tag:theconversation.com,2011:/au/topics/modi-one-year-on-17037/articlesModi one year on – The Conversation2015-07-03T01:17:32Ztag:theconversation.com,2011:article/439132015-07-03T01:17:32Z2015-07-03T01:17:32ZSpeaking with: Anthony D'Costa on the challenges facing India’s economy<p>Recent <a href="https://www.imf.org/external/pubs/ft/weo/2015/01/index.htm">IMF</a> and <a href="http://documents.worldbank.org/curated/en/2015/04/24423685/india-development-update-towards-higher-growth-path">World Bank</a> forecasts show that India’s economy could take over from China as the <a href="http://www.worldbank.org/content/dam/Worldbank/GEP/GEP2015a/pdfs/GEP15a_web_full.pdf">world’s fastest growing economy in the next two years</a>.</p>
<p>The two organisations’ tick of approval for the Modi government’s development agenda comes just over a year after <a href="https://theconversation.com/just-who-is-narendra-modi-indias-man-of-the-moment-26898">Narendra Modi</a> lead the Bharatiya Janata Party (BJP) to a <a href="https://theconversation.com/modi-wave-sweeps-india-25497">landslide win</a> in the <a href="https://theconversation.com/au/topics/india-election-2014">2014 Indian elections</a>, securing 282 seats and gaining majority control of the lower house – something that no other single party has done since 1984.</p>
<p>The election result was unthinkable a few years ago. Under the previous Congress party government, India had seven years of <a href="http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG">GDP growth of around 8% or more</a>, and India was seen as the next emerging economic power after China. </p>
<p>But the growth faltered and a series of major <a href="http://www.bbc.com/news/world-south-asia-12769214">corruption scandals</a> destroyed the credibility of the Congress government.</p>
<p>By the time of the 2014 elections, Indians, who had become accustomed to economic growth and its flow-on benefits, seemed desperate for change and the expectations on Narendra Modi are enormous, with both businesses and the electorate hoping that he can replicate his <a href="https://theconversation.com/should-india-really-follow-modis-gujarat-model-26917">successes as chief minister of the state of Gujarat</a>. </p>
<p>But despite the economic growth, Modi faces a number of challenges to deliver on his promise of good times ahead for India. Inadequate infrastructure, massive skill shortages and <a href="http://en.unesco.org/gem-report/report/2014/teaching-and-learning-achieving-quality-all#sthash.Qpm8XLpk.audvWhPE.dpbs">high levels of illiteracy</a> will all hinder efforts to generate the millions of jobs needed to cater for the <a href="http://eeca.unfpa.org/publications/state-world-population-2014-report">influx of young people entering the workforce</a>.</p>
<p>The Conversation spoke with Anthony D'Costa about the economic challenges facing the Modi government and India.</p>
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<p>Music: Free Music Archive/<a href="http://freemusicarchive.org/music/Vinod_Prasanna__Okey_Szoke__Pompey/Vinod_Prasanna__Okey_Szoke__Pompey">Vinod Prasanna</a>, Free Music Archive/<a href="http://freemusicarchive.org/music/Sunny_Jains_Red_Baraat_Festival/">Sunny Jain’s Red Baraat Festival</a>, Free Music Archive/<a href="http://freemusicarchive.org/music/Blue_Dot_Sessions/Castro/">Blue Dot Sessions: Castro</a> (CC BY-NC) </p>
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With about half of its population under the age of 25, how will India create enough jobs to cater for the millions of young people entering its workforce?Emil Jeyaratnam, Data + Interactives Editor, The ConversationLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/428142015-06-05T01:23:38Z2015-06-05T01:23:38ZCritics of Modi’s first year forget the legacy he faced<p>One of the major criticisms of Modi’s first year in government has been that the economy under Modi is directionless. This is understandable since it’s difficult to put the Modi government’s policies on the typical continuum of left-wing or socialist economic policies and right-wing or free-market policies.</p>
<p>On the one hand, Modi is globe-trotting to attract foreign investment, liberalising foreign investment proportions in defence, railways, insurance and other sectors. On the other he is focussing on opening bank accounts for the poor, constructing toilets in rural areas, and providing micro insurance and an old age pension for the poor. Since Modi is neither going whole hog towards a free market economy by slashing subsidies or privatising government enterprises, nor towards the socialist path witnessed in the Nehru dynasty era, critics are justifiably perplexed.</p>
<p>With previous governments, it was easy to know which direction the government was taking. All governments ‘till that of PVN Rao were unidirectional - following left of centre policies. Nehru’s policies (planning commission, high levels of state control over the economy) or Indira’s policies (bank nationalisation, directed interest rates) clearly showed the government’s economic direction.</p>
<p>The direction shifted somewhat to the centre-right after PM Rao was forced to let go the <a href="http://en.wikipedia.org/wiki/Licence_Raj">Licence and Permit Raj</a> for businesses under compulsions of dwindling foreign exchange reserves. Banks were given free hand in setting interest rates for example. Vajpayee’s coalition government (of which Modi’s BJP was a major partner) could not go the whole hog for centre-right policies and likewise the others that followed.</p>
<h2>Starting from a difficult position</h2>
<p>The economy that Modi inherited was in a limbo. Though ground level realities like rising unemployment, inflation would require more market-friendly policies, legacy issues like poverty, the baggage of ideological binds and real politic required more left-wing policies. Consequently, these governments were in a quandary.</p>
<p>The current direction of the Modi government is towards solving legacy issues. The issues haunting India since the Nehruvian era are lack of infrastructure (roads, electricity, irrigation, drinking water), lack of rural sanitation (India tops the world in terms of unsafe sanitation), education challenges such as low levels of literacy, lack of research and development, lack of good quality higher education institutions, and rural and urban poverty, affordable housing, unemployment, corruption and the like. These are the shackles created by left-wing policies that instead of solving the problems compounded them. These shackles also prevent India from ushering in big bang reforms.</p>
<p>As a result, Modi’s pragmatic government, intending to deliver on promises, is focused on implementing policies that hit the issues on the head rather than getting tied up with taking a defined direction. This confuses critics who are used to analysing in a stereotyped manner. In reality, expecting a defined direction demonstrates how divorced the critics are from the ground-level realities Modi has to face. </p>
<h2>Focus is on individual problems</h2>
<p>Modi is focussed on removing the shackles. Swachha Bharat Abhiyan (Clean India Mission), constructing toilets in rural areas to improve sanitation and rural health, addressing power shortages through more nuclear, solar and hydro power and social programs like <a href="http://www.thehindu.com/news/national/narendra-modi-launches-beti-bachaobeti-padhao-scheme-in-haryana/article6811642.ece">Save the Girl Child</a> are his priorities. </p>
<p>Providing employment to rural youths who can’t get sustainable work on small farms requires having agro-processing industries close to villages which requires land. Consequently, Modi is pushing for land acquisition, which is being stalled in the Upper House by the opposition.</p>
<p>Critics cite anomalies in the tax system as evidence of Modi’s government being “directionless”, but do such operational issues determine economic direction? The World Bank, IMF and international ratings agencies put India’s GDP growth rate above 7% (exceeding China’s) in Modi’s second year. Is that possible without appropriate economic policies of growth? Would foreign investment flow increase significantly without appropriate policies? Modi repeatedly says his government is there to achieve the twin objectives of development and good governance.</p>
<h2>Ground-level impact</h2>
<p>Critics often forget the <a href="http://www.pmjdy.gov.in/scheme_detail.aspx">Jan Dhan Yojana</a> which in six months opened bank accounts for 140 million poor families – something not done in the last 65 years. This massive financial inclusion program has drawn accolades worldwide and will help reduce corruption.</p>
<p>Modi has delivered decisive leadership in his first year, overseeing rising GDP, declining inflation, a stable rupee, corruption and scam free administration, modernising military through defence co-production, a massive infrastructure development program (especially roads and power generation), increasing digitisation, reducing red tape, proactive foreign policy and the like. </p>
<p>Social cohesion is another plus with the first year of Modi’s government free of any major religious or caste strife of the scale witnessed during the Nehru dynasty era.</p>
<p>Given the legacy issues that Modi has to face, these are noteworthy achievements.</p><img src="https://counter.theconversation.com/content/42814/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Milind Sathye does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Given the legacy issues Modi had to take on, his first year in office stands up to criticism.Milind Sathye, Professor of Accounting, Banking and Finance, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/421112015-06-03T20:15:17Z2015-06-03T20:15:17ZModi’s ‘Make in India’ plan needs more labour market reform<figure><img src="https://images.theconversation.com/files/83752/original/image-20150603-19252-1lz05f4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Modi is making changes to Indian labour laws that are likely to boost worker productivity.</span> <span class="attribution"><span class="source">Image sourced from Shutterstock.com</span></span></figcaption></figure><p>Reviving domestic investment, ensuring ease of doing business, and attracting foreign investors to enable his “Make in India” initiative to succeed were three of the key policies set in place by Narendra Modi’s government in its first year.</p>
<p>However, unlike China’s flexible and business-friendly labour laws, investors find labour laws in India rigid and restrictive. </p>
<p>Though the Modi government has initiated a few steps towards more flexible labour laws, much work is left to do if labour-intensive manufacturing and “Make in India” are to succeed. </p>
<h2>The problem</h2>
<p>India’s labour laws - numbering around 250 both at central and state level - are restrictive in nature and hurt investments in the manufacturing sector. For example, the Industrial Disputes Act (1947) has rigid provisions such as compulsory and prior government approval in the case of layoffs, retrenchment and closure of industrial establishments employing more than 100 workers. This clause applies even when there is a good reason to shut shop, or worker productivity is seriously low.</p>
<p>If the job or the nature of work of an employee or group of employees needs to be changed 21 days’ notice must be given under Indian law. While not particularly restrictive, in practice the changes also require the consent of the employees, and this can be tricky. </p>
<p>While the right of workers to associate is important, the Trade Union Act allows even outsiders to be union office bearers, leading to strikes and lockouts without any genuine grievances. This hurts investor faith in the process and restricts economic growth, which in turn results in a lack of jobs and rising unemployment. Rigid labour laws discourage firms from introducing new technology that would require some workers to be retrenched. Foreign investors are put off, worried they would be unable to dismiss unproductive workers or downsize during a downturn. </p>
<h2>Reform initiatives</h2>
<p>The first set of initiatives, announced in October 2014, were the “unified labour and industrial portal” and “labour inspection scheme”. These are meant for objective criteria and a transparent process for labour inspection. These reforms have given a breather to industry, more so for SMEs, which are supposedly victims of arbitrary use of labour rules by labour inspectors. </p>
<p>The prime minister’s efforts to raise the monthly minimum wage ceiling from Rs6500 (US$105) to Rs15000 (US$240) and to ensure a retirement savings scheme (the EPF) for vulnerable groups and the pension system, though small, are laudable steps. </p>
<p>Further, to undo the malady in India’s labour market, some changes have recently been initiated in the three acts that largely govern India’s labour market - the Factories Act, Labour Laws Act and Apprenticeship Act. Amendments to some restrictive provisions of all these acts have been cleared by the Cabinet and are being tabled in Parliament. </p>
<p>Key changes proposed in the Apprenticeship Act include dropping the punitive clause that calls for the imprisonment of company directors who fail to implement the Act. The government is also going to do away with a proposed amendment to the Act that would mandate employers to absorb at least half of its apprentices in regular jobs.</p>
<p>In order to provide flexibility to managers and employers, the amendment to the Factories Act includes doubling the provision of overtime from 50 hours a quarter to 100 hours in some cases and from 75 hours to 125 hours in others involving work of public interest. This is seen by some as being anti-labour as it imposes greater working hours without ensuring their security and welfare. However, the penalty for violating the Act has been increased so as to deter exploitation. </p>
<p>Increasing working hours might also impact low worker productivity in India. Importantly, the number of days that an employee needs to work before becoming eligible for benefits like leave with pay has been reduced to 90 from 240, a pro-labour step.</p>
<p>The amendments to the Labour Laws Act meanwhile will allow companies to hire more employees without having to fulfil weighty labour law requirements. It is proposed that companies with 10-40 employees be exempt from provisions under labour laws that mandate them to furnish and file returns on various aspects. </p>
<h2>Rajasthan shows the way</h2>
<p>The finance minister under the new regime has also encouraged Indian states to bring in appropriate labour reforms in line with Chinese provinces promulgating labour reforms suited to their needs. The government in Rajasthan has enacted reforms that would make it easier for firms to adopt hire and fire policies. </p>
<p>The Rajasthan government’s labour reforms are manifold. For one, industrial establishments employing up to 300 workers are now allowed to retrench employees without seeking prior permission of the government. In addition, the threshold number of employees required for the purpose of applicability of the Factories Act has been increased from 10 to 20 (in electricity-powered factories) and from 20 to 40 (in factories without power). This is expected to reduce bureaucratic and paper work related delays in scores of small units. Following Rajasthan, there are efforts now by other states like Madhya Pradesh, Maharashtra, Haryana for similar labour reforms. </p>
<p>The reality is manufacturing has to grow to absorb millions of semi-skilled young Indians. This will be difficult without rationalising labour reforms. Though the Indian labour force has been much more disciplined and cooperative during the post reforms period leading to decrease in number of strikes, lockouts, days lost etc, the large number of labour rules and the process of enforcement scares investors, at least on paper. Much more labour reform is required to help India reach its manufacturing potential. </p>
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<p><em>Read the other articles in our “Modi one year on” series <a href="https://theconversation.com/au/topics/modi-one-year-on">here</a>.</em></p><img src="https://counter.theconversation.com/content/42111/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pravakar Sahoo does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Getting foreign investment into export-oriented labour-intensive sectors in India has been stymied by rigid labour laws.Pravakar Sahoo, Associate Professor, Institute of Economic Growth, University of DelhiLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/426802015-06-02T20:04:08Z2015-06-02T20:04:08ZModi diplomacy a clarion call for Australian state premiers<p>Since he took office in May 2014, Prime Minister Narendra Modi has said he favours Indian states partnering with those in the international arena in order to promote India’s interests abroad.</p>
<p>While this is a new approach in India’s foreign policy, Modi cannot be credited for inventing this wheel.</p>
<p>Promotion of “local interests” overseas by sub-national units has become a global phenomenon. Sub-national governments – both state and municipal - in the Western world have long fostered sister-city and sister-state ties. Japanese and Chinese sub-national governments have vigorously pursued their economic and cultural interests through trade linkages, cultural exchanges and scientific cooperation through sister-state relationships.</p>
<p>Australian states too have pursued their own economic interests overseas. Just last week, South Australian Premier Jay Weatherill <a href="http://www.abc.net.au/news/2015-05-26/substantial-deals-struck-during-sa-trade-mission-to-china/6499302">led a 200-plus delegation</a> to China.</p>
<p>Some sub-national governments even pursue policies independently of their national governments such as Quebec in Canada. Others have represented their local interests by taking a different stance from their national governments. Okinawa Prefecture in Japan, for example, has pursued its own local position in Washington independent of the policy stance held by the national government on the deployment of US troops in Japan.</p>
<p>In contrast, Indian states have been largely inactive in their international engagement, even in non-controversial areas such as trade and cultural exchanges.</p>
<h2>Made in India, by the states</h2>
<p>As the Chief Minister of Gujarat, Modi was only a handful of chief ministers who recognised the importance of connecting states to foreign countries in the pursuit of trade and investment. Chandrababu Naidu in Andhra Pradesh has been another internationally active chief minister in India. Both reportedly succeeded in attracting trade and investment to their states from foreign sources, adding to their states’ prosperity. Hard statistical evidence is difficult to obtain but visits to these states by leaders such as President Bill Clinton and President Xi Jinping suggests they’re regarded as important destinations for trade and investment.</p>
<p>The successful <a href="http://en.wikipedia.org/wiki/Vibrant_Gujarat">“Vibrant Gujarat”</a> biennial investors summit has seen states such as Tamil Nadu, Madhya Pradesh and West Bengal follow suit with summits aimed at acquiring foreign investment.</p>
<p>Modi is now trying to institutionalise and strengthen such Centre-State partnerships, leveraging states to promote his “Make in India” vision, which also stands to benefit their economic development. Prior to Modi’s recent China visit, Andhra Pradesh Chief Minister Chandrababu Naidu was chosen by the Ministry of External Affairs to lead an Indian delegation, a move previously unthinkable.</p>
<p>Two chief ministers – Anandiben Patel from Gujarat and Devendra Fadnavis from Maharashtra accompanied Modi to China. The <a href="http://www.ndtv.com/cheat-sheet/24-agreements-signed-between-india-and-china-during-pm-modis-visit-763246">chief ministers met Chinese provincial leaders</a> and potential investors, but also joined the India-China State and Provincial Leaders Forum, which act as a dialogue forum between governors of Chinese provinces and chief ministers of Indian states. Beyond simply enhancing economic ties, the forum aims at strengthening people to people contact and establishing cultural and educational ties.</p>
<p>Similar sub-national linkages were made when Chinese President Xi Jinping visited India in September 2014, including an agreement for a sister state-province partnership between Gujarat and Guangdong, and a sister city partnership agreement between Ahmedabad and Guangzhou.</p>
<h2>Australian opportunities</h2>
<p>While Australian states have pursued their own interests overseas, their engagement with Indian states remains rather weak. It’s time for Australian states to think seriously about linking themselves with Indian states, as they have done with Japan, China and a number of European and North American states and provinces.</p>
<p>Diplomacy in the twenty-first century no longer starts and ends in national capital cities, nor is it the sole preserve of national leaders and national diplomats. Modi is the first Indian prime minister to recognise it and has taken the first few steps to partner with Indian states and cities in promoting his global engagement agenda.</p>
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<p><em>Read the other articles in our “Modi one year on” series <a href="https://theconversation.com/au/topics/modi-one-year-on">here.</a></em></p><img src="https://counter.theconversation.com/content/42680/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Purnendra Jain receives funding from the Australian Research Council.</span></em></p><p class="fine-print"><em><span>Tridivesh Singh Maini does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Following in the footpath of China, India is seeking new state to state tie-ups. Australia should answer the call.Purnendra Jain, Professor, Asian Studies, University of AdelaideTridivesh Singh Maini, Senior Research Associate, O.P. Jindal Global UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/421152015-06-01T20:08:05Z2015-06-01T20:08:05ZNo, India isn’t outpacing China, and other Modi myths<p>Having converted a potentially precarious majority into a grand majority, India’s Prime Minister Narendra Modi is now suffering the horrific blues of the winner’s curse of absolute majority. </p>
<p>Despite promises of seismic change to economic policy, we still don’t know Modi’s precise economic strategy. His sycophants have mouthed the obvious litany of praises about the already-transforming Indian economy, while detractors grudgingly await his pronouncement of the roadmap for economic recovery. </p>
<p>With the faux socialism of former Prime Minister Manmohan Singh rejected by voters, Modi took the opportunity for reform with both hands, scripting the most important economic policy shift of the Century. </p>
<p>He disbanded the Indian Planning Commission – a sheer anachronism in the modern era of globalism and corporatism. He then instituted the Niti Aayog for transforming the Indian economy. Detractors call it the “Dur-Niti Aayog” (corruption centre), and it is at best hazy which way the body will go in future years. Modi entrusted control of the new body to experts with excellent as well as dubious credentials and herein lies the greatest tragedy of the economic strategy of the new government. </p>
<p>Economic policy making calls for painstakingly detailed research - the kind of work that can create, shape, fuel and propel economic confidence in the nation. Economic confidence sometimes needs a nudge, but more often that not, screams out for a big push. Pink blotters cannot be a substitute for intellectual capital in policy-making. </p>
<p>Both Modi and his economic advisers are well aware of the deep economic malaise of India – the poverty in many regions in India is deeper than that of sub-Saharan Africa. They are well aware how hapless poverty stalls economic and social progress by triggering and abetting endless violence, perpetuating the problem. </p>
<h2>Selective numbers</h2>
<p>Modi’s economic advisers will possibly term any discussion of Indian poverty as the economics of sulking. Instead, their emphasis will be on more esoteric issues concerning market forces and free enterprise and economic growth. The clever advisers know that every economic figure in India, like a good bikini, hides more than it reveals. So the main strategy of Modi’s economic advisers in the first year has been to treat the Indian economy as the proverbial elephant in the room – a huge problem and terribly dangerous if provoked. Just ignore the economy and, instead, use economic figures for the purpose of hiding obvious economic facts. </p>
<p>The first year of Modi’s (economic) governance turns on the fulcrum of what I call the economics of hiding – optimally hide facts by giving confounding economic figures. Far worse, the economics of hiding is now an integral component of the overarching strategy of Modi’s “Make in India” campaign: economic figures now manufacture myths for domestic grandstanding and also for global consumption. </p>
<p>Let me debunk a few of the myths: first, that economic growth has returned to India – from 4.5% in 2013 to 6.9% in the 2014 fiscal year, and that India is now poised to overtake China as the fastest growing economy. This clever ploy by the central statistical office (CSO) of India to portray growth simply involved changing the base year for data comparisons. To the dismay of Modi, some economists consider this <a href="http://blogs.timesofindia.indiatimes.com/toi-edit-page/6-9-growth-world-laughing-at-this-bad-joke/">sheer fudging</a>. </p>
<p>Secondly, that consumer price inflation has finally been arrested by the hard-working Reserve Bank of India (RBI) to within the mysterious 6% band. </p>
<p>Of course the main driver of inflation is the oil price and the global fall in the price of crude is the real source of the decline in inflation rates. India imports two-thirds of its oil consumption. </p>
<p>Thirdly, that inflows of foreign direct investment (FDI) have increased by 60% in the last fiscal year.</p>
<p>One has to take this figure rather carefully since the source of this growth is a massive spurt in joint ventures in telecom, oil and gas, and mining - at best best a zero-sum game since FDI in these sectors is tantamount to offshoring of profits that used to go to the government’s coffers before. There are some positive signs of FDI into infrastructure projects and IT projects – but very little trickled down to the ailing industries. </p>
<p>Fourthly, that rural consumption and agricultural productivity are the drivers of Indian economic growth in 2014-15. </p>
<p>It is true that agriculture only contributes about 15% of the Indian GDP but it is the source of livelihood for 50% Indians. Due to bad weather shocks and inappropriate government policy to curb inflation by arresting rural spending, the Indian agricultural sector has gone into a tail-spin. During the last five years, rising spending in the agricultural sector became the engine of growth for the Indian economy. Under Modi this has disappeared and there is no sign that exports, investment in industry or urban consumption can compensate for the sagging rural economy. </p>
<p>Finally, that the Modi government has created 10 million jobs in the first year. </p>
<p>In reality, the number of job seekers went beyond the 12 million mark at the same time, so the growth in job creation is anything but satisfactory. Unless the current government can pump resources into infrastructure, there is not much prospect for industrial growth to fight joblessness in India.</p>
<p>Modi is an astute politician who knows that voters’ have short attention spans. This means his real economic policy will be unveiled in the third year of his first term with an eye for a second term. </p>
<p>Pork barrel politics will create the second Modi wave. In his likely second term, Modi can bring out his swords, as opposed to scalpels, to finish off faux socialism. India will march on towards a market-driven economy with a quarter of its population teetering on the brink of destitution, poverty and social exclusion.</p>
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<p><em>Read the other articles in our “Modi one year on” series <a href="https://theconversation.com/au/topics/modi-one-year-on">here.</a></em></p><img src="https://counter.theconversation.com/content/42115/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Partha Gangopadhyay does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Mindful of the short attention span of voters, Modi’s economic advisers have been careful to avoid selling economic policy as the answer to India’s problems.Partha Gangopadhyay, Associate Professor of Economics, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/421772015-05-31T20:06:35Z2015-05-31T20:06:35ZModi’s politics of hope: aligning democracy with relentless growth<p>Before Narendra Modi swept to power a little over a year ago, there had never been such excitement about the formation of a government in India, nor an eager anticipation of its anniversary. </p>
<p>Indeed, there was a lot at stake. Modi’s campaign was not only about setting expectations for sweeping economic policy change, lifting the country out of the proverbial policy paralysis. It was also an opportunity to test various hypotheses about Indian politics, morality and society, and the new model of the politics of hope. </p>
<p>After the <a href="http://en.wikipedia.org/wiki/2002_Gujarat_riots">Gujarat riot</a>, accusing fingers were pointed at Modi. The <a href="http://www.wsj.com/articles/SB10001424052702303380004579520041301275638">denial of a visa</a> by foreign countries, including the US, added to his humiliation. He would soon launch a campaign to makeover his tainted image: the new Modi was a man of action and delivery, growth and governance. </p>
<p>What this PR campaign actually experimented with is whether Indians would accept the proposition that personal welfare and national development are more important than the ethics of coexistence and the security of human life. It was a call to erase certain elements of the past, and march towards a future where particular social identities would be irrelevant. </p>
<p>The political commentators of liberal and critical ilk secretly longed for such a possibility and imported the concept of “aspirational society”. The more critical ones might have added the caveat of risk to it. Nevertheless the diagnosis was universal. The bane of India was its identity politics — the politics of affirmative action and appeasement, which perverted the modern norms of efficiency and merit. The institutional structure was corrupt and moribund, with layers of intermediate rent seekers, which distorted the rational allocation of social and economic resources. Bottlenecks along the chain of production and distribution led to the scarcity of resources and jacked up the base prices. If aspirations guide us, then we would agree to the expansion of the market and the smooth supply of inputs, which would create opportunities to fulfil those aspirations. It was a call to change our orientation to the future. </p>
<p>The massification of Indian democracy over the last three decades was predicated on the recognition of historical fault lines of society and the consequent discrimination, exclusion and humiliation of marginalised groups. The leitmotif was participation in politics, making institutions inclusive and becoming empowered in that process. The Left sought distribution of land and welfare goods, whereas the Dalits and Other Backward Classes wanted to use the instrumental power of the state to change the institutional arrangement, exit from traditional occupations and seek amity in social relationships, which formed the foundation of social justice. Taken together, these were demand-driven, here-and-now politics, with a historical rear-view mirror in the front. </p>
<h2>Capturing the aspirations of the people</h2>
<p>The parallel liberalisation of the Indian economy in early 1990s put a spanner to this democratic development. It created a condition where these distributive demands looked less attractive than sharing the spoils of economic growth. The instrumentality of the state became much more powerful in distorting the market and creating cronyism than re-aligning social relationships and changing institutional practices. Instead of widespread distribution, a section of the backward groups or certain dominant groups within the marginalised benefited from the expansion and distortion of the market, creating new internal fault lines. Many smaller groups on the wrong side of these fault lines were successfully drafted onto Modi’s ship.</p>
<p>This lure of economic growth perfectly converged with the logic of electoral democracy. </p>
<p>Elections are an exercise in weighing the collective strength of a group, but it is also a frame for fantasising collectively and offering promises. The politics of hope is assembled around this frame. Unlike the older conservatism, this is a politics without any enemy. Its adversaries are the institutions and policies which impede the movement of the capital and mobility of the individual. It is a politics based on the individual, who would be liberated from the number game of coalition politics and the attendant Shylockian bargains that India had seen in the recent past. It displaced the concept of merit by competency, a more pedestrian and tangible concept. If merit has a ring of inherited privilege or divine gift, then competency is something that accrues through learning and perseverance – a chaiwala (tea seller) can aspire to become the prime minister. </p>
<p>The new egalitarianism would be based on universalising the opportunities for becoming competent, which develop capacities to participate in the market. Modi’s campaign projected such a “positive” and youthful program. At the strategic level, it not only drafted the rebel and dismayed marginalised groups, but surreptitiously continued with its communal politics and deployed its orthodox religious wings to mobilise its traditional voters. The emphatic electoral victory of Modi has proved the hypothesis that identity politics is under stress and a new pan-Indianism has emerged. </p>
<h2>Hope floats</h2>
<p>One year into Modi’s five-year term the dominant feeling is “meh” rather than “wow”. The turbo reboot of the economy never took place, rather older policies are being repackaged and recycled. But it would be wrong to read this disappointment as despair. If Modi’s accelerationist politics of hope looks implausible with the continuation of global economic gloom and internal resistances, then it would survive in its populist form. </p>
<p>The populist politics of hope shares the same egalitarian thrust — moving away from problematising historic social identities. It propounds a new and paradoxical social justice. Instead of focusing on the individual, it brings back the “social” in the calculation of justice, but does not promise to change social relationships. It promises the dream of a dignified life, in whose search people migrate to the cities. At the minimal level, it assures survival in the city with impunity. The populist politics of hope shares the same urban-as-the-future imagination with its accelerationist big brother. A few radicals might still dream of encircling the cities with villages, but the urban has already become omnipresent.</p>
<p>This range of politics of hope is powerful. If the accelerationist variant tries to actualise a fantasy, the populist one creates a realistic possibility.</p>
<p>For the new populism, it is no longer true that the basic needs of the people must be secured first, and after that distribution of affluent goods can be considered. For populists, people are not poor, they need not gradually come out of the waiting room of history. They are “common”, a simulated sense of equality is created, and from that position, they have equal right to claim colour televisions, laptops, and free wifi along with subsidised rice, water and electricity. </p>
<p>The politics of hope returns a flickering sense of humanity, a sense of belonging, by making available a range of goods. It considers consumerism as a reality and does not make a value judgement on commonly lived life; hope touches desire. This then forms the ground to extract the consent to expand the market economy. </p>
<p>Once the accelerationist and populist politics of hope propels the country on a futuristic plane, they make the Left and the radicals look like a melancholic, rear-guard and stagnant force, denying them a possibility to represent the nation as such. The latter are strategically pushed to become localised and site-specific resistance mobilisations, converting them into a moral voice against underconsumption and underdevelopment. Can there be a counter politics of hope? Can hope be countered?</p>
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<p><em>Read the other articles in our “Modi one year on” series <a href="https://theconversation.com/au/topics/modi-one-year-on">here.</a></em></p><img src="https://counter.theconversation.com/content/42177/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Swagato Sarkar does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>By turning the focus to an aspirational society, Modi has championed the democratic case for economic growth at all costs.Swagato Sarkar, Associate professor, O.P. Jindal Global UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/424002015-05-28T20:12:44Z2015-05-28T20:12:44ZModi’s health agenda fit to walk not run<p>The election and victory of the BJP and its allies with Narendra Modi at the helm brought new hope to many segments of Indian society, including the health sector. </p>
<p>Health workers welcomed the appointment of a health professional – a specialist doctor – as health minister. It seemed to solve a long standing problem where neither the minister nor the secretaries were health professionals or had public health education, leaving important policy decisions in the hands of lay politicians and bureaucrats. But within a few months the minister was replaced, and it was not clear to the public why the change was made.</p>
<p>Notwithstanding this first glitch, the major health achievement of the Modi government has been the unprecedented commitment to a “clean India” or “Swachha Bharat”. Indian people and governments at all levels had neglected toilets, sanitation, hygiene and waste management so badly that it was causing major health problems, national shame, and an obstacle to tourism development, causing major economic loss to the nation. </p>
<p>After Mahatma Gandhi, Modi was the only major national leader who made cleaning of India a major priority. His gesture of personally cleaning the streets of Delhi gave a very powerful message to the country. Many leaders followed his example. They may have done it for the photo-ops and media coverage – but it sent home the urgency of the need for a clean-up to the millions of people who saw it on TV.</p>
<h2>Four million toilets</h2>
<p>In response, states, local city governments and companies pledged to build thousands of individual toilets and make cleanliness a higher priority in their programs. In one year some four million toilets were built. Plans are underway to improve solid waste management and install and properly maintain sewage treatment plants, which were not there in many cities and towns in India. Given sanitation is a multi-sectoral issue, it is a very welcome step that each ministry has been told to work in this direction.</p>
<p>The second positive development has been the <a href="http://economictimes.indiatimes.com/news/politics-and-nation/namami-gange-river-surface-cleaning-to-begin-backed-with-public-monitoring-app/articleshow/47409304.cms">cleaning of India’s rivers</a> – with the river Ganga being the first priority. Despite Indians treating rivers as very pious, they have showed no qualms in polluting them, including the river Ganga. Hopefully this will change – if it does it will be a major achievement of the Modi government for improving health.</p>
<p>As has happened in past, successive health ministers have announced many new health schemes. Some of these include a <a href="http://timesofindia.indiatimes.com/india/Immunization-can-save-1-5m-kids-per-year-in-India/articleshow/47102011.cms">revised immunisation program</a> with more vaccines, the provision of very low-cost <a href="http://economictimes.indiatimes.com/wealth/savings-centre/analysis/modi-governments-social-security-schemes-how-less-than-rs-20-a-day-can-secure-financial-future/articleshow/47395379.cms">life insurance</a> and accident insurance programs, and the transfer of the national hospitalisation insurance program (RSBY) for the poor from the labour ministry to the health ministry. </p>
<p>There has also been a major emphasis on <a href="http://www.thehindu.com/news/national/narendra-modi-launches-beti-bachaobeti-padhao-scheme-in-haryana/article6811642.ece">protecting girls</a> at a national level, which was Modi’s pet social campaign when he was chief minister of Gujarat. There has been talk about a health assurance program and <a href="http://www.hindustantimes.com/india-news/50-essential-meds-to-be-given-free/article1-1231375.aspx">free medicine program</a>, but it will take time for these to hit the ground. Special emphasis has been given to <a href="http://www.abc.net.au/news/2014-11-10/india-prime-minister-repositions-his-cabinet-with-the-addit/5880402">Ayurveda</a> and other traditional systems of medicine by the new government.</p>
<p>The government’s new <a href="http://www.mohfw.nic.in/showfile.php?lid=3014">draft health policy</a>, released in December, is currently open for comment and feedback. It offers many positives including increasing funding for health, and improving the public health system. Hopefully with wider consultations the policy will be quickly finalised.</p>
<h2>More to be done</h2>
<p>Meanwhile, the central health budget has been somewhat decreased, indicating a lack of funds and political willingness to put more central money into the health system. Central government under the recommendation of the recent finance commission has agreed to give states more un-tied funds for development, which may compensate for the cut in social sector funding. </p>
<p>The government has followed a process of decentralisation, with health matters left to the states and a limited role for central government. This could backfire if states already doing well on health and with good governance end up spending more of the devolved money on health, while poorer and less well governed states don’t use the flexible money for health and social sectors – directly impacting their people.</p>
<p>India has not developed a public health service staffed by well qualified public health professionals, nor a hospital management service staffed by qualified hospital managers. These have been talked about in the 12th five-year plan but rapid steps are needed to implement them. Without them, we cannot build an affordable, equitable and universally accessible health system with a strong focus on preventive, promotive and primary health care. If it is not done, India will remain a hot bed of preventable disease, with islands of excellence of private medical care affordable to very few.</p>
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<p><em>Read the other pieces in our Modi one year on series <a href="https://theconversation.com/au/topics/modi-one-year-on">here</a>.</em></p><img src="https://counter.theconversation.com/content/42400/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dileep Mavalankar does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>India’s Modi-led progress on sanitation, rivers and life insurance is overshadowed by the need for a professionally staffed public health service.Dileep Mavalankar, Vice President western region, Public Health Foundation of IndiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/420402015-05-27T20:04:45Z2015-05-27T20:04:45ZModi the statesman must now sell domestic reform<p>On May 26 2014 Narendra Modi’s BJP was swept to power with the largest electoral majority in forty years. The scale of the victory was partly a product of his astute campaigning and effective use of social media. It was also driven by profound concerns about economic stagnation, endemic corruption and a sclerotic state. </p>
<p>Congress had been in power for a decade and had shown little capacity to deal with India’s long-running problems, indeed there was a widespread sense they had exacerbated many of them. Modi campaigned as an energetic “can-do” outsider who would bring to India the economic magic he had woven during his time as Gujarat’s first minister. </p>
<p>The prime minster’s in-tray is of epic proportions. There are huge expectations that he will re-energise the economy, oversee huge infrastructure investment, improve the workings of government and tackle corruption. As a result one might have expected Modi to be largely tied up at home during his first year. Yet, surprisingly, the opposite occurred. </p>
<p>Modi has been among the most active leaders on the international stage. In his first 12 months, he has spent 52 days abroad visiting 19 countries. Critics of the government see this whirlwind of personalised diplomacy as a manifestation of the prime minister’s narcissism and tendencies to self-aggrandisement. While others have said his travels serve as a useful distraction from the government’s meagre economic achievements.</p>
<h2>Selling India</h2>
<p>While even his admirers concede he has a touch of the megalomaniac, there is a larger logic of India’s much more active and visible international engagement. If Modi’s trips appear to have a theatrical quality it is because he is self-consciously performing the role of world statesman to signal India’s confidence and sense of purpose. This is part of a much larger ambition for India to have an international weight befitting the world’s second largest population. Equally, the international environment has become very fluid due the growth of non-Western power sources. Modi’s foreign dealings are intended to improve India’s ability to position itself in this more uncertain environment.</p>
<p>But the most important reason behind Modi’s hyperactive foreign travel is that it is a vital component of his domestic agenda. The initial phase of India’s economic revival, which began in the early 1990s was achieved not by the kind of selective engagement with the global economy that was so important to China. The prime minister is acutely aware of the need for an international focus if India’s economy is to make good on its potential. </p>
<p>Modi’s “Make in India” campaign is as notable for its sharp imagery and catchy phrasing as it is for its centrality to the PM’s ambitions for India. The economy needs to produce millions of new jobs every year just to meet population growth - economic expansion will require even more. Increasing manufacturing’s share of the economy from its 16% level is crucial to this aim. The government wants it to account for a quarter of the economy by 2020. To achieve this it is betting heavily on the campaign’s ability to attract foreign investors to set up manufacturing bases in the country. Modi’s overseas visits are about selling this idea to global businesses.</p>
<p>The second target for Modi’s international economic ambitions are one of the country’s most important assets – the Indian diaspora. Currently around 27 million people of Indian origin live abroad. Through tens of billions of dollars in remittances they already contribute significantly to Indian GDP. It is not by accident that when Modi visited Australia, the UK, the US and Canada, carefully choreographed public events were arranged to engage with and energise Indians abroad.</p>
<p>The government hopes to use the diaspora to invest and in some cases bring ideas and know-how back to India. It is also hoping to cultivate influential groups that can act as advocates on India’s behalf. In this sense India is taking a leaf out of China’s playbook; overseas Chinese are among the biggest investors in the PRC, and have helped Chinese firms go abroad.</p>
<p>The final aim of Modi’s foreign travels is the traditional desire to promote trade. In some cases the government has sought specific agreements to correct large bilateral imbalances, such as agreements signed with South Korea to prompt investment in Indian infrastructure projects and manufacturing. In others, visits have triggered movement on larger agreements to try to jump start the broader economic relationship, such as the negotiations on a free trade agreement with Australia. </p>
<p>In one year Modi has become a figure of global importance. His extensive travels in many ways embody his political ambition. He knows his political success depends on his government’s ability to deliver economically. This in turn requires successful engagement with the global economy. The problem so far is that the energy shown abroad has not been matched by the requisite zeal for domestic economic reform. After all, an energised and enthused businesswoman in Toronto will have to be convinced by more than Modi magic to invest in a country ranked 142nd in the World Bank’s “ease of doing business” list. The international is crucial to the prime minister’s agenda but it is at home where the real work needs to be done.</p>
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<p><em>Read the other pieces in our Modi one year on series <a href="https://theconversation.com/au/topics/modi-one-year-on">here.</a></em></p><img src="https://counter.theconversation.com/content/42040/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nick Bisley is a member of the Australia India Institute Board which receives Federal and State government funding.</span></em></p>Modi’s first year in office saw him visit 19 countries, spending 52 days abroad. But his energy shown overseas has not been matched by the requisite zeal for domestic economic reform.Nick Bisley, Executive Director of La Trobe Asia and Professor of International Relations, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/410362015-05-26T20:10:06Z2015-05-26T20:10:06ZIndia’s development debate must move beyond Modi<p>One year on from Narendra Modi’s swearing in as India’s Prime Minister, the mood of the country is less buoyant.</p>
<p>Some say Modi’s much-touted “development” agenda has been <a href="http://www.firstpost.com/politics/rss-hijacked-modis-development-agenda-muslim-board-members-2166689.html">waylaid by the noxious partisans of Hindu nationalism</a>. Modi’s apparent appeasement of their regressive social agenda is corroding the allegiance of his development-oriented flock of supporters. Such a zero-sum approach posits that a focus on divisive social issues eclipses the real agenda of development.</p>
<p>This narrative oversimplifies the debate.</p>
<p>That Modi wants development is not the issue – every politician will claim to champion the cause of development including Modi’s opponents. The problem is the way the word “development” is employed in public discussion. It is used with little qualification or elaboration. Throwaway references to, say, coal and mining reform constitute the extent to which the development agenda is specified. Why the changes to the coal and mining industries are bestowed with the appellation “reform” is more often than not left unanswered.</p>
<p>Modi’s development agenda itself does not lack merit. The point is that our public debate does not even extend to an analytical interrogation of the elements contained within it. Instead, we fall prey to generalisations and empty slogans such as “Acche Din” (good days are coming) and “Swachh Bharat” (Clean India).</p>
<p>Our failure to go beyond a superficial engagement with the government’s development agenda leaves us acutely uninformed about what development is actually taking place. In a recent poll, respondents were asked what they thought of Modi’s Swachh Bharat initiative. Unsurprisingly a plurality of voters supported it. Why wouldn’t they? Virtually everyone wants the country to be cleaned up.</p>
<p>However, such a poll and the general discussion surrounding the issue of public hygiene are not very informative about the actual content of the PM’s initiative. The vacuous nature of the discussion thus renders opaque the nature of the program to clean India. As a result there isn’t sufficient public debate about the concrete steps needed to bring about an improvement in public hygiene and sanitation levels and to evaluate the progress being made by the government.</p>
<h2>Simplicity makes for inconsistency</h2>
<p>The lack of clarity concerning Modi’s vision for development means the discussion is mired in a web of inconsistencies. Take growth. Modi wants rapid economic growth but also seeks to significantly pare down the role of government in the economy. These two goals are vigorously at odds with each other.</p>
<p>A plethora of studies show that rapid GDP growth has been achieved in the industrial world through significant government intervention in the economy. The pioneering technological breakthroughs in say, computers and satellites, would not have occurred without years of extensive government support and intervention in the US economy. How is Modi’s growth vision of less government going to buck this historical trend? Only a deeper analysis of the government’s development narrative can bring to light satisfactory answers.</p>
<p>Further cracks in the “more governance, less government” edifice become evident upon scrutiny. The claim of reducing the role of government cannot be reconciled with the numerous bans that have been instituted in the country over the past year. Infringement of free speech achieved via a ban constitutes a classical embodiment of big government wherein the government decides on your behalf that something is not to be seen.</p>
<p>The government’s decision to <a href="http://www.bbc.com/news/world-asia-india-32747649">suspend Greenpeace</a> India’s Foreign Contribution (Regulation) Act [FCRA] license also exposes the gap between rhetoric and reality. Here the government is claiming, among other charges, that Greenpeace is retarding India’s economic development. In doing so, the government is propounding a narrow view of development. As Greenpeace’s notion of development falls outside these parameters, it has run afoul of the government. Such a punitive approach is fundamentally at odds with the “more governance, less government” paradigm associated with Modi.</p>
<p>The limited prism through which the actions of the Modi government are viewed also results in a stymied understanding of the tension in the Modi - RSS relationship. The media is right to suggest that Modi does not see eye to eye with the Hindu nationalist group. But their concentration on the social agenda of Hindu nationalists causes them to overlook Modi’s clashes with the Saffron brigade on the development front. One fault-line splitting Modi and the RSS over development is the issue of land acquisition.</p>
<p>Here too there is a gap between the narrative of “less government, more governance” and the reality of the changes Modi has pushed for in the Land Acquisition Act [LAA]. Modi wants less government. But removal of the LAA provision for consultations with affected people empowers the government to ignore the wishes of key stakeholders. Such unilateralism is redolent of big government intervention in the economy.</p>
<p>That’s the problem with the current state of debate concerning the Modi government. The emphasis is on Modi’s problems with the Hindu Right’s social agenda, whereas the problematic issues of development are sorely neglected.</p>
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<p><em>Read the other pieces in our Modi one year on series <a href="https://theconversation.com/au/topics/modi-one-year-on">here</a>.</em></p><img src="https://counter.theconversation.com/content/41036/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sachin Dhawan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>One year on from his swearing in, Modi’s “more governance, less government” mantra is coming unstuck, and simplistic public debates are not helping.Sachin Dhawan, Assistant Professor and Assistant Director, Centre for Law and Humanities, O.P. Jindal Global UniversityLicensed as Creative Commons – attribution, no derivatives.