The urban middle class, the rural folk and businessmen are all getting restive
Prime minister Narendra Modi’s personal popularity as well as the hopes and expectations from him continue to remain extremely high. He has just returned from a triumphant visit to three nations and the fawning adulation of the Indian diaspora. But, as his government gets set to mark a year in office, even his most vociferous supporters must admit to a sense of confusion about the government’s priorities that is conveyed through its actions and the negative narrative of the mainstream media.
Modi sarkar’s innings started with three major programmes. The first was JanDhan Yojana, which claims to have opened over 140 million bank accounts for un-banked people. It is expected that over 33 types of subsidies will eventually find their way into the JanDhan accounts, which come with a RuPay Card (with an inbuilt accident insurance cover paid for by the National Payments Corporation of India, so long as the Card is used at least once in 45 days), an overdraft facility of Rs5,000 and life insurance cover.
While JanDhan is touted as a major success, there is no clarity on how many new accounts were actually opened and how many will remain unique after eliminating duplicates. Bankers openly admit to intense pressure and impossible targets set by the finance ministry to report a large number of accounts opened. They admit that intermediaries took the same set of people from one bank to another to enable them to fulfil targets.
Some say that a large number of the defunct no-frills accounts (210 million) that were opened under the diktat of the Reserve Bank of India (RBI) in the past few years have been reactivated. This time around, they have been linked to the core banking system to enable the credit of government subsidies/benefits into them. But that is not enough. In rural India, where bank branches are few and far, transactions can only happen through banking correspondents.
This last-mile linkage between account-holders and the bank is yet to happen. Nobody is clear what shape this will take or the safety and security issues involved. More importantly, account-holders will be able to avail the proclaimed benefits of overdraft, insurance, Aadhaar linkage and RuPay Card only when this linkage happens. Before that, will the prime minister (PM) ask for a detailed audit and honest appraisal of JanDhan accounts and order the cancellation of multiple accounts? JanDhan accounts have been opened with minimal KYC (know your customer) checks and could easily become conduits for laundering black money.
Another important priority for Mr Modi was the Swachh Bharat Abhiyaan (Clean India Mission) which includes toilets for all. After the initial blaze of publicity blitz about its celebrity brand ambassadors, this campaign too has waned. Basic issues of sweeping and garbage disposal, which are the domain of local municipalities (including segregation and recycling), remain neglected in most parts of India. The Digital India Programme is the only major initiative launched by the PM, which is apparently moving with speed and efficiency; but the public knows little about this.
Interestingly, while three major initiatives of Narendra Modi sarkar have yet to impact the lives of ordinary people, a series of other actions, or failure to act, is agitating different segments of his support base.
The urban middle class, fed up of dealing with corrupt government, stifling red tape and crumbling infrastructure, was looking for Mr Modi to deliver growth and governance. The rural folk had hoped to see better markets for their produce and jobs. Business and Industry expected less of red tape, better labour laws, a stable tax regime and an end to taxtortion and retrospective actions. Today, there is creeping despair among all these stakeholders about the lack of action and direction.
The government would argue that it has set in motion processes that would eventually lead to achche din. But is the hurried launch of new institutions without a proper roadmap and shutting down failed relics the right way? The Planning Commission has transmogrified into Niti Aayog but nobody is quite sure about its role and whether it will fulfil the objective of being lean and effective. Debashis Basu, our editor, explained in his Business Standard column, how Mudra Bank had been hurriedly set up without touching dozens of legacy institutions and schemes that had failed in the very same objectives over the past decades. All of them continue live off taxpayers’ money.
If this were not enough, business is chafing at slow reforms, pursuit of retrospective taxation cases and the apparent intolerance of this government to criticism. Gung-ho foreign institutional investors (FIIs), who had driven the Sensex to all-time highs with a Rs2,80,000-crore net investment in 2014-15, have been badly hit with a massive minimum alternative tax (MAT) claim of Rs40,000 crore. Every expert, including those who have little to do with FIIs, finds the action outrageous; yet, finance minister Arun Jaitley stoutly defended the tax demand with a set of dodgy arguments. Is the government being badly misguided by its bureaucracy? Or, has the Modi government learnt nothing from the unfair targeting of Vodafone by the United Progressive Alliance (UPA) that cost us billions of dollars of foreign investment?
The new, longer income tax return (ITR) form requiring details of foreign travel and personal spending on such trips was withdrawn overnight after it sparked massive outrage over social media. Instead of targeting the most obvious founts of unaccounted money, the government’s Black Money Bill mainly seeks to arrogate more power to tax officials to harass and question people who have assets overseas. Whether it unearths any black money or not, the Bill is certain to unleash a wave of taxtortion. Why does the Modi sarkar
continue to be led by the same abominable bureaucracy which has harassed law-abiding Indians for decades while lawbreakers escaped punishment? If the Congress is reduced to just 44 seats in parliament it is because of the massive loot by crony capitalists and a backlash against the government for creating a toxic environment for doing business in India.
Narendra Modi had won people’s hearts and votes by promising to change all this. People were hooked on to slogans like ‘India first’ and ‘minimum government, maximum governance’. He promised to reduce the number of permissions required to set up business; but the bureaucracy is working overtime to do the opposite.
Another mystery about the Modi government’s priorities is the decision to stake both goodwill and reputation on amending the Land Acquisition Bill. Since independence, our public sector companies and government regulators have amassed massive tracts of land and buildings that are extremely valuable today. Many are owned by loss-making institutions sustained by doles from the exchequer. The government could easily encash these assets and use the funds to revive public sector white elephants like Air India.
Wherever you are in India, especially in crowded urban centres like Mumbai, Delhi, Pune or Bengaluru, you will notice empty government buildings or large tracts of unused land owned by unknown institutions. Within a one-kilometre radius of our office in Mumbai, we have a training institute in crumbling disrepair on the arterial Veer Savarkar Marg. In a lane opposite it, is a huge Bankers’ Training Centre of RBI lying empty and a little further is the controversial Indu Mills, again in disrepair and ruin. Look around you and you will have plenty to report too.
But Modi sarkar had no time to look; it preferred to amend the Land Acquisition Bill when acquisition by industry has always been iniquitous to landowners and controversial. Did Modi sarkar forget the special economic zones (SEZs) scandal? Why is it unwilling to think out-of-the-box, as it was expected to?
So, the question is: Who is the government working for and why do its priorities seem so muddled?
(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]
It is over to you my lord. :-)