afford a coal monopoly.

The third most important legislation is to enable privatisation through executive action – but there is no such legislation currently in the works. If Modi has to find the resources for growth this year and the next, he can find them only by privatising banks and other non-strategic public sector companies. This needs a critical piece of legislation: an omnibus law that allows government to hold a golden share, with voting rights of 51 percent in certain defined circumstances like a national or economic emergency, even if the government divests up to 90 percent of the stock. This golden share concept should be extended to nationalised banks and all public sector organisations. This may need changes in the Bank Nationalisation Act, and various laws relating to the acquisition of public sector oil companies.

What Modi should do is keep a restricted list of public sector companies that will never be disinvested below 51 percent. I can think of a few like SBI, one or two more big banks, ONGC, Indian Oil, and some defence production companies. Even the railways can ultimately be privatised partially, but that fight can wait for another day.

The 2015-16 budget is the most important one since 1991, and the legislations proposed above are absolutely essential for India to hit a higher growth path.

What Modi needs to remember is this: elections can be lost here or there, but the country’s growth opportunities cannot be repeatedly lost by government’s failure to take bold decisions.

India has a positive demographic window for the next decade or two, after which growth will again start to falter as the population ages.

India also has a huge youth population, which is looking for jobs and growth to provide them with hope.

Modi’s election in 2014 and AAP’s spectacular win in Delhi yesterday (10 February) are driven by the same demographics of hope. The young are willing to give parties a huge mandate, in the hope that they can deliver jobs and income enhancements. Their anger will be palpable if they don’t deliver.

This is the message Modi needs to take to heart. He still has more than four years in which to deliver. But he can’t do it if he lets 2015 become yet another year of politics and minor reforms.

To be sure, Modi has worked hard on all fronts, including economic reforms (diesel deregulation, ending policy paralysis, easing rules for business, etc) but the public perception is that he cares more about political outcomes than economic ones.

In 2015, he needs to reverse this. If he misses this chance, he may lose it forever.

(This article was first published on Firstpost.com)

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  • Manimaran

    the author of this piece of article is seems to bean advocate of theoretical economics. if modi wants real devolopment , what he should do is eliminating corruption in almost all sectors,including judiciary.if corruption is eliminated, india will grow corruption is the one and only obstacle for the development of india. without eliminating corruption, no schemes, plans... will not yield result.

    on Apr 23, 2015
  • Dr.a.jagadeesh

    Excellent article. The Delhi election results that too of Union Territory cannot be taken as referendum on the Country's Prime Minister and ruling party's policies. Certainly Modi's popularity was on the rise,thanks to Media hype and no opposition. As somebody put it 'Narendra Modiji was quite different in Action when he was Chief Minister of Gujarat but as Prime Minister more slogans less concrete action especially towards welfare of lower and middle classes. Prices of essential commodities are on the rise. Though Narendra Modiji's popularity has gone up, thanks to his visits abroad, at home people's expectations are high and towards this end many are disillusioned. THINK GLOBALLY AND ACT LOCALLY will be the best policy ,Narendra Modiji. Here are the top 10 quotes from the PM's address at the Independence Day: 1. I can promise you. If you work 12 hours, I will work for 13. If you work 14 hours, I will work for 15 hours. Why? Because I am not a pradhan mantri, but a pradhan sevak. 2. I am an outsider in New Delhi. I have stayed away from the elite in this city. In the 2 months I have been here, I now have an insider view. I was astonished. I saw many governments functioning within a government. One department is fighting the other. So, we are trying to break this wall; we want to have one mission and target: Take the nation forward. 3. I come from a poor family and I want the poor to get dignity. We want to start a movement for a clean India. If we have to build a nation, let us start from the villages. 4. Be it caste or communal violence, they stall the growth of the nation. Let us affirm that we will be free from these tensions. 5. Can someone tell me, whatever we are doing, have we asked ourselves if our work has helped the poor or come to benefit the nation in any way? We should come out of the 'Why should I care' attitude and dedicate ourselves to the nation's progress. 6. India used to be known as the land of snake charmers. Today, our IT professionals have left the world spellbound. 7. From ramparts of the Red Fort, I would like to call people of the world to 'come, make in India'. I want to tell the global companies that we have skill, talent and discipline... From electronics to electricals, from chemicals to pharmaceuticals, come, make in India. Paper to plastic, automobiles to agricultural products, come, make in India, from satellite to submarine, come, make in India. We have the capabilities. Come here and manufacture in India. Sell the products anywhere in the world but manufacture here... we have the power, come I am inviting you. 8. The mantra of our country's youth should be to at least make 1 product that we import. Don't compromise in manufacturing; Stress on Zero defect, Zero effect (impact of environment). Our manufacturing should have zero defects so that our products should not be rejected in the global market. Besides, we should also keep in mind that manufacturing should not have any negative impact on our environment. 9. I want to ask parents, when daughters turn 11 or 14, they keep a tab on their movements. Have these parents ever asked their sons where they have been going, who they have been meeting? Rapists are somebody's sons as well! Parents must take the responsibility to ensure that their sons don't go the wrong direction. 10. India's sex ratio is 1000 boys for 940 girls. Who creates this disparity? It isn't God. Don't fill your coffers by sacrificing the mother's womb. People feel that sons will take care of them when they are old. But I have seen aged parents in old-age homes. I have seen families where one daughter serves parents more than five sons. So much hype has been given to Swachh Bharat Abhiyan (Clean India Mission), is a national campaign by the Government of India, covering 4041 statutory towns, to clean the streets, roads and infrastructure of the country.The initial push has slowed down. Prime minister Narendra Modi has unveiled a massive initiative to provide bank accounts to the poor, a milestone program in a country where over a third of the population has no access to any financial services. This is the new government's first welfare program, launched a 100 days after taking over. The Jan-Dhan Yojana (translated as people's wealth program) was launched. The government announced that state-run as well private banks primed for the program had opened 15 million bank accounts on the launch date itself. Unless the follow up action is there,it will remain on paper. After 'Digital India' and 'Make in India', the NaMo Government is to launch yet another programme. This one is a revised version of programmes launched earlier under the skill development policy. This new programme, called 'Skill India', is supposed to be a multi-skill programme. It will be launched in March 2015. Like all other programmes, 'Skill India' too is a dream project of Narendra Modi The present Government should not think all previous Government policies and programmes should be dispensed with. In fact Rajiv Gandhi Missions to promote planned and balanced development in the areas of social security, agriculture and animal husbandry, health and population, education and literacy and water resources conservation were excellent. Even subsequent Congress Governments did not act further on these missions. The previous Government has drawn a plan to set up a dedicated Rs. 5,000-crore fund to boost scientific innovations that can improve the life of the common man. The Union Government will initially contribute Rs. 100 crore to this fund - to be called India Inclusive Innovation .The remaining amount to the fund will come from scheduled banks, insurance companies, corporates and high networth individuals as well as bilateral and multilateral The inclusive innovation fund was built on the principle that innovative enterprises can profitably, with scalability, and competitively engage citizens at the lower strata of the economic pyramid. In doing so, goods and services could be provided that could transform their lives.India and several other emerging economies need Innovation for inclusion to raise the living standards of people. Creativity,Innovation and Invention are the pillars of Progress. Narendra Modiji give top priority to promote Innovations by continuing this Innovative policy on Innovations ofcourse with a Hindi name. Narendra Modiji ,You have been emphasising Solar Energy. Of course Solar Energy is an important component of Renewables. But in a Vast and populous country like ours,we need decentralized energy systems like wind,biomass,biogas,biofuel,micro and n=mini hydel besides Energy Conservation. Here is an action plan for India on Renewables to bring in Rural Prosperity: 1. Promote Offshore Wind Farms. 2. Promote small wind generators as decentralised systems 3. Roof Top PV Solar 4. Creating Renewable Energy Fund. Investment by Income Tax Payers to be exempted under Section 80C. 5. Wind Farm Co-operatives on the lines of those in Germany,Denmark etc. 6. Solar Co-operatives on the lines of those in US. 7. Energy Conservation by replacing most of the inefficient 2.6 million irrigation electric pump sets(About 30% power can be saved). Agriculture consumes much power next only to Industry 8. Reading lights with reliable and quality dual powered(Solar/Electricity/USB) to save enormous energy. 9. Biofuel/Biogas for power generation and cooking from Agave/opuntia care-free growth,regenerative and CAM plants. In China Biogas for cooking is supplied trough pipes. In the vast vacant land in India Agave and Opuntia can be grown and power generation established as decentralised locally. 10. Simple Box Type Solar Cooker with frying facility( 3D approach,Design,Demonstrate and Disseminate) 11.Cost effective vertical and cylindrical,mobile solar water heater design. 12. Low head Micro hydro device to generate power from the head of falling water from the delivery pipe of Electric/diesel pump sets. 13. KW size Biogas power/cooking plant for villages. 14. Simple solar drier 15. Growing CAM Plants in Waste and Vacant lands which act as Carbon Sink. Energy Conservation https://www.scribd.com/doc/250077351/Energy-Conservation Put the RENEWABLES to WORK: To get in exhaustible, Pollution- Free Energy which cannot be misused. Dr.A.Jagadeesh Nellore(AP) India

    on Feb 12, 2015
  • Manimaran

    reforms should be consistant with the basic stucture of economy.indian economy is basically an agro based economy.budget allocation for agriculture should be done keeping this in mind. allmost all the sectors are related either directly or indirectly with agriculture.in order to devolap agriculture public expenditure should be planned to increase area under cultivation.ganga kauary link project is the only available way for this.other plans by bjp will yield adverse results in the long run.

    on Feb 11, 2015
  • Communal

    I think Modi should reform himself before reforming India.

    on Feb 11, 2015
    • Manimaran

      rightly said.if modi is clean with out any ulterior motive ,he shouldn\'t inducted gadkari in to his cabinet.

      on Apr 23, 2015