Two Years of Modi Government in India

Professor Harsh V. Pant

The Narendra Modi government will complete two years in office this month. Ever since the Bharatiya Janata Party (BJP)-led government came to power in May 2014, it has been dominated by the powerful personality of its Prime Minister. Today, Mr Modi remains India’s most popular politician.

He has benefited in many ways from the disarray in the ranks of the main opposition party, the Congress, that ruled India for the better part of the past six decades under the leadership of the Nehru-Gandhi family. Yet, the party today is struggling to retain its relevance in a rapidly changing nation, mainly because the dynasty is no longer as potent as it used to be.

In fact, Rahul Gandhi, the vice president of Congress, is a much ridiculed politician who, despite the best efforts of his supporters, has neither been able to demonstrate leadership nor challenge the Modi government effectively. Other opposition figures are largely limited to regions within the country, without the pan-India appeal of Mr Modi, who has successfully wielded social media to emerge as one of the most formidable politicians of his generation.

If success can be measured by the shrinking of the main opposition party, then the Modi government has clearly been successful in keeping Congress on the defensive, by raking up a plethora of scams during its rule. Under Mr Modi, the BJP is expanding in parts of India where it could never set foot earlier. In the north-east and in the southern state of Kerala, for example, the BJP’s base has been expanding rapidly, turning it into a truly pan-India party.

It will be the government’s economic performance that is likely to determine its future trajectory. India’s economy seems to be doing well at the moment, with estimates suggesting that the country has overtaken China as the world’s fastest growing economy. At a time when major global economies are shrinking against the backdrop of strong American dollar and falling commodity prices, India remains one of the few bright spots. Its economic growth is expected to reach 7.6 per cent this year, higher than the 7.2 per cent of 2014. India also replaced China as the top destination for foreign direct investment (FDI) last year, largely on account of the push from the Modi government to increase manufacturing in the country. Yet, there has been disappointment in some quarters that the PM has not introduced any large-scale reforms as he seemed to promise during his election campaign.

One major reform initiative, the goods and services tax bill – that is to subsume all indirect taxes such as excise duty and service tax into a single standard rate – has not been implemented, thanks to Congress, which has stalled the reforms’ passage into the lower house of parliament. Although it was the brainchild of Congress, the institution now feels it can deliver a blow to the Modi government by refusing to ratify it.

However, the government has introduced several other measures that will have a long-term bearing on the economy. The insolvency and bankruptcy code, for instance, will make it easier to do business in India as it will ensure time-bound settlement of insolvency. It also makes it easier for the country’s financial sector to address loan recovery. Other initiatives include the direct benefit transfers scheme, which aims to transfer subsidies directly to the people through their bank accounts. It is hoped that crediting subsidies into bank accounts will reduce leakages and delays.

There is a larger focus on governance by ensuring bureaucratic accountability that bodes well for the future. Because of the government’s tough stand on corruption, cronyism centred wealth in India has come down from 18 per cent of GDP in 2008 to an estimated 3 per cent this year.

On the foreign policy front, the government has been successful in leaving its unique imprint in a short period, making clear its objective of positioning India as a leading global player. Gone is the talk of non-alignment. Instead, the focus is on building strong partnerships with like-minded states to enhance India’s economic and diplomatic profile. From giving greater operational autonomy to the military in border areas, to re-envisioning the country’s defence policy as an integral part of diplomacy, Indian strategic evolution has entered uncharted waters.

The country is now undertaking military exercises with like-minded states in Asia and beyond: Japan, Vietnam, Australia and the US, something that was considered to be controversial in the past in light of China’s reservations. New Delhi has decided to move ahead and deliver attack helicopter gunships to Kabul to buttress Indo-Afghan security ties. India is wading into the South China Sea dispute between China and its neighbours by not only calling for freedom of navigation in international waters, but also agreeing to cooperate with the US in safeguarding maritime security and ensuring freedom of navigation and overflight throughout the region, especially in the South China Sea.

India’s Pakistan policy has also evolved to a point where New Delhi is now using Pakistan’s traditional allies in the Middle East, such as Saudi Arabia, to put pressure on Islamabad to rein in militants.

These are still early days for the Modi government. In this age of rapidly rising expectations, it will be the outcome of its policies over the next three years that will determine the fate of the Modi government at the hustings in 2019.

 

This post is based on an article titled ‘Is India Developing a Strategy for Power?’, which appeared in the Washington Quarterly Journal.

 

Image:The Prime Minister, Shri Narendra Modi addresses the Parliament of Nepal. Courtesy of Wikimedia Commons.

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