Four years of PM Narendra Modi: What worked, what didn't and what still can | WeForNews | Latest News, Blogs Four years of PM Narendra Modi: What worked, what didn’t and what still can – WeForNews | Latest News, Blogs
Connect with us

Analysis

Four years of PM Narendra Modi: What worked, what didn’t and what still can

In the 2018 budget, the government was widely expected to announce a National Employment Policy, which would lay a comprehensive roadmap for job creation, but that did not happen.

Published

on

Narendra Modi

On 26 May, Prime Minister Narendra Modi completes four years as the head of India’s first majority government since 1984. While campaigning for the 2014 general elections, Modi’s Bharatiya Janata Party (BJP) had made a slew of promises to end the 10-year rule of the Congress-led United Progressive Alliance. A corruption-free regime, 10 million new jobs a year and doubling farm incomes by 2022 were among those promises.

With less than a year to go before the next election, VCCircle takes a look at the Modi government’s four big achievements and failures during its tenure and four major opportunities it can still tap into.

Hits

Goods and Services Tax: Although the landmark legislation that overhauled the country’s indirect tax regime had been in the works for more than a decade and a half, the Modi government does deserve credit for getting the GST implemented in July 2017. However, the GST was not without its controversies that stretched India’s federal fabric to the hilt, resulting in strained centre-state relations at various junctures.

Moreover, what finally emerged was a complex multi-slab system instead of the one tax regime it was initially envisaged to be, even as key commodities like fuel and liquor remain outside the ambit of the GST. Further, owing to implementation glitches, tax numbers took a hit, at least in the initial few months following the GST rollout. Yet, the implementation of the GST did alter the country’s indirect tax regime for good.

Insolvency and Bankruptcy Code: The Modi government can pat itself on the back for implementing a comprehensive bankruptcy law, India’s own version of the Chapter 11 regulation in the US Bankruptcy Code. Ever since its implementation in 2016 though, the IBC has been the subject of legislative and regulatory tinkering by parliament, the Insolvency and Bankruptcy Board of India and the Reserve Bank of India.

These encumbrances notwithstanding, available data analysed by BloombergQuint show that operational creditors have overwhelmingly outnumbered corporate debtors in using the provisions of the law—by as much as 87%—so much so that the latter are beginning to pay them even before they trigger the IBC.

Also in the news have been 12 large cases of defaulters as identified by the RBI. Just last week, debt-laden Bhushan Steel was acquired by Tata Steel for Rs 35,200 crore, making it the first big settlement under the IBC, with several other big deals set to close in the coming months.

No allegations of big-ticket corruption: The Manmohan Singh-led UPA was under fire during the last leg of its tenure as several of its ministers and members of parliament were embroiled in corruption cases. The Modi government can take some heart from the fact that no one among its top leadership or the cabinet has been accused of serious corruption thus far.

Rival political parties and some media reports have sought to target BJP leaders, but the charges haven’t really stuck enough for investigating agencies to get involved. Having said that, the Modi government has been accused of being in cahoots with some top industrial houses and going soft on high-profile defaulters like diamond merchants Nirav Modi and Mehul Choksi and former liquor baron Vijay Mallya.

Aggressive foreign policy: In March, the Foreign Policy magazine reported that, until then, Modi had made 35 foreign trips as prime minister, having visited 53 countries, rubbing shoulders with nearly all of the world’s top leaders. Although Modi has been accused by foreign policy wonks of conflating action with achievement, he has succeeded in making significant rapprochement with key neighbors like China, evidenced by the amicable settlement of the Doklam standoff, which was threatening to snowball into a major armed skirmish.

However, Modi’s Pakistan policy and his overtures of peace, including an impromptu visit, have not paid off, as the Pakistani intelligence and army continue to back insurgent groups in the Kashmir valley. Moreover, the government’s trade policy, too, has seen average success at best, with the country actually reducing tariffs and ceding ground much beyond what the World Trade Organisation guidelines had demanded.

Misses

Make in India /Startup India: The Modi government had promised to make India a global manufacturing hub catering to both the export and domestic markets. The government followed through on this promise by launching its flagship ‘Make in India’ programme in a bid to significantly boost local manufacturing and creating a new skills development ministry to provide vocational training to unskilled youth. It also launched a much-hyped ‘Startup India’ programme with the ostensible goal of making India the startup capital of the world, just like Israel.

But none of these initiatives seem to have gone very far. In fact, how dismally India has done in export terms is borne out by the fact that the country’s trade deficit with China remains skewed in the latter’s favour by a ratio of four to one. According to a status report on the Startup India website, only 74 startups had been identified to receive tax benefits as of January first week.

Black money: On 8 November 2016, Modi banned the use of high-value notes, sucking 86% of the currency in circulation in one swoop, with the ostensible aim of delivering a body blow to black money hoarders. But the government had perhaps not factored in the fabled Indian ingenuity to subvert the system. So, while the government had hoped that as much as a third of India’s unaccounted wealth would go out of the system, in the end, nearly all the currency found its way back, riding pillion on hundreds of thousands of poor Indians who acted as mules, for a cut, filling up their hereto dormant Jan Dhan accounts, or simply exchanged cash over the counter. The move brought the country’s informal economy to a standstill and dented growth.

Bad loans: This was a problem the Modi government inherited and promised to resolve. Bad debts—now at more than Rs 9 trillion—continue to weigh heavily not just on government-controlled banks but also on its fiscal health. Last year, the government implemented a massive Rs 2.11 trillion recapitalisation plan to keep public-sector banks afloat. But its efficacy is in doubt, especially after Punjab National Bank was hit by a Rs 13,000-crore fraud.

The government also merged the State Bank of India with its subsidiary banks, and could merge several of the remaining 22 state-owned banks among themselves. But it remains to be seen whether these measures will take the massive load of bad debt off their books. It can, however, be safely said that the next regime too will inherit this problem, only at a much bigger scale.

Agriculture: One of Modi’s key poll promises in 2014 was to double farm incomes by 2022. Instead, farm incomes have fallen in real terms, primarily on account of food price deflation and the breakdown in the cash-based rural economy in the wake of the November 2016 demonetisation. In fact, if one compares India’s real GDP growth to expansion of its farm sector, the latter has consistently lagged the former since 2012.

Moreover, the 2018 pre-budget Economic Survey notes that on account of climate change, farm incomes could see a further 25% decline in the long term. Not only has farm distress exacerbated the issue of farmer suicides, it has also brought farmers on to the streets, as happened in Mumbai, when in March this year 20,000 farmers converged upon India’s wealthiest city demanding a complete waiver of loans and power dues. Farmer unrest could cost Modi dearly especially in areas of rural Maharashtra, Karnataka and even Uttar Pradesh, where the BJP’s rival political parties could be quick to cash in on it.

Opportunities

Direct Tax Code: After GST, the Direct Tax Code is the other big tax reform that the Modi government is reportedly looking at implementing. News reports say a draft bill could be introduced in the upcoming monsoon session of parliament. The code could introduce new income tax slabs and cap the corporate tax at 25%.

With these changes, Modi aims to bring some cheer to middle-class Indians by reducing their actual tax outgo and make corporate houses more competitive by reducing their tax liability. If he does manage to pass the direct tax code, the BJP could reap rich dividends in the 2019 elections.

GDP growth: India’s economic growth slumped in the quarters following demonetisation. However, the momentum seems to be back in the recent past, with the December quarter clocking 7.2% growth and India reclaiming the tag of the world’s fastest-growing economy from China. The Modi government would do well to try and keep this momentum going.

But there are some risks ahead. Global crude oil prices have topped $80 a barrel and are unlikely to go down by much in the near term. This could hurt the balance of payments, and lead to a spike in inflation and interest rates. In fact, consumer prices in April rose 4.58% reversing a three-month slide. The Modi government will have to keep its fiscal math in check amid a tough global economic scenario before the next general elections.

Infrastructure (Roads/ Railways// Power): In September 2017, Modi and his Japanese counterpart Shinzo Abe laid the foundation stone for the Ahmedabad-Mumbai bullet train project, which is to be completed by 2022. Although the Modi government has been criticized for prioritising the Rs 1.1 trillion project over other necessary development projects, it does underscore the fact that India’s infrastructure needs an urgent facelift.

In fact, the 2018 Economic Survey says India faces a $526 billion infrastructure investment gap by 2040. In October last year, the government had said it planned to build 83,000 km of roads at a cost of Rs 7 trillion. Railways, power and ports are the other major infrastructure sectors where the government will invest in a bid to kick-start the country’s sputtering economy. Now, if only it could follow through with these lofty promises.

Jobs: If the Modi government plays its cards well, this could well be its biggest trump card yet, even as four-fifths of its time in office is already gone. In 2014, during its election campaign, the government had promised to create 10 million jobs a year. Instead, it ended up creating less than a million in the four years it has been in power.

In the 2018 budget, the government was widely expected to announce a National Employment Policy, which would lay a comprehensive roadmap for job creation, but that did not happen. The government could usher in such a policy now to focus on employment-intensive sectors, especially in the small and medium enterprises space.

Credit : VCCircle

Continue Reading
Advertisement

Analysis

The US presidential elections and future of India-US relations

Published

on

By

Donald Trump Joe Biden

As the coronavirus pandemic dominates global news in the United States, progress toward the next presidential election scheduled to be held on November 3 moves slowly forward. President Donald Trump had no real opposition in the Republican party and is running for re-election. And it has now become apparent that former Vice President Joe Biden will be his opponent as the Democratic candidate for president.

What would a Trump victory bode for the future of US-India relations? What would a Biden victory bode? Let me answer each of those questions in turn.

Given the love fests of Prime Minister Narendra Modi’s ‘Howdy Modi’ event in Houston, Texas, in which Trump participated in September of 2019, and Trump’s ‘Namaste Trump’ event hosted by Modi in India in February of this year, it might be assumed that the future for US-India relations is a splendid one. This would be an incorrect assumption.

Both of these events were more symbolic than substantive. Trump’s participation in them undoubtedly helped to persuade some — perhaps many — Indian American Modi supporters who voted for Hillary Clinton in 2016 to cast their ballots for Trump in 2020. Trump’s campaign team took steps to ensure this by holding an event at his Mar-a-Lago resort in which a group of prominent Indian Americans announced their plans to work for his re-election and to mobilize Indian Americans on his behalf.

To understand the future potential of India’s relations with the US. with Trump as president, however, it is necessary to look beyond these political moves and to examine the present state of those relations and Trump’s personal style.

In a word, the best way to characterize the current relations between the US and India is “functional”. The relationship was relatively good for the first two years of Trump’s presidency. In fact, near the end of 2018, Alice Wells, the Acting Assistant Secretary of State for South and Central Asia, was quoted in the media s saying: “This has been a landmark year for US-India ties as we build out stronger relationships across the board.”

Then, in 2019, the relations went off the track in the first half of the year after the US and India got into a tit-for-tat tariff war after the US terminated India’s Generalized System of Preferences which allowed India to send certain goods to the US duty-free. There have been continuing efforts to structure a “modest” trade deal since then. It was thought there might be some type of deal done in September of 2019 while Modi was in the US by year’s end, and then during Trump’s India visit. But, as of today, there is still no deal.

This inability to get any meaningful trade agreement in place speaks volumes about India’s potential future relations with India with Trump as president. So, too does Trump’s style.

Trump’s campaign slogans this time around are “Keep America Great” and “Promises Made, Promises Kept.” Trump is not a policy wonk and most of his effort will go toward “America First”. This involves making the US more isolated by withdrawing from international agreements, restructuring trade agreements, emphasizing building walls to stop immigrants at the border, using tariffs to block trade with countries who are taking away American jobs, and confronting businesses who are allegedlly stealing American trade secrets.

This perspective suggests what India can expect for its relations with the US if it has to deal with Trump for a second term as president. The relations will stay functional at best. As I have said before, that’s because the words partnership, cooperation and collaboration are not in Trump’s vocabulary. Nationalism, isolationism and protectionism are.

Joe Biden stands in stark contrast to President Trump both professionally and personally. Biden is a strategic thinker and doer with a solid eight-year track record of leadership experience as Vice-President in forging alliances that have made a difference around the world and he has also been a long-standing friend of India.

He was chairman of the Senate Foreign Relations Committee and a leading advocate for the Congressional passage of the Indo-US civic nuclear deal in 2005. At a dinner convened 10 years later in 2015 by the Confederation of Indian Industry and the Carnegie Endowment for International Peace, Vice President Biden discussed the tremendous joint progress that had been made by the two countries in the past and declared “We are on the cusp of a sea change decade.”

Early in his campaign for the Democratic nomination for president in July of 2019, in laying out his foreign policy vision, Biden stated that the US had to reach out to India and other Asian partners to strengthen ties with them. The items on Biden’s foreign policy agenda for strengthening which are of importance for India include climate change, nuclear proliferation and cyberwarfare.

During his vice presidency, Biden worked side by side with President Barack Obama to do things that would contribute to achieving Obama’s vision stated in 2010 of India and America being “indispensable partners in meeting the challenges of our time.” In 2020, those challenges are even greater than they were a decade ago.

That is why it is so essential that India and the US develop a strategic relationship that enables them to become those indispensable partners. That can happen if Biden assumes the presidency on January 20, 2021. It cannot happen if Donald Trump remains as president for a second term.

The results of this upcoming election in the US matter greatly for the future of the United States. They matter greatly for the future of India-US relations as well. Time and the American electorate will tell what that future will be.

(Frank F. Islam is an entrepreneur, civic and thought leader based in Washington DC. The views expressed here are personal)

Continue Reading

Analysis

Covid-19 toll across world crosses 35,000

The COVID-19 is affecting 132 countries and territories around the world.

Published

on

Patients infected with the novel coronavirus

New Delhi, March 30 : The death toll around the world due to coronavirus crossed 35,000 on Monday evening, with Italy heading the list of 35,097 deaths with 10,779, while the number of cumulative cases rose to 737,929, with US leading with 143,055 of them, as per data from the Johns Hopkins University’s Coronavirus Resource Centre.

Spain was second with 7,340 deaths, followed by China with 3,308 (3,186 of them in Hubei where the outbreak was first recorded), Iran with 2,757 deaths, France with 2,606 deaths, the US with 2,513 (776 of them in New York) and the UK with1,228 deaths.

In number of cases, Italy was second with 97,689, followed by Spain with 85,195, China with 82,198, Germany with 62,435, Iran with 41,495 and France with 40,747.

Meanwhile, 156,652 people around the world had recovered, with nearly half of them (75,923) in China, followed by 16,780 in Spain, 13,911 in Iran and 13,030 in Italy.

Continue Reading

Analysis

45% of Indians do not back up their data, files: Survey

The survey was conducted among 728 Avast and AVG users between February 20-March 25.

Published

on

By

Data Privacy

New Delhi, March 30 : Nearly half of Indians do not back up because they think their data or files are not important enough and most of those who back up their data, do it once a month, a survey said on Monday.

Other reasons cited by the respondents for not backing up their data included not knowing how to do it, not having time and forgetting about it, according to the survey by cybersecurity company Avast.

“It could be that many aren’t aware they are backing up, as it could be happening automatically, in the background, however, others really might not be backing up at all, thinking it is not worth it,” Luis Corrons, Security Evangelist at Avast, said in a statement.

“Losing personal documents, photos and videos can be a painful experience and it’s not until this happens that they realize how valuable it actually is,” Corrons added.

Of those who do back up their data, nearly 42 per cent Indians back up to a cloud storage, 36 42 per cent back up their data to an external hard drive, 23 42 per cent back up to a USB or flash disk, 18 42 per cent back up their phone to their PC, and 10 42 per cent back up to a network storage drive, the results showed.

Corrons recommended to back up data to two different locations, like the cloud, and a physical storage, like an external hard drive.

When it comes to iPhone and Android phone owners, the percentage that backs up is nearly the same, 69 per cent and 70 per cent respectively.

The percentage of smartphone owners that don’t know how to back up their data does not vary much between iPhone and Android owners, with 13 per cent and 17 per cent claiming not knowing how to, respectively, the study revealed.

Data loss can be caused by users accidentally deleting their data themselves, hardware damage and failure, as well as malware, causing valuable data such as photos, videos, documents, and messages to be lost forever.

Ransomware and other malware, such as wipers, can either encrypt or completely destroy files, and there is no guarantee that files can be decrypted if a ransom is paid.

The survey was conducted among 728 Avast and AVG users between February 20-March 25.

Continue Reading
Advertisement

Most Popular

Corona Virus (COVID-19) Live Data

COVID-19 affects different people in different ways. Most infected people will develop mild to moderate illness and recover without hospitalization.