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Six (6) Months of Modi Government


21-11-2014Six (6) Months of Modi Government


Narendra Modi has been at the helm of power for six months now and it’s time to look back on the journey so far, for a reality check and review of what was promised versus what was achieved.

Narendra Modi fought the elections on a development agenda promising the nation to set India on a path of rapid development. He rode in with a massive mandate, unseen and unexpected by a largely pessimistic nation that almost gave up on development and growth and was resigned to the conundrum of coalition politics.

Modi’s Rising International Stature

Modi demonstrated India’s willingness to offer due respect and attention to its neighbours by inviting SAARC leaders to attend his swearing-in ceremony.

He has certainly managed to bring India into international attention, not just politically but economically as well. His early pronouncement on initiating reforms demonstrated his intent and gave the international investor community the confidence that India meant business.

Narendra Modi has shown political sharpness of Chanakya along with a long term vision. Leaving the domestic challenge of consolidating the party gains in the Lok Sabha elections and extending its influence to various states, to his trusted lieutenant Amit Shah, he has focused on the onus of attracting foreign investment to India.

Given the warm reception he got in Japan, at the Madison Square Garden in New York and the Allphones Arena in Sydney, he soon began to position himself as an emerging statesman of international standing.

Clever Diplomatic Moves

On the development front, he has many achievements to his credit. The most important of which has been the turnaround in investor sentiment, both in India and overseas. The Sensex has broken the record level of 28,000 in November 2014 from the depths of 17,000 seen last September. That’s no mean achievement, given the lows seen at the fag end of UPA-II regime.

His visit to Japan was largely successful and has managed to convince Japan to commit US$ 55 billion investment in India. He invited the Japanese to invest in his dream project to build 100 smart cities, along with the High Speed Train network in India.

Similarly, his trip to China was seen to neutralise the China threat on border dispute by putting development agenda on the fore front. The Chinese have welcomed his openness to Chinese investment in infrastructure and they have committed to invest US $ 35 billion over a period.

His US visit saw him engage the US in a strategic dialogue and also to push his ‘Make in India’ agenda in defence production.

Much to Deliver on the Domestic Front

On the domestic front, it’s been a mixed bag with a clear picture yet to emerge. The business community had high expectations of path-breaking reforms to kick in with Modi riding to power on a majority mandate. That hasn’t happened, at least not as yet. Contrary to expectations, the Modi government has taken a more cautious approach with an eye on elections in different states. The government has made slow but steady headway on the much needed GST and is still trying to get a buy-in from states to approve the Bill when it comes up for discussion. Public sector disinvestment is yet to take off. On Air India, the government has taken a decision to infuse more capital into the ailing airline.

The manufacturing sector is suffering from a credit squeeze and lack of labour reforms has been holding back the sector. The Modi government initially did give strong indications that it was willing to take bold decisions in reforming the archaic labour laws but is yet to take a clear stand, given the strong resistance from existing trade unions.

Land acquisition has been a contentious issue and the government is trying to work out an acceptable formula.

However, the government has taken some positive steps. In a step to boost defence-related manufacturing in India, the government has increased FDI limit from 26 percent to 49 percent, and extending to 100 percent in some cases involving total transfer of technology.

Insurance sector has got a boost with FDI limit being raised from the earlier 26 percent to 49 percent. To boost infrastructure and construction sector, the government has increased investment up to 100 percent, while announcing easier terms for road and highway development, which has been suffering from land acquisition and funding issues.

The other achievement has been to announce cancellation of allocated coal blocks and calling for fresh auctions. The new government has shown its resolve in addressing contentious issues regarding the iron ore mining sector.

The government has taken the first step towards deregulating diesel pricing and is also open to retailing of diesel by private players.

It has initiated a major programme to bring all people under the banking system by launching the Jan Dhan Yojana. The banking sector was pushed to action and brought 70 million people into the banking system, who were not part of the system earlier.

However, the other side of this achievement is that 56.64 million of these new accounts do not have any cash balance. Also, only 43.3 million have been provided the RuPay debit card. This does bring into question the achieving of numbers versus the fulfillment of the overall objective.

Conclusion to the first 6 months of Modi Government

The Modi government has certainly raised the bar on government action and has raised people’s hopes and faith in governance. Modi has managed to galvanise a nation that was stopping to believe in itself and has succeeded in instilling a sense of pride and patriotism not just in the countrymen, but the entire Indian diaspora.

The international community has given a thumbs-up to this government and it is now for Narendra Modi and his administration to build upon the widespread expectations.

The coming Budget will give a clearer picture whether this government walks the path of reform or it lets political gains take precedence.

WBDC20.11.2014

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Last Updated on November 21, 2014, 4:07 pm