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Insights into Editorial: Outlining the first 100 days of the new Modi government


Insights into Editorial: Outlining the first 100 days of the new Modi government


Introduction:

According to the World Economic Forum, India is on the cusp of overtaking the United States to becoming the world’s second largest economy, with a consumer spending of $5.7 trillion, 77% of the population under 44 (80% among the middle class), and a billion Internet users, all by 2030.

A full majority government has been re-elected in India after many years. A young, aspirational India has identified itself with Prime Minister Narendra Modi and his “idea of India”.

 

Non-exhaustive agenda for Mr. Modi’s first 100 days:

In mission mode, Mr. Modi needs to expand his “home delivery of services” model (cooking gas, health care, multiple citizens’ services) to cover major government services.

Separating the “point of decision” of a government service from “point of delivery” will be a necessary condition to get red tape out of the way.

 

Technological Revolution in government services is the need of the hour:

Technology as the lifeblood has to flow through every major government programme, especially in agriculture and health care.

Through the ambitious ‘Digital India’ programme, which cannot remain a stapled-together version of the schemes of previous years; it needs to become genuinely transformational.

An ‘AAA’ Government or “Anytime-Anywhere-Anyhow” (or on any device or platform) delivery of services is still far away, which government needs to accelerate in deep collaboration with the private sector.

 

Reforms needed in Agriculture:

Loan waivers and input subsidies have not ameliorated rural distress, so the key policy shift is to move away from production to income.

Having promised $85 per small farmer as a direct transfer, the government needs to move from an inefficient, ossified cross-sector subsidy regime to an income-support model.

This is possible by expanding this to cover all farmers in terms of both value and volume.

This unconditional cash transfer should be an electronic transfer (banks, primary agricultural credit societies and post offices, with an area cap) keeping an eye on the fiscal deficit.

 

Harnessing data by Leveraging various technological tools:

India is emerging as a major ‘data economy’ with over 800 million mobile phone users, half of whom own a smartphone.

India needs to leverage the enormous data it produces and deepen use of an ‘India Stack’ everywhere.

However, India is way behind the U.S. and China in terms of artificial intelligence, data analytics and blockchain. It needs to pump in millions of dollars to make itself future ready, perhaps by first completing the fibre optic pipe that it begun to lay five years ago.

It needs to make it extremely simple for startups to start and die (should they wish to).

 

Need of Easier Regulatory Framework for more Capital Inflows:

India received about $11 billion in venture capital through 748 deals in 2018 (of $29 billion private equity inflows) but there is much more capital waiting to come if its unicorns and ‘soon’icorns (soon to be unicorns) benefit from an easier regulatory framework.

Mr. Modi needs to set up an “India First” Investment Agency directly in his office which should reach out to select ‘Fortune 1000’ companies to set up shop in India.

For example, why shouldn’t a Tesla set up its next gigafactory in India if it can be done at half the cost of doing it in Nevada?

After a deep dive into their annual reports, government needs to send empowered envoys to attract them for marquee investments (in exchange for assured job creation).

Credible incentives must include an exemption from India’s notoriously opaque land laws and bureaucratic maze.

This should not and must not be outsourced to any Ministry, for only the credibility of the highest office will make investors take such calls and commitments seriously.

 

Restrictive Labour Laws needs to be go away: Enhance Employment:

There are 200-odd labour laws that mandate companies with 100 or more workers to get government permission to lay off or even change job descriptions (which never comes).

Thus, India does not get the benefits of scale of huge factories with over 75% firms employing less than 50 workers, to escape such regressive laws.

There is a golden opportunity to compete with and take business away from Bangladesh (garments), China (toys, electronics and manufacturing) as their wages rise.

India can turn attractive by abolishing such restrictive labour laws, which will enhance employment by erasing a key factor that throttles India’s global competitiveness.

 

There are an estimated three million vacancies in government jobs in India and these are often left unfilled to keep the fiscal deficit low.

While many of these jobs are redundant for a “New India” in overstaffed sectors such as railways recruitment needs to start now through employment exchanges to buttress the dismal number of doctors, teachers, police officials to keep the ship moving.

 

Fast tracking privatisation:

There must be a start to the privatisation of Air India and the other top 10 public sector entities without the restrictive covenants that discouraged bidders the last time. It should not be a tinkering on the margins with privatisation as has been the case so far.

The bold reclassification of bad loans (of about $190 billion) to reveal their true picture needs to be followed by recapitalisation, a merging of banks, narrowing down priority-sector lending, and, finally, at least some privatisation.

This will stop bleeding coffers and send out a strong signal to the world that the present government favoured the business.

 

Way Forward:

The focus needs to be on execution and delivery. Prime Misnister should set up a delivery unit inside the Prime Minister’s Office using modern technology tools (OmniFocus and Slack), for deep monitoring and follow-up, programme-wise and office-wise.

The government’s relentless focus should be on results and not only on process and effort. This can be the next avatar of the Pro-Active Governance And Timely Implementation (PRAGATI) system.

 

Conclusion:

A surging 1.3 billion-strong “New India” identifies itself with Mr. Modi.

Economic super performance should become a causal effect for election victories and the perpetual intellectual and execution gridlock needs to be broken.

Mr. Modi has to deliver India victory in its war against poverty, the bureaucracy and every anti-prosperity force that holds it back. Make no mistake. This mandate is for transformational and not incremental change.