India voted for a decisive break with the past and voted Narendra Modi and the Bharatiya Janata Party to power 11 months ago. It’s been a year marked by optimism about the future, hope for a new beginning and expectations of a better tomorrow. Now, a month a bit short of one year after that momentous event is a good time to draw up a balance sheet of the new government.
To do justice to this exercise, it will be necessary to draw up a list of promises and posit it against the government’s achievements or lack thereof before drawing up the interim report card –interim because governance is a work in progress and many of the initiatives are still to play themselves out fully.
On the economic front, Modi’s rise to power has led to a sea change in both perceptions and ground realities. The government has taken several steps that have restored the faith of global investors in the India Growth Story.
The economy is slowly turning around, GDP growth has picked up, inflation is benign and sound management have brought macro-economic indices such as fiscal and current account deficit under control. Interest rates have started falling across the board as a result and this should, in the coming months, lead to a rise in loan-fuelled consumption and demand growth that will almost certainly result in a more robust growth in the investment cycle.
This is no mean achievement for a government that had inherited an economy that was being buffeted by negative global and domestic headwinds less than a year ago.
Then, despite a concerted opposition campaign that the BJP government is pro-corporate and, therefore, pro-rich, the fact is that this government has done more for the poor in 11 months. The Jan Dhan Yojana, which has ensured that every Indian family has at least one bank account, has done more for financial inclusion than any other initiative in the history of India. So much so, that the World Bank is now considering seeking Indian help to roll out similar schemes in other parts of the world.
Further, Finance Minister Arun Jaitley unveiled India’s first universal social security scheme in his first full Budget when he announced universal medical insurance at a negligible cost of Re 1 (less than 2 cents) per month per person.
And finally, the launch of the Mudra Bank will provide finance to small and micro businesses run by almost 60 million entrepreneurs, more than half of whom belong to so-called backward castes and minority communities – historically the most financially excluded communities in India. This sector employs 120 million people or a quarter of India’s workforce but gets only 4 per cent of institutional finance.
Several other major initiatives, such as Make in India, that seeks to transform India into a manufacturing powerhouse, Digital India, which leverages technology to deliver governance and essential services to the remotest corners of India and Swachh Bharat (Clean India), which has set a target of ending open defecation in India in a time-bound manner, are also transforming the way India functions.
Most importantly, all these major economic initiatives have been launched and are being implemented without a hint of corruption or scandal, which had, unfortunately, become synonymous with the way India functioned in the past.
On the foreign policy front, Modi has re-energised ties with neighbours and even reached out to Pakistan to try and resolve a strained and often bitter relationship. Modi has also reset floundering ties with the US, deepened and strengthened bilateral cooperation with Japan and the Asean, who had become frustrated with India’s reluctance to play any meaningful role in ushering in a new security and economic cooperation architecture in Asia.
And he has also started afresh with China, with whom ties had been prickly in the recent past. There are indications that Beijing is being more accommodative of India’s interests following Modi’s multilateral approach, especially his outreach to the US, Japan, the ASEAN and the European Union.
All these are huge pluses. If there is an area of concern, it is the loose statements by some motor mouths in the BJP – who do not set official policy but still vitiate tensions and divert at least the media attention from Modi’s single focused development agenda. But Modi has demonstrated – he is not a man for turning.
So, overall, it’s been a good beginning. Many of the initiatives will take another few quarters to show results. It will be possible to draw up a more detailed report card on this government then.
For now, it will be fair to say: “Two-and-a-half cheers for Modi”
This was published in BDO’s The Indian Tiffin – http://bdo.in/theindiantiffin_edition2/#
Manoj Ladwa is the founder of India Inc. and chief executive of MLS Chase Group @manojladwa
