by Harish Gupta, National Editor, Lokmat Group
In
May 2014, Narendra Modi, on assuming power as India's Prime Minister,
seemed an epitome of strength in stark contrast to UPA in its last
leg. But it took only a few months to find the Modi administration's
Achilles Heel—its deficit in numbers in the 245-member Rajya Sabha.
Pitted against an opposition determined to crush Modi's reputation as
a human dynamo, if not his credibility, the government had to sit out
as scores of its bills got stalled in the upper house. The government
was crippled and the opposition thought it had won.
However,
the Congress' fencing in the Rajya Sabha is showing gaps that may
soon be wide enough for Modi to ride through. Come August 1, when
biennial elections fall due to 56 seats across 15 states, and seven
more nominated members are replaced by 'eminent' personalities chosen
by the present dispensation, the NDA/UPA difference will be greatly
neutralised. But the real change lies in the growing pull of BJP
among large regional players, like TMC in West Bengal, BJD in Odisha
and, significantly, both SP and BSP in Uttar Pradesh.
But
the number game in Rajya Sabha has only begun. In Andhra Pradesh, one
has to watch if TDP gifts an assured seat to BJP minister Nirmala
Sitaraman or INLD offers an olive branch in Haryana. And how many
seats are gained by BJP's 'frenemies', like SP, YSR Congress and TRS
is yet to be seen. And AIADMK, always a supporter of Modi except on
the GST Bill, may get even closer to him if it is returned to power
in the state for another term. No doubt it is Modi's skill as a
player on India's vast political chequerboard that has begun to reap
dividends.
But
he is lucky not only on the political front. The met department's
forecast of 106 per cent of July-September "long period average"
rainfall, after two years of below-average showers, has given a boost
to demand which is so overwhelming that it kicked off a week-long
stock market rally. Perhaps, rain Gods are also smiling at Modi after
two years of drought. The Index of Industrial Production has
registered a two per cent rise in February after months of
contraction. Of course this rate of growth is midget sized compared
to the 6 per cent that India has clocked on an average in the past
ten years. But it is the first green shoot after a long drought. It
synchronises with yet another happy tiding, that of the consumer
price index rising only 4.8 per cent in March from over 5 per cent.
Significantly, this drop in retail inflation is due to moderation in
food prices, a key factor that can put more disposable income in the
hands of the rural population. Besides, it signals the prospect of
agriculture turning the corner at last, after a minimal growth of 1.1
per cent in 2015-16 and generally lackadaisical performance in the
past. Tied to that is the destiny of half the country's population
engaged in agriculture, a sector that contributes only 15 per cent to
GDP.
Optimism
about India under Modi is not limited to his loyalists and RSS bhakts
in the country. It is shared by some of the world's largest Private
Equity funds who specialise in the art of investing in businesses
that has the prospect to grow in the future, often on a 10-year
horizon. Carlyle, the world's second largest PE fund, in a note
circulated by its director of research, has noted: "The most
optimistic forecast for 2016 GDP growth in China (7%) matches the
most pessimistic for India". It quotes IMF data to put India's
expected returns on incremental capital (a single unit of capital
newly deployed) between 2016 and 2020 at 24.7 per cent. It is twice
that of the global figure and 1.7 times of the Emerging Markets. Be
it power, railways, roads, airports and ports, the signposts of
future growth, India has come a long way in the past two years.
Under
Modi, India's politics is moving away from its traditional populist
mould. Earlier, Congress was identified with its populist
programmes—be it MGNREGA, PDS or doles. The real gains from them
remained doubtful due to lack of strict monitoring mechanism and
corruption. But Modi, the pragmatic leader, is doggedly pursuing Jan
Dhan Yojana, Mudra and Aadhar, projects that bring welfare within the
scope of audit. Only future can tell how much of wasteful expenditure
Modi's fiscal filters are going to save. He is painted as hardhearted
but that did not deter him, or his colleague, Maharashtra chief
minister Devendra Fadnavis, to send wagons of drinking water to
parched Latur. Modi may have failed to keep his election promise of
bringing black money hoarded abroad back to the country. But his
government is taking plenty of measures to raise the cost of tax
evasion within the country. He is determined to regulate the sectors
that shelters black money, such as property, jewellery, natural
resources etc.
He took the bold decision to allow 100%
FDI in e-commerce companies thereby eliminating circulation of black
money in retail and wholesale trade. He may have been opposed to some
of the UPA’s schemes as Gujrat Chief Minister. But he is a fast
learner. Once he realises the gains of a scheme, he doggedly pursues
it. The way he is going after domestic black money and didn’t yield
an inch is an indication of his well crafted strategy. He knows that
he is creating an army of Modi-haters. But he had an inkling that the
wheel of economy will surely turn. With RBI Governor Raghuram Rajan
showering praises on him, the ACHHE
DIN are not too far. Narendra
Modi is not a hasty reformer. But nor was Deng Xiaobing, the maker of
modern China, who said it is a good policy “to cross the river by
feeling the stones”
(The
author is National Editor, Lokmat group)
