BJP Changes of Guard: Impact on India's Economic Fortune
By Gopal Krishna Agarwal,
Gopal Krishna Agarwal analyses the rise of Narendra Modi and its
impact on Business sentiments, trade and investments in India.
Narendra Modi chief minister of Gujarat was appointed a member to the
parliament Board the highest decision making body of Bhartiya Janata Party in
March this year. Later in September, He was declared the Prime Minister
Candidate of the National Democratic Alliance (NDA). In 200, He Became Gujarat’s
CM and after reelection in 2002, 2007 and 2012, heads a corruption free,
transparent and an efficient administration in the state. Though regularly
attacked for the 2002 Gujarat riots. Modi is also praised for outstanding
administration in turning Gujarat into an economic powerhouse. He has been
successful in bringing the development plank as an election agenda.
Will India Shine Under NaMo?
Though Modi’s appeal cut across all classes, regions and age groups, it would not be an exaggeration to say that the Indian business community, youth and burg coning middle class are the biggest votaries of Narendra Modi. The fact that the Indian business community, generally obsequious and fawning before government of the day has risked the wrath of the present regime in doing so speaks volumes.
The economy is going through done of the most difficult times in recent memory. The UPA II government instead of navigating the economy through the turbulence caused by global factors, has exacerbated it through clumsy policies, entitlement schemes without proper budgeting and the worst kind of kleptocracy. There are both political and economic factors affecting business sentiments, trade and investments. Politically, we have a situation where there are different centers of power and responsibility. A cabinet in which ministers pull and different directions and a government that a lacks conviction in its own policies. The present macro economic situation is rife with sticky inflation, rising fiscal as well as current account deficits falling rupee slow pace of reforms and an overall policy paralysis. These two sets of factors have dealt crippling blow to business sentiment and trade and investments. We are in a situation where the finance minister of the country is trying to convince global capital to come to India of a time when even Indian capital is looking for markets abroad.
Modi Mantra in Gujarat
So what are the defining characteristics of Narendra Modi’s style of
managements that is relevant from the macro-economic points of view? He has
focused on ‘less government and more governance, which broadly means
unobtrusive but effective government. His e-governance model with decentralized
decision making and power is his major forte. He has also emphasized on a
transparent corruption free, consensus oriented good governance model with
emphasis on inclusive participation, timely clearance of project proposals
focus on infrastructure improvement and revival of agricultural sector. The government follows the rule of law with
efficiency and effectiveness and is accountable to the people. His decision-making
is quick and timely and believes in single window clearance as we seen in the
case of Tata’s Nano project. Gujarat under Modi’s leadership has excelled in
infrastructure development and has created world class linkages acting as a
backbone in the present global competitive scenario. The successful functioning
of the BRT public transport system in Ahmedabad is one such shining example. He
has been instrumental in creating urban landscape at par with international
standards. Gujarat has successfully implemented power sector reforms and is
supplying 24*7 powers to 100 percent of villages.
Modi Means Business
The Government under Modi would definitely improve business sentiment leading to an increase in both trade and investment. Sustained growth rarely occurs and autopilot. It requires competent leadership at the top. The most fundamental change from the present government would be the absence of the dual power centers. The de jure center of power would also be de facto one. This would impart realism in policy formations which is greatly missing today. The right of center ideology subscribed to by the BJP and Modi does not see itself in an adversarial relationship vis-à-vis the business community, but as partners to realize the potential of the country. This in itself would be a major change that would affect business sentiment positively. The NDA under the leadership of BJP was focused on improving physical infrastructure, which would continue under modi. We are trained to think that the best rate the agriculture sector in India can achieve is 4 percent, but this has been believed by Gujarat experience. Where the agricultural sector grew by around 10 percent for more than a decade. We should therefore expect a paradigm shift in the way the agricultural sector would be dealt with under Modi. This focus on physical infrastructure and agriculture would remove supply bottlenecks and would bring down inflation. Better infrastructure would also make our exports more competitive and boost trade. A lower rate of inflation would allow the monetary authority to lower interest rates and thus revive investments. A focus on urban infrastructure for rural areas and rising rural income would also augment domestic demand, as more than 60 percent of our total population is living in rural areas. It was under the NDA government that the FRBM Act was enacted and fiscal responsibility targets were met. At the National level the BJP is assimilating good governance models of its various state governments and intends to replicate them on a Pan India Basis, whether it is the socially inclusive focus of Madhya Pradesh government or the Public Distribution System (PDS) of the Chhattisgarh government. Modi would also put the economy back on the path of fiscal consolidation considering his treatment of state owned enterprises in Gujarat, it would not be wrong to expect that they would be given operational freedom to achieve efficiency and scale.
First among Equal
How does Narendra Modi fit in the whole scheme of things? It is an undeniable
fact that Modi is first among the present day BJP leadership Modi has a very
wide acceptance amongst young voters and considering the present Indian
demography, is most suited to capture the youth bulge. In the 2014 elections
around 120 million voters would be voting for the first time. In is under his
leadership that the party has the most realistic chances of surpassing its
previous tally of 182 seats. It has been the experience that voters consolidate
towards the winner in sight. As far as his ability to bring coalition partners
on board is concerned, we already see two parties jockeying to align with BJP
in Haryana. These would improve with the elections drawing near. It has anyway
been the experience that parties come together to form the government only
after elections and very few parties enter into a pre-poll alliance. Future
uncertainly harms business sentiments to a great extend but as we move towards
overcoming this uncertainty one sees gradual improvement in business sentiment.
People who grudgingly accept the development of Gujarat under Narendra Modi claim that this success cannot be replicated at the Pan Indian level as he would be hamstrung by coalition partners and powerful leaders within BJP unlike Gujarat where he virtually has free rein. We believe that not only would he be able to repeat the success of Gujarat, But would also surpass it. It should be noted that considering the very limited powers of state in India. Narendra modi’s achievements are indeed commendable. He has infused new hope and confidence in the people of the country. Particularly the youth that comprises 65 percent of the total population. He has been able to generate the can do spirit that is evident in the national and international business and political community. Under the stewardship of Narendra Modi. India would be able to achieve its true economic potential and become an economic super power.
No comments:
Post a Comment