To his admirers, Prime Minister Narendra Modi, who completes a month in office Tuesday, has made a great start – from reinvigorating the ossified hand of a government system that hobbled progress to biting the bullet on tough decisions needed to pull India’s economy out of a dangerous morass.
To his critics, though, much of this is old wine in a new bottle, minor cosmetic tweaks that betrayed no signs of the paradigm shift in India’s destiny that Modi promised.
To be sure, in the history of a nation a month is but just a drop in the ocean. But, given the groundswell of hope and anxiety surrounding Modi’s ascent, the new government’s first 30 days have been under great scrutiny.
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A sense of bullish self-confidence marked Modi’s sweeping victory last month, spurring hopes of firm governance and quick policy changes. Hope ignited in many Indians of a better life. To investors, the possibility of India further opening up its market never looked more real. “As far as the expression of intent is concerned, the new government has made the right noises,” says Sebastian Morris, professor of economics at the Indian Institute of Management, Ahmedabad.
So far, there has been no dearth of action.
Prime Minister Modi started with a bang. The decision to invite South Asian leaders to his inauguration was as much about his desire to focus on foreign policy and build bridges with the neighbours as his talent to surprise.
From speaking of inclusive, accountable governance to promising a freer hand to bureaucracy, many of his moves have resonated well with Indians tired of a rudderless government mired in corruption scandals and whose indecisiveness had left more than 700 major industry projects in limbo.
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Miles to go
In raising railway fares substantially, Modi has signalled that for Indians the journey to ‘achhe din’ will probably involve surviving a brief period of pain.
For Modi’s government, the true measure of success would be reviving the investment cycle to create jobs for a burgeoning youth population and curbing prices, the latter a monumental challenge, given the imminence of a weak monsoon this year and the armed crisis in Iraq that is driving up global crude prices.
Then, many investors want cuts in subsidies for fuel, fertiliser and food. They expect the government to move fast on removing supply bottlenecks blamed on state-controlled prices as well as poor roads and rail. Although there is huge buoyancy in the stock market, economists say, the government must convince the central bank to allow credit growth. Other moves such as extending tax credits on investment could help.
Modi’s government will get a chance to address some of these in the budget on July 10.
The Swiss government’s promise to share a list of Indians who have parked money in banks there have raised hopes that he will deliver on his election promise of unearthing black money.
“So far the signals from the government are very very positive,” says DH Pai Panandiker, head of private think tank RPG Foundation.
“Be it rethinking retrospective tax or the land acquisition law, which are barriers to investment, the government has made the right moves.”
The Congress says, so far, the government has only regurgitated UPA-era policies.
“I was expecting major Policy changes as promised by Narendra Modi in the Presidential Address but was disappointed,” party general secretary Digvijaya Singh wrote in a blog. “There is no obvious change in the Policies of the earlier UPA Government but endorsement of the UPA Government policies.”
Some decisions of the new government have been controversial such as pushing out UPA-era appointees, including governors, and going after non-governmental organisations.
For now, the prime minister has the momentum to overcome the lethargy and corruption that Delhi has historically represented, and possibly usher in the ‘achhe din’ he promised.
“Modi has come on an agenda of growth, transparent and inclusive,” says Prof Morris. “He now has to make that agenda get off the ground.”