Earlier this month, the National Democratic Alliance (NDA) marked the completion of two years in office, with the same planning and precision that it approaches its election campaigns. Specific ministers were dispatched to different cities to participate in discussions on the government’s achievements. Those heading important ministries, such as power, roads, railways and finance, have spewed details of their achievements on social media and were generous with interviews to Indian and foreign media. That the second anniversary coincided with elections in four important states probably meant that the publicity was an indirect campaign tool as well, and given the results, it seems like a smart move too.
I was invited to one such panel discussion on the Modi government’s performance. The questions from the audience and its reactions to the designated minister’s replies made one thing very clear—most people are happy to lap up the hype and the claims, whether or not there is any impact on their own lives even in terms of lower food inflation which is understood by all.
Of course, there are plenty of positives that the NDA can justifiably tout. GDP growth is strong; foreign direct investment is high; and overall inflation is under control. Prime minister Narendra Modi’s personal popularity remains higher than that of any other politician today, even though it may have waned a bit under the burden of massive public expectations of high-speed reform and rapid change. There have been no major corruption scandals in the past two years, although corruption issues are just as bad when it comes to dealing with lower rung officials in most government departments. Many of the problems that the government is grappling with, such as the bad loans of banks ballooning to a massive Rs8 lakh crore, are a legacy of the past and cannot be laid at the NDA’s door. However, the bigger worry is that the government has failed to take advantage of the low oil prices that have shown a steady uptrend in recent weeks. Let’s look at some hits and misses of the past two years.
Among the earliest successes claimed by the government are the Pradhan Mantri Jan Dhan Yojana (PMJDY) and the two insurance schemes. Going by the government’s figures, it is, indeed, a stupendous success with 218.1 million accounts opened and Rs37,616 crore in deposits. The Jandhan accounts come with a Rupay debit card which has a built-in accident insurance of Rs100,000. The government reports that 94.3 million Suraksha Bima Policies and 29.6 million Jeevan Jyoti policies have been sold since the launch of the schemes.
The key to any insurance is the number of claims settled. Here, too, the record is very good, so far, albeit with very low claims. Under the Rs30,000 life cover offered under PMJDY, 2,799 claims were received and 2,425 were settled (with 360 invalid claims), until 13th May this year. The Rupay card has also received 1,080 claims of which 735 were paid, 261 rejected and 84 are under process. The real question here is: How many PMJDY accounts are examples of true inclusion through first-time accounts and how many have used easy KYC norms to park funds in second accounts?
On the flip side, the same public sector banks (PSBs) that have been forced to lead the financial inclusion effort are also leaders when it comes to massive bad loans estimated at a stupendous Rs8 lakh crore rupees. While the Reserve Bank of India’s (RBI’s) loan recognition norms have exposed the extent of behest lending, crony capitalism or lax project appraisal in PSBs, the government seems to have no clear idea of how to set things right. Is the Bank Board Bureau going to provide answers? What we know is that two Gyan Sangams have not shown the way.
There is no change in slow and confused appointment policies, or any attempt to provide more autonomy to senior management along with increased accountability. Meanwhile, protests by trade unions are likely to escalate, since most employees are clueless about what the government has in store for them. The unions squarely blame bad loans on cronyism and political interference and have some justifiable concerns about their future, since the government has yet to articulate its plan or policy with regard to bank mergers, new bank licensing or privatisation. All of this is already overdue.
There is a general consensus that three infrastructure ministries are doing excellent work: power, railways and roads. Of these, the power ministry, under Piyush Goyal, has been on a fast track, in line with the prime minister’s announcement on 15 August 2015 that all un-electrified villages (18,452 villages have been identified) would be electrified within 1,000 days. According to a Reuters report, the PM is pushing for the target to be met before the Union Budget of 2017. In effect, the PM hopes that this will pay dividends in the crucial assembly elections for Uttar Pradesh. Like the PMJDY, there is a dashboard that is constantly updating progress at http://garv.gov.in/dashboard with details of the officials who can be contacted for work to be done.
Without going into details about road, rail and infrastructure projects, one can only say that grand announcements and project outlays running into thousands of crores of rupees must only be evaluated in terms of actual implementation, because many key projects are stuck for over 50 years and mired in controversy.
A big damp squib of the NDA is the Black Money Bill that has only ended up giving draconian powers to the income-tax (I-T) department. This has been partly offset by reworking the double taxation treaty with Mauritius with plans to extend this to other tax havens, to plug treaty shopping designed to avoid taxes. The long over due Insolvency and Bankruptcy Bills touted as another big achievement of the NDA. However, as Debashis Basu wrote in Business Standard, the plans for a large regulator like SEBI (Securities & Exchange Board of India) and cadre of certified insolvency professionals could turn it into another unwieldy bureaucracy that defeats the intent of the legislation itself.
The past two years have been about huge schemes with catchy names, launched at mega events in a blitz of publicity. Some have worked, others have flopped and the jury is still out on a few. These include Skill India, Start Up India, Make in India, Digital India, Mudra and Swachh Bharat and improving the ease of doing business. There is apparently a lot happening with all these initiatives, but we have still to see tangible results in terms of higher employment numbers and greater investment. Indeed, we need to worry about the inevitable slowdown in e-commerce and logistics, which has been a big employer of unskilled youth, who have led the consumption of mobile phones, motorcycles and other consumer goods, usually purchased on equated-monthly-instalments. We see no concern, as yet, on the implications of this slowdown.
A granular assessment of every ministry of the Modi government shows that it has done a lot more than any previous government; but much of the good work is marred by three problems. First, there is excessive hype, slogans and announcements. Without an engagement with key stakeholders, or a clear plan and vision, such hype raises questions about the targets claimed to be have been achieved. Second, reliance on the same bureaucracy to deliver different results seems to be tripping up the government too often. This is evident in the handling of tax issues, whether at the corporate level (Vodafone) or individuals. Thirdly, the slogan of “minimum government, maximum governance” which gladdened our hearts in the run up to May 2014, still seems a distant dream.