Prime Minister Narendra Modi’s first year in office has been closely dissected by analysts since May 2015. He remains closely watched and his actions or inactions closely analysed. So how is he standing out at the end of the quarter after completing his first year in office?
Narendra Modi took office at the pinnacle of his perception as a strong-minded, decisive, clearheaded and proactive leader, with a strong ‘can-do’ attitude. Today, that perception has been dented to a large extent. He still remains popular but has lost the ‘aura’ of swinging an election on his own strength and image. Those days are gone when his mere presence in leading election rallies is no longer a guarantee of a win. However, he remains in the best bet for the BJP and is the most popular amongst all NDA leaders.
He remains popular amongst the masses in India who still throng to his rallies in large numbers to listen to his signature style speeches. His megastar status continues to remain popular with the Indian diaspora living overseas.
Here he is on far weaker ground than what he was a year ago. At the start of his tenure in 2014, his political stature within his party as also amongst the opposition was high. After losing out crucial territory in UP and Delhi, and with the opposition beginning to find its voice and feet in the Parliament, Narendra Modi has been struggling to maintain his ‘aura’ as a political giant. His prolonged silence on sensitive political, economic and socio-religious issues is only eroding his perception as a decisive leader.
There are murmurs amongst the laid-back bureaucracy that he is often abrasive and demanding, while running roughshod over those who don’t fall in line with his thinking. This perception has gained ground with recent unceremonious shunting out of the Home Secretary, which was the second one in one year.
Earlier, the Foreign Secretary was packed off on similar lines. His silence on crucial issues like OROP, reigning in fringe elements within right wing groups, matters relating to J&K and hesitation to move decisively on reforms are all rapidly denting his ‘decisive’ leader image. The problem with positive perception is that it takes a lot to build but once lost, rebuilding it is very difficult.
This is one area where he has consolidated on his earlier image of being an honest and forthright leader. A year and quarter after taking office, he remains strong on integrity.
He rode in with ‘Minimum Government Maximum Governance’ slogan, but his actions since have pointed towards over-centralisation of decision making. All major decisions are now being taken at the PMO, with final call resting with his desk. However, it is also true that he has extended a lot of room to select ministers in his cabinet like Nitin Gadkari and Piyush Goyal, to take major decisions on infrastructure and power, respectively, and the results are beginning to show.
Impact on Economy
Make in India
One of the positive outcomes of Narendra Modi taking office as PM has been his thrust on ‘Make in India’. At a policy level, this is the right direction to go and India should be seeing a lot of activity on this front in all sectors. However, the fact on the ground is that the economy has actually slowed down in the April-June quarter from 7.5% in the previous year to 7.0% this year as per government figures. Nevertheless, the Indian economy is still growing at a robust rate and continues to remain an attractive destination for investment.
As an extension to ‘Make in India’, the defence sector is likely to register substantial growth over the next 5-10 years. Most defence sector projects take 2-3 years for full roll out of production and is likely to boost the MSME sector.
India continues to remain the most favoured destination among the emerging markets and various Prime Minister-led foreign policy initiatives are continuing to strengthen India’s position as an attractive destination for FDI.
India continues to attract foreign capital despite the China/Greece-led turmoil in financial markets. The FIIs continue to maintain faith in the India growth story and a lot of policy initiatives taken by the present government have continued to instill confidence amongst the international investor community.
This is a crucial sector that has a direct impact on the economy. National and State Highways development had got bogged down during the latter part of UPA-II administration. This sector has now been given due focus both in policy and investment and the results are beginning to show. If Nitin Gadkari, the Minister in charge of Infrastructure, can continue to push for reforms and direct investment into priority projects, the roads sector will remain a major catalyst to India’s GDP over the coming years.
Amongst all public utilities, Indian Railways needs the maximum investment to modernise and expand its services. Fortunately, PM Modi himself has taken keen interest and has been driving focus on to high investment-high impact railway projects like high speed rail connect between key cities, speeding up the construction of dedicated freight corridors and boosting local manufacturing of modern high capacity locomotives in India. All these will remain key thrust areas for the government and the results will begin showing in FY’16-17 onwards.
The government has laid out an ambitious plan for the development of new airports, while modernising and expanding the existing ones. However, the government is facing stiff resistance from the existing government staff especially those of Airports Authority, who have been resisting privatisation. Narendra Modi-led government has not been able to push for wider private participation in modernisation and operation of existing airports. How this impacts the government’s overall plans to attract investment into the sector remains to be seen.
After years of policy paralysis under UPA-II, the NDA government has been able to successfully restart mining operations. The successful and transparent auction of coal and mining blocks have been well-received by the industry and the coming years will see the impact of investment and activity on various related sectors.
Waterways interlinking offers vast potential for cost-effective bulk transport of goods and commodities, as also for optimisation of water resources in India. While the government made a slew of early announcements in this regard, not much activity has been initiated in this aspect although it remains a government priority. This sector will take some time before the impact is seen.
This is an important project for the NDA government and ranks high on emotional appeal. After the initial noise, the government has gone slow on its implementation, but it remains a priority for the government. The Clean Ganga project also remains an important thread in the overall waterways linking project. Though behind schedule, the project should see increased activity in the next 12 months.
This is one of Prime Minister’s pet projects. His ambitious plan for building 100 smart cities has generated a lot of international attention and interest for investment, but the definition of a smart city is still being debated. The government has announced the first list of cities to be included under the Smart City project, but how it progresses will need to be watched closely. Several countries including Japan, China, Germany and Singapore have expressed serious interest and, if launched successfully, can become a major catalyst to the economy in coming years.
Most of the reform initiatives that were expected from the present government are now on slow-track. When the NDA came to power, it promised to increase the pace of reforms and the general expectation was that the government would take decisive action in its first year itself. That has not happened and after the initial euphoria of a massive mandate, the government seems to have gone slow in pushing reforms. This has been largely due to a hostile opposition in the Parliament that saw very little work being done, as also due to the fact that BJP has not been able to sustain its electoral inroads into regional strongholds of local political parties in many states. These parties are now driving a hard bargain for their states, which means a lot of centre-driven initiatives are now being held hostage to regional parties’ support.
Land Acquisition Bill
One of the most glaring areas of failure for the NDA regime has been its inability to bring Congress-led opposition parties to accepting the NDA-sponsored Land Acquisition Bill. Unfortunately, the opposition succeeded in portraying the Bill as anti-farmer, thus hurting the NDA government’s pro-poor image. The government has now been forced to retract the bill and more or less go back to the one initiated by UPA-II. The final shape of the Bill, as and when it is passed, will be crucial for future infrastructure development.
Like the Land Acquisition Bill, GST too has been held hostage in the Parliament by a hostile opposition. Here again, the government failed to garner support from various opposition parties and its passage will now be debated in the next session.
While the government has taken steps towards initiating Judicial reforms starting with the process of appointing judges, the overall reforms process has been slow. Some archaic and redundant laws have been done away with, but overall reforms of the judiciary are yet to be implemented.
Law and Order being a state subject, the reforms in the police, which include training, equipment and jail reforms, are also a state matter. Most states have shown resistance in implementing much needed police reforms and the central government hasn’t been very successful thus far in bringing the states on board.
Disinvestment of Public Sector Companies
Disinvestment of the public sector was a stated objective of the NDA government when it took office in 2014. It was expected that with the massive mandate it received, along with a decisive and strong Prime Minister, the reforms process will start with disinvestment in Air India and ITDC and follow through with other public sector entities. However, it is now clear that the government lacks the political will to take on deep-entrenched interests, as also hostile labour unions. The industry has been disappointed but remains hopeful that the government may eventually take some action on the above.
Fight against Corruption
Bringing back black money within 100 days has turned out to be a whimper. The government has not seen much action on this front and remains a work in progress. The government has also been slow in announcing various crucial appointments like the CVC, CIC and the still awaited Lok Pal. However, to the government’s advantage, it is still largely viewed as a clean government, thus far. Though the recent controversies involving Sushma Swaraj- Vasundhara Raje – Lalit Modi and the Vyapam scam in MP has had a negative impact on the government’s image, it still holds on to public faith, at least for now.
Social Sector Schemes
The government’s attempt to bring a large section of the population into the banking system for the first time through Jan Dhan Yojana is definitely a big plus for PM Modi. While its execution has been wide, its visible impact has been slow. This, however, will show results in the coming year and should place the PM in a stronger position with the masses.
Various flagship insurance schemes like the Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Yojana, and Atal Pension Yojana have been hailed as both ambitious and needed, in a country where a large segment of the population lives without any social security cover. Though it is still work in progress, its impact in terms of acceptance is improving by the day.
Started under the UPA regime, the present government has decided to carry forward this programme albeit with some changes. Though it remains popular, its impact has reduced from its peak years under the UPA regime. With increasing investment in infrastructure development, this will hopefully have a positive impact at the grass root level and will reflect through payments into the worker’s bank accounts, as project execution picks up pace.
Foreign Policy Initiatives
With PM Modi directly taking charge of foreign policy initiatives, he has been very successful in bringing India into the international spotlight. His use of foreign policy to initiate investment has never been followed up with such vigor by any previous regime. Another personal achievement has been his ability to galvanise the Indian diaspora to re-look at India as an investment destination and his call to bring back knowledge and experience has won wide support amongst the Indian community.
This is one area that Narendra Modi has not been successful. After the initial hype post-General elections in 2014 when the Amit Shah-Narendra Modi duo seemed invincible, the present situation shows the PM in poor light as being reclusive, arrogant and self-obsessed. His extended period of silence on crucial issues and controversies is only cementing the above impression. Amit Shah, too, is viewed as aggressive and abrasive by most political parties. The BJP has not shown good statecraft in the Parliament either, which has seen most of its sessions washed out.
Law and Order
This is a tricky turf to be on as events have been unfolding in recent times. The OROP is a serious issue that can get out of hand very quickly. Despite enough warnings from ex-serviceman, political parties and media, the Prime Minister has not shown any urgency in dealing with this potentially explosive situation.
The recent Patel agitation for quota has surprised the government and is now showing signs of spreading into other states. The PM is yet to come out clearly on how to address this agitation.
Various labour unions are up in arms against the government’s initiatives on reform and privatisation, with several unions calling for a general strike.
Right-wing religious fundamentalists are increasingly raising their voices with various groups taking to moral policing in many parts. Prime Minister’s silence is further stoking rumours of his reticence to take on these groups and in coming times, this could well lead to an explosive situation, as was seen during the Muzaffarnagar riots.
The industry remains supportive of the BJP-led NDA government’s intent and initiative, while the people generally remain in support of the Prime Minister. However, the same does not hold true for the BJP that has seen its political capital erode slowly. The slowdown in decision making is apparent, but there is still time for Narendra Modi to come out as the decisive leader we saw in 2014, but the big question is will circumstance allow him to do so?