Modi enjoys the strongest mandate of any Indian premier in the past 30 years. But he must use this power to mend rifts within this nation of 1.2 bn people and build bridges between his nationalist Bharatiya Janata party (BJP) and those in the country who reject its ideology of Hindu supremacy.
Some had expected more from India’s new government in its first 100 days. Modi’s pledge of “less government” has led to a smaller, more streamlined cabinet, and senior officials have been told to work 18-hour days.
However, an inaugural Budget revealed no major policy shift from the previous administration and finance minister Arun Jaitley failed to address an unresolved tax dispute with UK mobile operator Vodafone that continues to cast a shadow over the future of foreign investment. Modi’s decision earlier this month to tear up an international trade deal has also tarnished his image as a free-market reformer.
And yet Indian companies tell us they are ready to invest in boosting capacity and efficiency in anticipation of a recovery in consumption and changes in consumer behaviour. Retailers want to build their online platforms while other companies are excited about India’s latent data growth potential and opportunities in digital media.
Modi must strengthen ties with the chief ministers of India’s 29 states if he wants a nationwide sales tax that simplifies and boosts government revenue. The BJP directly controls 13 major states but New Delhi will need the support of all of them to create a single tax levied across the country. Meanwhile, land acquisition and environmental concerns have been two of the biggest obstacles to infrastructure development and an overhaul will take time given the complex issues and number of stakeholders involved.
Modi has enjoyed a level of popularity that will be hard to sustain. That’s because if he’s serious about fixing the economy, he will need to sign off on measures that will leave many unhappy. Slashing bureaucracy threatens jobs and opportunities for self-enrichment; cutting subsidies makes people feel poorer; and allowing more outside investment in key industries invites condemnation from those who argue that national heirlooms are being peddled to foreigners on the cheap.
However, he must resist the temptation to adopt populist measures that provide short-term fixes at the expense of long-term remedies.
When there are setbacks – and there will be – he must avoid the politics of religion and demonstrate all the tenacity and skill he showed during a decade of impressive achievements as chief minister of Gujarat.
more
{ 0 comments... » Modi must seize the chance to revitalise India's economy read them below or add one }
Post a Comment