Two truths of Narendra Modi
Anilesh S. Mahajan November 3, 2015US-based rating agency Moody's improved the rating of Indian banks from negative to stable. But a few days earlier, its research and analysis wing, Moody's Analytics, came up with a blunt observation. Their apprehension was that most of the reforms initiated by the NDA government are running into an obstructionist opposition, and the government also isn't helping itself.
These two reports reflect the two truths of today's India. First, economic reforms are setting in. And second, the government has failed to communicate it, and subsequently allowed the opposition to get in.
The fear is that if the government senses shrinking of its ground, this may lead to another round of populism and could potentially derail the country's recovery.
India is now clocking 7 per cent-plus GDP growth numbers, the Index of Industrial Production is surging (the numbers released in October were up by 6.4 per cent), the WPI and CPI are stable. The biggest import item, crude oil, is at a decade low. Most analysts now believe that India is poised to grow faster than its neighbour China.
As per Moody's Analytics, India's GDP grew 7.3 per cent in the September quarter, while for the full fiscal it would be 7.6 per cent. Although at this stage it would be unfair to compare the two economies - in FY 2014/15, at market prices, China was a $10-trillion economy, and India clocked $2 trillion - yet the two countries are seen as engines for global economic revival.
But to make things happen, India will have to continue its reforms, and fast. There are roughly 500 road projects that need to come on-stream very quickly, and the country needs new power projects along with the spurring of demand. This immediately requires new bankruptcy laws, GST, land reforms (at State level), and amendments in electricity and environment laws.
Another hard reality is the government's continuous failure to communicate. It failed to reason out the land reforms despite the fact that it was backed by economists and businesses. But the opposition parties succeeded in painting them as anti-farmer.
Prime Minister Narendra Modi had to use his monthly "mann ki baat" radio show to put his weight behind land reforms, but in vain. The Bill had to be withdrawn and now the BJP and its NDA partners are pushing these bills in the state assemblies where they are in power.
Now, the government is facing its worst criticism of intolerance and is unable to keep communal harmony, especially after the lynching incident at Dadri over eating of beef and killing of rationalist and academician M.M. Kulburgi. These issues triggered a section of winners returning their awards to the autonomous literary body, Sahitya Akademi. And in a cascading effect, eminent personalities from other sections of society have followed the suit.
Obviously, the ruling BJP and its ideological think tank Rashtriya Swayamsewak Sangh, or RSS, see rival Congress's hand, but it lacks a credible voice to say its side of the story. The voices so far include some who gave intellectual support to RSS thoughts, and some who were sidelined in the Modi-led BJP, many of who are now training their guns at him.
There are issues related to ghar wapsi, beef, religion-based population count, and we have another pot boiling on the debate on a uniform civil code.
It was just 18 months ago that India voted 282 members of the BJP into the lower house of Parliament. And almost every MP of the ruling party was voted in the name of making Narendra Modi the PM. The vote was for a strong leader who could steer development and who could create more jobs.
If the Indian economic growth story is to be revived, PM Modi needs to come out as a strong leader, and rein in his motor-mouth affiliates.