Landslide. Avalanche. Tsunami. The sheer magnitude of Narendra Modi’s election victory strains one’s vocabulary.
He kayoed Rahul Gandhi by winning more seats in Uttar Pradesh than Rahul did in the whole of India. The BJP has finally become an all‐India party, winning seats all over the country and not just in a few states. Astonishingly, it has won as many seats as the Left Front in West Bengal, and left Mayawati seatless in UP.
Critics say the BJP has just got slightly more than the required 272 seats, so let’s not get too excited. Phooey! For the first time since 1984, a party has won an absolute majority in the Lok Sabha, and that’s a landmark. For the first time in 30 years, India will have a stable, decisive government.
Modi has broken the era of coalition politics. No longer is it necessary to create endless new ministries to accommodate endless more coalition allies. No longer is it necessary to induct criminals and crooks into the Cabinet in the name of “coalition dharma”. No longer is it necessary to constantly dither and sacrifice common sense for fear that an ally may defect. The Prime Minister can at last be consistent and decisive.
The stock markets have boomed, naturally, but sceptics already ask whether expectations are running too high. India faces deep structural problems for which there are no quick‐fixes. Even with a strong Modi government, GDP growth this year is unlikely to exceed 5.5%.
But if Modi brings about the good management he has promised, growth could ramp up to 6.5% next year and stabilise around 7% subsequently. If so, Indian markets may be in for a sustained bull run. If not, the current euphoria will fade in a year or so.
Mould the Mood
The economy is currently mired in low growth, high inflation and bureaucratic paralysis. Modi has no magic wand. How can he transform the economy within six months?
Only by transforming the country’s mood. If he creates infectious optimism and enthusiasm, consumers will once again start consuming, investors once again start investing and bureaucrats once again start moving files.
The sheer size of his victory has already enthused the markets. He must now enthuse bureaucrats by promising them protection against wild allegations and vendettas. This means changing the current rule saying that if a decision has benefitted any private party, the bureaucrat concerned can be prosecuted for corruption even if he has not received any benefit.
He must assure investors that the era of retrospective changes in tax and other laws is over. He must find creative ways of unclogging the clogged clearance system. He must assure the world that he will retain and back RBI governor Raghuram Rajan, whom global markets trust to curb inflation. He must phase out diesel subsidies within a year, checking the fiscal deficit and releasing funds for urgent tasks like bank recapitalisation and infrastructure. He must combine many existing ministries into one, reducing the number of ministries and Cabinet ministers.
The UPA government cleared ‘6,00,000-crore worth of projects, yet these never translated into any boom in capital goods or construction. The main reason is that land acquisition has come to halt after the UPA’s terrible land acquisition law. Amending bad laws is difficult, since the BJP lacks a majority in the Rajya Sabha. Better will be recourse to Article 254 of the Constitution. Under this, the President can decree that for any subject in the concurrent list, a state law will override a central law. This will enable the states to sidestep senseless red tape in bad central laws, including land acquisition and labour laws.
This will also represent a major decentralisation of power from the Centre to the states. It can help Modi bring on board regional parties, whose support he needs to pass legislation in the Rajya Sabha. He needs to change his image of being a ruthlessly controller and micromanager. Critics cite Modi’s track record as one of finishing off dissent within the party, and ruling with an iron fist. Such tactics will not work in New Delhi, where he lacks a majority in the Rajya Sabha.
Most Indians have never seen a central government official, and only know state officials. Modi in Gujarat could whip state officials into line, but will be helpless to do so as Prime Minister.
New Delhi controls some issues like international trade or banking, but the states control the overwhelming majority of issues touching the common man. Modi cannot issue orders directly to state officials, and can get his way only by wooing and co‐opting chief ministers. He also needs to show that he has put the 2002 communal riots behind him, and will ensure security for minorities.
Adept at Adapting
Is this impossible for a man of his temperament? His track record shows a chief minister who cracks the whip to finish all internal dissent. Yet, a deeper look suggests more flexibility.
A good manager is one who can keep adapting successfully to different circumstances. Modi was once a low‐level RSS functionary, who adapted to become a key BJP worker, who adapted again to become chief minister in Gujarat.
His track record as chief minister may not suggest he is a good team player. Yet, he could not have risen through the ranks to become chief minister without an ability to get along with colleagues. He could conceivably revert to this old style to win the cooperation of Opposition chief ministers and parties in the Rajya Sabha.
He has a reputation for being a good listener. He will have to do a lot of listening an empathising to get chief ministers on board. How far he succeeds remains to be seen, but he has built a reputation as a good manager, so the portents are not unfavourable.