Reforms & Governance under Modi

Doing it right is as important as doing the right thing. How does the government measure on this count?

 

A year-end rush of action is probably Narendra Modi’s way of responding to the growing impatience for the strong decisive policy changes that everyone has been expecting from him.

 

Among a slew of decisions, the government has promulgated several ordinances covering land acquisition, coal mines, arbitration and insurance. Will achchhe din follow in 2015? 

 

We do hear that Mr Modi, his ministers and bureaucrats have been working round-the-clock. But many of us have been dismayed at the noise over religious conversions dominating public discourse, while there has been less action on the prime minister’s (PM) election promises. And when important Bills needed to be passed by parliament to push reforms, fringe elements in the Bharatiya Janata Party (BJP) gave the disparate opposition frequent opportunities to gang up and prevent the Rajya Sabha from functioning.
 
Foreign investors are clearly more optimistic about policy reform being on the right track, despite 10 years of watching reforms derailed under the Congress-led alliance. They are even impressed by the ordinances. 
 
Chetan Ahya of Morgan Stanley India, in his year-end note, says that GDP growth shows signs of revival after the ‘sharp deterioration’ in recent years. He flags the key drivers of growth as: land reforms to ease acquisition; labour flexibility for the formal sector; tax reform, especially introduction of the goods & services tax; revival of infrastructure investment and improving the overall ease of doing business. 
 
On ease of doing business, Morgan Stanley lists the government achievements as: online environment and forest clearances with prescribed timelines; project monitoring and plans to set up an integrated approval process (for all ministries) by March 2015 and steps to remove the discretionary power of labour inspectors to simplify compliance of labour laws. 
 
All these are positive developments that will reduce a big source of harassment for industry but have not been discussed in the media much. Indeed, there is much to be optimistic about Modi sarkar’s actions in the last days of 2014. But there are concerns too. 
 
While the ordinance route signals that the government means business, the fact is that important legislative changes are not going through the parliament, nor is there any attempt at public discussion or taking all stakeholders into confidence. The government is coming across as one that only talks to business and chambers of industry. 
 
We need the PM to employ his famous communication skills and use his mann ki baat chats to explain his policy direction. We need to know how these policy changes will improve governance, reduce corruption and make policy-makers accountable to the people. On 1st January, the PM took to twitter to explain why NITI Aayog would replace the Planning Commission; but he has remained silent on why his government ham-handedly blocked dozens of websites on 31st December. This sends contradictory signals from our most skilled communicator and social-media-savvy PM.  
 
The government must realise that people are keenly interested in issues that affect them. It is this interest that brought people out to vote and gave the BJP a sweeping victory in the 2014 general elections. Unfortunately, the government seems in danger of losing that connect. Social media interactions have been largely reduced to greetings, condolences and photos of ministers’ meetings. 
 
Media reports leave ordinary people clueless about the motive behind some attempted bailouts, the long delay in public sector bank appointments, the transfer of honest ministers and bureaucrats. At the same time, even media-friendly Cabinet ministers are repeatedly being forced to clarify twisted media reports. A government that does not clarify its actions also faces the prospect of coming across as a prisoner of business lobbies, especially when the shady businessmen are among the first to praise the changes the government is making.
 
Many badly drafted laws introduced by the United Progressive Alliance (UPA) need to be amended if India has to attract investment. But these need to be done with proper discussion with all stakeholders. 
 
The hasty amendment to the Companies Act, 2013, after several clarifications, is particularly perplexing. The NDA’s (National Democratic Alliance) majority in the Lok Sabha ensured that the Lok Sabha swiftly cleared the Bill, but it is anybody’s guess what happens when it comes up again in the Rajya Sabha. 
 
What we know for sure is that the Companies Act, 2013, was draconian when it came to corporate compliances and directors’ responsibilities, but had drastically tightened provisions to protect depositors. The ministry of corporate affairs (MCA) has done nothing to act on those provisions, despite the long list of companies refusing to refund company deposits or pay interest. Will someone explain how the amendments to the Act were decided?
 
The ordinance amending the Land Acquisition Act, 2013, is more worrying. Here, too, an amendment was necessary. But, given the recent history of land acquisition, the PM could have taken people into confidence, instead of allowing the Congress and its supporters to spin it as a pro-industry legislation implemented by stealth. 
 
In fact, history is in BJP’s favour. Soon after it came to power, the UPA government let loose a land grabbing frenzy among Indian industrialists in the garb of special economic zones (SEZs). 
 
Public protests, often violent ones, finally brought the whole SEZ mania to a halt and, as elections neared, the Congress decided to swing the other way in the election year such that it made land acquisition almost impossible. Worse, it did not even make the effort to harmonise the new law with 18 other legislations that had different compensation provisions. 
 
The NDA ordinance attempts to set things right. Importantly, it has left compensation (4x market value in rural areas and 2x in urban areas) and rehabilitation and resettlement provisions untouched, despite pressure from industry. The ordinance has diluted some norms pertaining to environment clearances and exempted five types of acquisitions from the consent clause. 
 

But, by springing an ordinance on people, Mr Modi has created an opportunity for motivated spin on the negative implications of the land acquisition Bill for ordinary people. Property tycoons, like Niranjan Hiranandani, who face allegations of land grab, deepen the suspicion, when they are first off the mark with fulsome praise for the government’s action. 
 
Mr Hiranandani’s talk of ‘affordable housing’ in brand new smart-cities is sure to get peoples’ backs up when most of us want really stringent regulation and penalties for the real-estate sector.
According to Morgan Stanley, over US$300 billion worth of projects, especially the stalled public-private partnerships (PPP), may be expedited by amending the Land Acquisition Act. 
 
We don’t know if that is really good news, because we would like to see more transparency and accountability in PPPs. A former bureaucrat describes PPPs as ‘passing public-property to private hands’. These are not subject to scrutiny under the Right to Information (RTI) Act and, in some cases, the PPP agreements have been found missing. 
 
The PM, undoubtedly, has a tough job. He has to kick-start the economy but also to ensure better governance and regulation. He has to deal with a yawning fiscal deficit and bloated government expenditure, and also avoid burdening people with more taxes and keep public investments going simultaneously. 
 
He needs the support of opposition parties in parliament to push through key legislation, but has also to deal with the frequent controversies created by his own ministers. The Union Budget of 2015 and the ensuing budget session of the Parliament will throw light on whether Mr Modi wants to do the right things the right way.
 
(Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected])
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COMMENTS

sanjeev naik

4 years ago

before talking in both the directions, ask yourself a question, why does RSS take conversion activities when parliament is sitting in winter session? and what happened to that activity now? why sudden silence... Modi clearly knows the bills cannot be passed in parliament straight a way. so make chaos and follow ordinance route.. he is doing right thing for this undisciplined country...

MG Warrier

4 years ago

I too am impressed by the communication skills of Prime Minister Modi. I had sent copies of my book "Banking, Reforms & Corruption: Development Issues in 21st Century India" to several people involved in policy formulation in different capacities. I received a communication from PMO conveying PM's thanks for sending the book to Prime Minister. I consider this as an indication of PM's receptiveness to thoughts from public.

REPLY

Kiran Aggarwal

In Reply to MG Warrier 4 years ago

u r plugging in your book
everytime
which is very bad to eyes and
sound despo

MG Warrier

In Reply to Kiran Aggarwal 4 years ago

I value your sentiments though you are the only person who took objection. Thanks Take care

B. Yerram Raju

4 years ago

The article is just a good sample of acts of good governance that are getting delayed for want of pragmatic action in the place of lofty and pompous announcements.
The country is young. Education reforms are crucial as right from the primary to higher and technical education are in morass. Vice Chancellors are appointed on the basis of caste and region and not on the basis of merit. Teachers likewise are appointed on the basis of reservations that continue after 65 years of independence in the same format. Reservations like the subsidies need reform if the governance in education and health sectors has to improve significantly.

Kiran Aggarwal

4 years ago

Fantastic Article

refined results and observations from Mrs. Dalal !!

Land ordinance- 5 modifications
is a route for old loot and grab
taking all rights of farmers of right compensation and asking .
Infact in technical terms it is not even ordinance.

I knew BJP has more Tamasha !! than substance !!
Without effective rules and governance for all and
public discussion of govt . policies
no Business or economy can prosper and generate revenues !!
Electoral reforms r much needed
5. The Problems

5.1 In all of the above reports and literature, the main problems that have been generally recognized and debated are as follows:
Increasingly money hungry elections leading to unethical, illegal and even mafia provided electoral funding. The terribly high cost of elections in turn, has led to increased corruption, criminalisation and black money generation in various forms.
With the constituents/electors being the same for all directly elected representatives from the lowest Panchayat level to the Lok Sabha level, there are competing role expectations and conflict of perception e.g. the constituents expect even members of the Union Parliament to attend to their purely local problems.
With the electorate having no role in the selection of candidates and with majority of candidates being elected by minority of votes under the first-past-the-post system, the representative character of the representatives itself becomes doubtful or so to say their representational legitimacy is seriously eroded. In many cases, more votes are cast against the winning candidates than for them. One of the significant probable causes may be the mismatch between the majoritarian or first-past-the-post system and the multiplicity of parties and large number of independents.
The question of defections and the Tenth Schedule.
Inaccurate and flawed electoral rolls and voter ID leading to rigging and denial of voting right to a large number of citizens.
Problems in the conduct of elections:

Booth capturing and fraudulent voting by rigging and impersonation.
Flagrant use of raw muscle power in the form of intimidating voters either to vote against their will or not to vote at all, thus taking away the right of free voting from large sections of society and distorting the result thereby.
Involvement of officials and local administration in subverting the electoral process
Engineered mistakes in counting of votes

Criminalisation of the electoral process - increasing number of contestants with serious criminal antecedents.
Divisive and disruptive tendencies including the misuse of religion and caste in the process of political mobilization of group identities on non-ideological lines.
An ineffective and slow process of dealing with election petitions, rendering the whole process meaningless.
Fake and non-serious candidates who create major practical difficulties and are also used to indirectly subvert the electoral process.
Incongruities in delimitation of constituencies resulting in poor representation.
Problems of instability, hung legislative houses and their relation to the electoral laws and processes.
Last but not the least, loss of systemic legitimacy due to decay in the standards of political morality and decline in the spirit of service and sacrifice in public life.

5.2 Elections in parts of the country have become synonymous with intimidation of voters specially poorer sections, rigging, booth capturing, violence against and even killing of candidates and political workers, connivance of officials at the polling stations and at times a complete hijacking of the polling process by unruly and criminal elements. Unfortunately, over a period of time local police forces have also allegedly become involved in the above by becoming partisan and by being guided by local loyalties, caste considerations, as well as by being easily bribed for connivance. What is disturbing are the sporadic allegations of even the central forces acting in a partisan way in some places. Reports of above irregularities in the conduct of elections have become so commonplace that these are not news anymore. Many suggestions have been made to address these issues and most relate to implementing our existing rules and laws effectively. But experience has shown that laws in a low accountability society like India are known more for violation than for any degree of compliance.

Source - http://lawmin.nic.in/ncrwc/finalreport/v...

Bapoo Malcolm

4 years ago

The appellation of Mr. or Mrs. or even 'Her Royal Highness' are passe. TIME was the first to boldly introduce this change 30/40 years ago; and explain it to boot. No one gets smaller or bigger by being given a title. Even courts, and judges themselves, want to do away with the "Lord" bit. "Sir" should suffice, they say.

At the most, the initial reference may carry a suffix by the way of a title, but not later. It is to distinguish between the sexes because one may wonder. Is Tony for Anthony or Antonia? The title would clarify. Therefore Obama is Obama, no more. It's just Elizabeth, that's all. Cleopatra is it. As is Tutankhamen. And Confucius,Alexander or Ashoka. Great people need no titles. The small ones will give an arm and a leg for them. Sir Donald Bradman is still called Don Bradman.

Incidentally, the explanation above refers only to print. POTUS is, in conversation, referred to as Mr. President, the Queen as Your Highness, and Modi as the Hon. Prime Minister. And Sir Donald.

It's high time we also got rid of the .....ji, an Indira remnant. And by the way, the 'ji' amongst Parsis refers to 'jeevta' or alive. Unfortunately, in the overdose of fawning, even the deceased are suffixed with a ....ji! The Parsi precedent would be 'Behsti Rustom", meaning a resident of Heaven. Hopefully.

We excel at hypocrisy.

Bapoo M. Malcolm,
Advocate, Bombay High Court.

Vipan Mahajan

4 years ago

At least have the courtesy of addressing PM as Mr. Modi

Ordinance approved for amendments to Arbitration and Conciliation Act

This less politically contentious change could help get quicker decisions and improve the entire arbitration process

 

With all political and public focus on the ordinance for the changes to the Land Acquisition Act, another ordinance has slipped by relatively unnoticed. The cabinet approved an ordinance to amend the Arbitration and Conciliation Act yesterday.
 
The ordinance has been sent to the President and will come into force once it gains assent from President Pranab Mukherjee.
 
The changes in the Act will make it mandatory for the Presiding Judge/ officer to clear the case within 9 months. This is aimed at encouraging foreign investors to come into India and trust the focus of the administration on speedy disposal of disputes.
 
The Act still has a provision for an extension for the settlement proceedings but the High Court will have the choice to allow or disallow such an extension.
 
As the recent past shows, many high-profile cases like the Vodafone transfer pricing case and the Reliance gas pricing case decided to avail of arbitration. Considering the large volume of cases that involve such disputes, this comes as a welcome sign.
 

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A Rupee agreement with Russia would be beneficial to Indo-Russian trade

Since the current crisis in Russia has arisen out of western sanctions, a bi-lateral currency agreement would benefit both countries in the long run.

 

In 2013-14, the Indo-Russian trade amounted to S6.01 billion with the balance of trade in favour of Russia, as Indian exports during the same period stood at $2.121 billion only.

 

Apart from major exports like pharmaceuticals ($535 million), other items such as electric machinery ($ 170 million) Iron and steel ($128 million) and agri-produce ($117 million) comprised our exports. Our bilateral trade with Russia is settled in US Dollars. It is projected that this may actually increase to over $30 billion by 2025, if our trade relations grow at current rates.

 

The recent happenings in Ukraine have been a damper. Because of Russia's annexation of Crimea and the resultant crisis in Ukraine, the Russian relationship with the West has deteriorated to the extent of attracting sanctions from the West, which is USA and Europe. Although Europe is heavily dependent upon Russian gas supplies, this intervention has not been taken kindly by them.

 

Russia has announced its plans to scrap the South Stream pipeline project to supply gas to Southern Europe without crossing Ukraine and has proposed an alternative gas pipeline via Turkey to whom it has offered gas at a discount. Gazprom is reported to have signed a Memorandum of Understanding with Turkey's Botas for the pipeline, proposed to run under the Black Sea. A lot of technical and commercial details will still have to be worked out on this project.

 

In the meantime, it is reported in the press that, Ajai Sahai, Director General and CEO of Federation of Indian Exporters Organisation has plans to meet the Commerce Ministry to seek their assistance if the Government can work out some sort of Rupee payment agreement with Russia, because of the fall in the Rouble-Dollar parity since the Rouble's free fall in the recent past.

 

It may be recalled that when the sanctions were imposed on Iran by Western Powers, led by USA, as both Iran and India were inter-dependent on oil supplies, to circumvent the impasse, a rupee account was set up in the UCO Bank, Kolkata, which was used as a conduit for settlement of trade between both the countries. Since the current crisis in Russia is similar, arising out of western sanctions, Ajai Sahai feels a similar proposal can be brought into use, by both Russia and India, as this will benefit both nations.

 

Also, during the recent visit of Russian President Putin, projects and other details worth much more than $20 billion were concluded as reported in the press, which includes, Essar's 10-year multibillion dollar oil deal; Alrosa's pact for direct sale of rough diamonds; NMDC-Acron of Russia's deal to acquire a potash mine in Russia among others. Recently, Russia also relaxed the rules to permit the importation buffalo meat from India.

 

An indepth study and initial limitation of Rupee-Rouble agreement stipulating the total value that can be made in this manner would be a good start. Because of the steep fall in Rouble realisation, Russia is bound to control or reduce its export of wheat and India may find it worthwhile to have an "understanding" of wheat export price, wihch would also help to stabilise the market.

 

However, all these may also depend upon how the proposed first visit of an American President, as Chief Guest on Indian Republic Day goes and the result of discussions during the visit that he may have with the Indian Government.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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COMMENTS

SuchindranathAiyerS

4 years ago

It will be good for India. But, will it suit Russia? Russia is reported to be moving to receiving payments in Gold or hard currencies that can be converted forth with to gold.Abd then there is the US Polyphemes with the Old Man of Islam athwart its shoulders like Sindbad of yore who will include India in the sanction block!

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