Thursday, 27 November 2014

The achhe din must take shape now........

Favourable circumstance rather than design has ensured that the first six months of the Narendra Modi government have gone quite well. Six months is really far too short to take a realistic stock of the government’s performance. 

But, the external environment in the form of softer global commodity prices and lower crude oil prices have helped keep inflation down and emboldened the government to deregulate diesel prices.
‘Make in India’ became a catchy phrase but to realise it, the government will have to do some real heavy lifting in the form of eradicating red tape and a plethora of rules and regulations that make doing business in India difficult.

It will have to walk the talk if it wants investors queuing up at the door. On the bright side, Mr Modi now has a competent team in place. He has a seasoned finance minister, a capable defence minister and experienced home, railway and external affairs ministers.

On the foreign policy front, he has done a good job of re-energising relations with the US and the Indian diaspora there. But with a lameduck president in the United States, it is not clear what real business can actually transpire during the Obama administration’s term.

However, getting the diaspora active once again will turn out to be in India’s benefit in future as they can be a powerful lobby group. His engagement with the neighbours again could, if things turn out well, bolster India’s security in a relatively hostile region.

The real test will come in pushing through the big bang reforms, something that has not happened so far. And perhaps it is too early in the day for that.

But tricky issues like FDI in various sectors, agricultural reform, labour reform, black money and whittling down wasteful expenditure are all challenges before the government.

Putting in place a constructive working relationship with the states is another issue that the government will have to address to get the economic and social engine going full steam.

This government has a great advantage in that it cannot really be held hostage by fractious allies. So, it has no reason whatsoever not to deliver on its promises.

It also needs very badly to rein in Right-wing organisations, which seem to have become emboldened enough to start interfering in education and culture, among other areas.

This must be resisted if the government wants to preserve its inclusive and modern image. The real test starts now that the so-called honeymoon period is over.

Expectations were sky high when this government came in promising that achhe din was here. Now is the time for that day to start taking shape.