Not one, but many right ways to achieve reforms: Modi to India Inc
Prime Minister Narendra Modi defended the pace of his government’s economic reforms on Friday, saying investors had to understand there were alternative routes to faster growth that may not be conventional but were no less effective. Speaking at the inaugural session of the HT Leadership Summit, Modi defended his administration’s reforms record and said it was because of a slew of measures taken by the government that India was now clocking 7.5% GDP growth.HTLS2015 Updated: Dec 04, 2015 15:18 IST
There is no one right way to making economic progress. Results can come in many different ways, some of which may not be conventional but no less effective, Prime Minister Narendra Modi said Friday as he defended his administration’s reform record.
The path his government has chosen, the prime minister said, is one that uses common sense to solve problems, even as big-ticket policy reforms get stuck in political and legislative quagmire.
Modi, who swept to power last year raising hopes of a quick turnaround in a sagging economy, has lately come under pressure from investors to move faster on economic reforms.
But on Friday, he urged business leaders, policy analysts and opinion makers to look afresh at the work done by his 19-month-old government.
“Results can come in other ways, too, not necessarily in the way you think right... Change does not happen all of a sudden. One has to work towards it,” Modi said in a speech that opened the annual Hindustan Times Leadership Summit in New Delhi.
To buttress his point, the prime minister listed a number of accomplishments that may not have made headlines, but have effectively addressed some of the problems that have plagued the country for years, or decades.
Take for example, he said, the drive to replace existing light bulbs with LEDs, which consume much less electricity. A fifth of the 100-city drive is already complete. Once all these cities have replaced their bulbs with LEDs, they will save 21,500 Mw of electricity every year.
“That is money saved... Rs. 45,000 crore saved per year by the people of these 100 cities.”
Similarly, a pilot project has freed Chandigarh of kerosene. The city used to consume 3 million litres a year in spite of the proliferation of gas cylinders there. When the Prime Minister looked into it, he found that 80 per cent of the kerosene was not reaching those for whom it was intended. Instead, it was being stolen and added to diesel.
The outcome was a lose-lose: more pollution and expenditure in foreign exchange to import the crude oil. The project further showed that only 3,200 poor families were really using kerosene for cooking. All of them were given gas cylinders and Chandigarh now needs no kerosene.
“This is the direction,” said Modi.
Gas cylinders, though, are a bigger story than Chandigarh. Once the subsidy on them was put under direct benefit transfer, with money going straight to Aadhaar-linked bank accounts, millions of cylinder claimants vanished overnight.
Modi personally appealed to those who did not need this subsidy. He told them God had given them a lot, they could forego this small amount of a few hundred rupees.
As many as 4 million did, and what has been saved is now going to an equal number of poor people, who so far used kerosene or wood fire.
“Their quality of life is improving, we are saving on kerosene, we are saving on precious foreign exchange, we are saving the environment,” Modi said.
“If I had removed subsidy altogether then people would say ‘Wah! What a Prime Minister we have. But they don’t see the reforms in this. They don’t see the right use of subsidy.”
Since his election, Modi’s government has sought to trim subsidies on pertroleum products, cut public spending and rationalise taxes but many foreign investors have appeared unimpressed, especially after the government failed to push through new laws governing the acquisition of land and a Goods and Services Tax.
Pressure has also been mounting on Modi to boost manufacturing and other sectors to create jobs for about 12 million people entering the workforce in India every year. But he has also helmed the NDA government’s initiatives such as Jan Dhan Yojana, Make in India, Swachh Bharat and Digital India.
“There was an atmosphere of disappointment earlier. The mandate we got from people was the first step towards changing it,” Modi said.