What can Modi do? PDF Print E-mail
Monday, 08 April 2013 00:00
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Whether on subsidies, reservations or other policy reforms, the BJP looks different from the Vajpayee era


Whether it is on MGNREGA, food and other subsidies or reservations, the BJP acts as the UPA's B-team.Vajpayee's privatisation, reasonable hike in procurement prices, cut in kerosene subsidies, you see little of that in today's BJP



Narendra Modi obviously has a great track record as Gujarat’s chief minister, so if LK Advani’s I’m-still-active-in-politics will allow it, this is what the BJP is trying to sell to the electorate—you’ve had a dramatic fall in growth over the past few years because of a government that failed to take quick decisions, but vote for our leader with a proven track record, and life will be ok. This BJP message is what the kids in Delhi’s Shri Ram College of Commerce loved and, by all accounts, many in corporate India seem to have bought the same message.

But assuming that Modi does make it to power, delivering on his promise will mean having to reinvent the BJP from scratch. After Vajpayee demitted office, the BJP seems to have turned its back on the very reforms he began and carried out with aplomb—India wouldn’t have had a telecom revolution had it not been for Vajpayee’s ability to renegotiate a tricky settlement with an entire industry that benefitted telcos as much as it did India’s citizenry, and an Indian company would never have been exporting automobiles had Maruti not been sold to Suzuki to make it part of the latter’s global R&D network.

Most mention the BJP’s opposition to FDI in multi-brand retail as the biggest sign of the party turning its back on reforms, but though there’s little chance of a Walmart replacing a kirana, this can be glossed over as the natural, if unfortunate, response of a party that fashions itself as being the representative of the trading class. Not allowing FDI levels to be hiked in insurance or pensions, on the other hand, does seem like going back on what the party supported—there is little to suggest the BJP is right in thinking Indian savings are at risk if more FDI is allowed in these sectors. What’s amazing is that the BJP has little to say where the life-savings of crores of Indians are at risk—the publicly-run Employees Provident Fund Organisation already has a shortfall of over R50,000 crore and doesn’t even have an accurate picture of how much money it has available to distribute each year by way of dividends.

For both India Inc and the aspirational youth looking to Modi for a change, it’s a good idea to look at the big roadblocks to economic growth in recent years and see where the BJP stands on this—and to ask the Modi camp to, at some point in the campaign, address these issues. Availability of land is one of the biggest roadblocks to the setting up of new projects. While we have no firm BJP view on how land should be acquired, the Standing Committee report on the land acquisition Bill—chaired by a BJP MP—makes it impossible for land to be acquired for any private project. And given that it says PPPs are also private sector, this means acquiring land becomes difficult for even an airport or a metro or a new city.

Some of the UPA’s pet projects like MGNREGA are seen as driving up wages to levels where industry/agriculture is getting uncompetitive, but when’s the last time you heard a BJP leader take this on except to talk in general terms about poor economic governance and slow decision-making. Indeed, the huge food stocks requirements in the Food Security Bill will drive out private traders—apart from the huge corruption it will spawn—but BJP states like Madhya Pradesh and Chhattisgarh are adding to the problem by offering huge bonuses over the government’s minimum support price—Madhya Pradesh offers farmers 11% more for wheat and Chhattisgarh 22% more for paddy. As a result, private traders have been completely driven out of the markets in these states. And this is supposed to be a traders’ party. Gujarat, it is true, offers no such bonuses and procures little—it also has India’s highest agriculture growth—but will Modi get all his chief ministers to change the way they function?

The government, for a long time, has been accused of being anti-industry, especially MNCs, given how it went after Qualcomm, Vodafone and T Rowe Price, to name just a few, last year. At a pre-budget meeting with senior BJP leaders, this was mentioned as one of the action points for the party to take up. The BJP’s response was how can we take up MNC issues? Never mind that the MNCs are working in India and, to that extent, are no different from Indian firms.

Or take the issue of petroleum subsidies. While the UPA has just about got to hiking diesel prices on a monthly basis under a very serious threat of a credit downgrade, under Vajpayee, diesel prices were raised 112% and kerosene—supposedly sold to the holiest of holies, the poor—prices were raised two-and-a-half times, from R2.5 a litre when the NDA came to power to R9 when it demitted office. Nine years later, diesel prices are up only 37% while kerosene prices are up 62%. Disinvestment was replaced by meaningful privatisation that saw the fortunes of erstwhile PSUs change under Vajpayee. While Modi may be open to privatisation again, it’s not clear if the BJP leadership is.

Voting in favour of Modi may seem the natural thing to do for those disgusted with so many years of inaction, but it is important for voters to get a sense of where Modi stands on major issues. The BJP, like several other parties is vocal on the Coalgate corruption, but even bigger than the profits handed over to a few private firms by giving away coal mines for free is the loss caused by the inefficient Coal India Limited and its chokehold over the country’s coal mines. Coal India’s inability to supply coal makes power plants run at low capacity but the political class refuses to break the monopoly—just look at how the entry of private players has changed the country’s petroleum sector fortunes to know how coal can change. Does the BJP’s prime ministerial candidate have a view on this? The optic fibre cable (OFC) programme to give the defence forces a dedicated network has been delayed for a long time because it has been reserved for BSNL—the OFC project to connect villages has also been reserved for PSU players and is equally delayed. Does the BJP under Modi think only the public sector should be allowed to work on national projects? The telecom minister has just asked the Prime Minister to form a Group of Ministers to consider a bailout of the chronic-loss-making BSNL and MTNL, the cost of which could be upwards of R23,000 crore.

What is the BJP’s view on caste-based reservations, including that for promotions? Given that Modi’s answer on his treatment of Muslims is that Gujarat’s Muslims are amongst the most prosperous in the country, surely economic development will be higher on his agenda than caste-based reservations? Armed with a power point on how economic development was more important than caste, I met a BJP chief some years ago. After 8-10 slides showing the issue was more about education and economic growth, I was told he agreed with me. So would the BJP talk about this? “If Soniaji agrees to make the same argument, the BJP is fully with you”, was the reply. B-team or different team? That’s what Modi needs to clarify.

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