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Financial Inclusion – Modi’s tryst with India

Financial Inclusion – Modi’s tryst with India

In his second term in office, Prime Minister Modi has talked about making India a US$ 5 trillion economy by 2024-20251. This has not only generated a lot of debate in India and but also has focused world attention on the Indian economy.

Many may think that this might be a tall order for a country that till recently was home to the largest number of utterly poor in the world. But the truth is that India may be closer to this target than we may realize.

While all sectors of the economy have to grow rapidly, the financial services sector has a key role to play to reach the mark. By stepping up its inclusive program that provides equal access to loans and other financial services to all sections of society, it can create a multiplier effect.

The obvious link here is that when a larger number of people borrow, especially the poor, increased economic activity follows leading to growth in sustainable means of income for broader sections of society. This, then helps rupture the “vicious cycle” of poverty.

Public policy planners, to their credit, have long been aware of the direct relationship between financial inclusion and swift economic growth. In fact, in 2005, Dr. YV Reddy, the then Governor of the Reserve Bank of India (RBI) had talked about financial inclusion in his annual policy statement2. In 2008, the Dr. Rangarajan Committee on financial inclusion3 recommended a national mission to facilitate required policy changes.

Despite all this, India’s progress had obviously been slow in the past. But the economic fortunes of the poor have changed for the better – quickly and noticeably – only in the last decade. A report published in the Times of India (TOI) in January 2019 quoting World Data Lab showed the steep fall in poverty in India and estimated the current ‘extreme poor’ to be around 50 million.4 [According to the World Bank, ‘extreme poor’ are those who make less than $1.9 per day.]

It is important to see the declining poverty levels in the context of the massive digital revolution that is taking place in India in parallel. Contrary to what the electronic and print media in India may have you believe, the digital revolution on multiple fronts has aided and catalyzed the financial inclusion programs of the government.

As of December 2018, 1.23 billion people had Aadhar digital biometric identity cards5 and over 1.21 billion had mobile phones.6 Also, as of 2017, 80% of adults had a bank account .7 Bulk of the new accounts were opened with the aid of Aadhar identity cards.  

Further, the country has also seen steep rise in mobile payment transactions. According to the data released by the National Payments Corporation of India (NPCI) 8 transactions via the Unified Payments Interface (UPI), the country’s flagship payments platform, grew 25% and crossed Rs.1 trillion in value in December 2018.

However, millions continue to live in poverty. India has a low credit access with only 154 loans per 1000 adults7. This may be attributed to the reluctance of lenders to lend to people whose credit worthiness cannot be reasonably assessed. Unlike the US, India does not have robust credit reporting agencies with depth of data that can help lenders in approving loans. This remains a major challenge for credit expansion.

The good news, however, is that the confluence of mobile penetration, establishment of a biometric identity and the emergence of disruptive credit risk solutions that facilitate the identification and assessment of borrower risk may set the scene for massive credit inclusion process. Consequently, India’s efforts to eliminate poverty may have reached a tipping point.

Many fintechs around the world and in India are now using a consumer’s digital identity to predict loan repayment behavior. In a report published in September 2018, the Federal Deposit Insurance Corporation (FDIC) of the US has reported9 that a predictive “model that uses only the digital footprint variables equals or exceeds the information content of the credit bureau score”.

In other words, lenders in India will now be able to assess credit risk of borrowers by using their digital identity. This also simultaneously obviates the need to build credit bureaus using traditional data – an expensive and time consuming effort in any case.

The purpose of this piece is not to speculate if India will reach the US$ 5 trillion mark by 2024-25, but to rather assess its preparedness in setting in motion a host of services and programs that will benefit the largest number of poor.  As is obvious, lifting millions of people out of poverty is a multi-pronged, multi-mission driven exercise where the happy meeting of cutting-edge technology and robust political will to execute the mission are necessary and imperative conditions.

India has adequately demonstrated its capability to execute complex projects on time and within budget. This augers well for the extreme poor. If they rise up above poverty, so will India, economically speaking, and crossing the US$ 5 trillion mark may just be one of the milestones.

Modi’s achievements in this regard, as substantiated by data from multiple sources, are substantial and suggest that it is broad-based and truly inclusive. This is in stark contrast to the efforts of the earlier government led by Dr Manmohan Singh who claimed at the National Development Council that “the first claim on the country’s resources for development”10 were reserved exclusively for a particular religious community.

It is indeed debatable if India, in its tryst with destiny, ever managed to redeem its pledge, as Pandit Jawaharlal Nehru dreamt at that midnight hour in 1947. Definitely data suggests that even after almost six decades, the redemption of the pledge in terms of poverty eradication, was not even substantial.  But given the track record of the last five years, Modi’s tryst with India is taking it places and the poorest of poor are joining the bandwagon in their millions. And Modi has the backing of the state-of-art technology. Of course, the claim on the country’s resources for development will be inclusive and for all, not the exclusive right of a select few.

References
1.Goal to make India $5 trillion economy by 2024 challenging, but possible, says PM Modi
https://www.businesstoday.in/current/economy-politics/goal-to-make-india-5-trillion-economy-by-2024-challenging-but-possible-says-pm-modi/story/356407.html
2.Annual Policy Statement for the Year 2005-06 by Dr. Y. Venugopal Reddy, Governor, Reserve Bank of India
https://rbi.org.in/scripts/BS_ViewMonetaryCreditPolicy.aspx?Id=2217#1
3.Rangarajan Committee submits report on financial inclusion
http://archive.indianexpress.com/news/rangarajan-committee-submits-report-on-financial-inclusion/257905/
4.New data may show big cut in number of poor
http://timesofindia.indiatimes.com/articleshow/67705787.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
5.Number of Aadhar Card holders in India
https://en.wikipedia.org/wiki/Aadhaar
6.Number of Mobile phones in use by country
https://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_use
7.Strategy for New India @ 75 – NITI Aayog
https://niti.gov.in/writereaddata/files/Strategy_for_New_India.pdf
8.UPI transactions rise 25%, cross Rs 1 trillion mark in December
https://www.business-standard.com/article/economy-policy/upi-transactions-rise-25-cross-rs-1-trillion-mark-in-december-119010100767_1.html
9.On the Rise of the FinTechs—Credit Scoring using Digital Footprints
https://www.fdic.gov/bank/analytical/cfr/2018/wp2018/workingpapers-2018.html
19.Minorities must have first claim on resources: PM Manmohan Singh
https://economictimes.indiatimes.com/news/politics-and-nation/minorities-must-have-first-claim-on-resources-pm/articleshow/754218.cms

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Posted by on July 18, 2019 in India, Indian Economy, Modi

 

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India’s RBI gets a new Governor

India’s RBI gets a new Governor

 The recent resignation of the Governor of the RBI, Urjit Patel due to “personal reasons”,as expected, has generated lot of discussion. The RBI was in the news recently for its apparent tussle with the government of India (GOI) on several issues including deployment of the central bank’s reserves.  The media had a field day speculating on the reasons for his departure.  Even the opposition parties cried foul.  Whether Patel resigned because he felt stifled, or had other reasons, will only be known if and when he chooses to publish his side of the story in his memoir.

 Reactions to the departure of the governor have been on expected lines. Many predicted the decimation of the stock markets and loss of confidence in the strength and resilience of the Indian economy. The stock market did fall during that time; however, it is unclear if the markets fell because of the exit polls on elections to key states indicating political instability or due to the departure of the governor. Beyond that, the banking and financial system in India remains on course. As regards confidence in the overall resilience of the Indian economy, there are no reports to suggests otherwise.

Is it true, as many in the media claim, that the RBI governor felt stifled by the government’s attempt to grab the bank’s turf? Or did he pick the wrong battles with the government? Should Patel have exercised discretion as the better part of valor and lived to fight another day? It would be interesting to look at some available pointers that may shed some light.

 
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Posted by on December 13, 2018 in Banking, Economics, India, Indian Economy

 

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Government of India VS RBI

Government of India VS RBI

As a former officer of the Reserve Bank of India, I was shocked to read the recent remarks of Viral Acharya, Deputy Governor of the Reserve Bank of India. There are probably no parallels or precedents to such public remarks that tantamount to threatening the government of India by a ranking leader of the Bank.

The RBI, India’s Central Bank is a venerable institution that effuses dignity and reverence in the world of banking and finance, not only in India, but the world over. Its rather quaintly abstruse and almost self-effacing communication style – be it in its official communiqués or while interacting with the public at large – speaks of its tradition and élan that is generally matchless. This quiet dignity actually conveys so much more than what it actually says and adds an aura of enigma to it. For example, even a passing nod from the RBI Governor at a meeting of CEOs of banks can set tongues wagging.

Like most other Central banks, its presence is felt, rather than heard. Insiders are aware that RBI’s reticence and an unwillingness to hog the spotlight is also a calculated strategy to create space for itself.  It provides enough room to maneuver, change course if needed, and fight its battle with the government quietly and behind closed doors. That has only earned it respect and reverence.

Given this grand setting, it was upsetting to read the speech of Viral Acharya. It is very amateurish indeed and only betrays a lack of experience in a managing a large banking bureaucracy. He is certainly oblivious of the ethos and dignified traditions of a great institution that he represents. That the Deputy Governor chose to attack the central government in a public lecture has not only raised eyebrows, but also raised questions of why the government has not acted on this. His continuing in office has become untenable.

 
 

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Trade War – US Trumps China

Trade War – US Trumps China

As part of a worsening trade war, President Trump on Monday, September 17th, 2018 announced a slew of new tariffs on imports worth $200 billion from China. A 10% tariff will come into effect later this month which will then rise to 25% from January 2019. Not to be outdone, China too has responded with tariffs on $60 billion of US goods that includes meat, nuts, alcoholic drinks, chemicals, etc.

These announcements come in the midst of an already expanding trade and sanctions regime that has already engulfed the EU, Mexico, Canada, Iran and Turkey in its wake. But the response from most nations have been predictable. Fully understanding the potential threat to their vulnerable economies, Mexico and the EU quickly sued for peace.Canada too is in advanced negotiations to resolve outstanding issues. That leaves behind Iran and China in the crosswire.

This has sent shock waves in stock and currency markets all over the world. Many national currencies have tumbled, including India’s Rupee. But the collateral damage will be broader and deeper and continue to strike at the very root of “free trade” as we understand it today.

Several pundits have faulted Trump for his ‘aggression’ on China and have blamed him for what many see as the coming collapse of international trade. While one may disagree with the way Trump has executed the tariffs, he is absolutely right on taking on China. In fact the US has been very late in getting its act together on China.

A patient review of the events and facts may suggest the urgent need to hit the reset button on China. China is, by no means, a saint and has been violating every bilateral and multilateral agreement to further its trade. In fact many nations, particularly the smaller economies in the developing world have long complained of dumping of Chinese goods on their markets that led to the decimation of local businesses in these countries.

US too has long been wary of China stealing civilian as well as military intellectual property for several decades now. Further, China’s scant respect for international law – from its defiance of the International Court of Justice on the South China Sea judgement to coveting its neighbor’s land – is all well known.  If the international community has very little regard for China as a responsible world citizen, it has only itself to blame.

China may be believing it has arrived on the world stage as a super economy and a super power. That probably is the reason it decided to defy the US and impose counter tariffs. The ground reality, though, is that the US is still the largest economy with the most powerful military in the world.

Unlike China, the US has the power and means to impose sanctions and enforce it. The sanctions on Iran is a case in point where it has successfully prevented other nations from buying oil from it.

The Chinese on the other hand have a false sense of their international influence and authority. Their recalcitrance at the negotiating table earlier with the US has indeed surprised many. They seem to have played their hand wrong to their own detriment. The bottom line is that in the current trade war with the US, China will be alone as no other nation will openly defy the US to support them.

As regards the sustainability of the trade war, it is anybody’s guess as to how long this will last before a diplomatic resolution is negotiated. But given the asymmetry in trade – China exports over $200 billion compared to $80 billion of imports from the US – it is more vulnerable and will cave in sooner than later. China’s defiance is ill advised and amounts to a hara-kiri. Delay in arriving at a negotiated settlement will be a punishing setback for China and will undo decades of economic progress.

It must be mentioned here that international trade as we understand today is built on the twin pillars of economic pre-eminence and military might. These two pillars are then artfully packaged and deployed using sophisticated diplomacy to gain maximum commercial and economic advantage. Countries endowed with both emerge leaders and winners. That is the winning formula and all nations understand this very well. But for China to pretend it is on the same footing as the US is indeed churlish.

We must note here though, that history is a mute witness to the fact that when push comes to shove, the true intentions of nation states have emerged. The US and its allies have a track record of not hesitating to weaponize their trade relations and impose sanctions, which really is a proxy for their overwhelming military might, to ‘straighten’ things out.

Of course, this is not to suggest that the current crisis will transmogrify into open armed conflict. Far from it. But the consequences could be as devastating. However, in international relations, the dynamics and power equations keep changing depending upon the underlying economic fortunes of the country. The EU for example, given its weak fundamentals, may not be able to stand up to China. But the US, on the other hand, buoyed by a booming economy, has staying power.

For China, a prolonged face off with the US can have disastrous consequences at home. From unprecedented levels of unemployment to internal unrest and rebellion, anything in between may be a potential outcome.

The ongoing trade war between the US and its major trading partners has powerful lessons for India. India is caught between the US on one side and some of its own major trading partners – Russia, China and Iran – on the other. How India manages to successfully maneuver its way around these treacherous waters of international sanctions will determine – to a large extent- the survival and long term growth of India. But it certainly cannot adopt a confrontationist approach vis-a-vis the US. A collaborative approach will take it places, literally. Prime Minister Modi seems to be on the right track.

 
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Posted by on September 19, 2018 in China, Donald Trump, Economics, India, Trade

 

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The curious case of Justice Chelameswar

The curious case of Justice Chelameswar

The Supreme Court of India in its recent judgement on a public interest litigation (PIL)  filed by Shanti Bhushan (TOI July 7th 2018), has reiterated, for the third time in eight months that the Chief Justice of India (CJI) will have sole authority on allocating cases in the top court. The judgement although pertains to the internal administration of the apex Court, has huge implications, particularly with regards to the powers of the CJI. The judgement also firmly puts to rest the unseemly controversy raised by Justice Chelameswar and three other judges in their well-publicized press conference in January 2018.

It may be recalled that Mr. Chelameswar and three of his fellow judges had hurriedly convened a press conference in New Delhi to “inform the nation” about ‘happenings’ within the Supreme Court of India.  A startled nation watched the drama unfold, hoping to hear some radical steps to reform the judiciary or something to that effect.  Instead, the justices raised the banner of revolt. It turned out, much to the disappointment of millions of Indians, to be another case of washing dirty linen in public.

The anguish of the four judges was over the CJI’s powers to allocate cases to his subordinate judges. An eager opposition jumped onto this ‘rebellion’ that ultimately led to the tabling of the motion for the impeachment of the CJI in Parliament. That the motion was rightfully defeated is not the issue here. It certainly opened the doors to the ‘happenings’ within the Supreme Court. This power play or the quest for control over judge’s case load unabashedly played out in front of the nation, masquerading as concern for the ‘functioning’ of the highest judicial body of the land.

The press conference of Justice Chelameswar et al. or the failed move to impeach the Chief Justice cannot be a surprise if one looks into what is happenings within this high judicial body. That Justice Chelameswar later met with a communist leader and other opposition politicians and that the likes of Shanti Bhusan had filed a follow up PIL to wrest control of the muster from the CJI speaks volumes for itself.

That the said judges seem to be so oblivious of the humungous challenges and problems faced by the courts in the country is indeed hurting. It certainly shows that a section in the judiciary has consistently put personal career aspirations over and above the sacred function of delivering justice. No one can fault them for personal ambitions, but to cloak it as a concern for the judiciary does not lend them dignity at all.

In this context it is worth looking at the problems and challenges confounding the judiciary in India today. Take a look at the data presented by National Judicial Data Grid (NJDG). According to the NJDG the backlog of cases in the judicial system in India was approximately 3.3 crores including 43 lakh cases in High Courts and 58,000 cases in the Supreme Court. (Business Today, June 28 2018). In a related news report (The Pioneer 24th November 2017), it was pointed out that almost two thirds or 67% of the prisoners in Indian jails are under-trials. This is indeed shocking.

But amidst all the pendency, ironically, the Supreme Court, did find time to convene, in the middle of the night, to pass its considered views on the election outcome and the state Governor’s decision to give two weeks’ time for the BJP to prove its majority in the recently concluded elections in Karnataka. The apex court, it appears, can definitely find time and resources to hear cases of the mighty and powerful almost immediately while the average citizen may have to wait for years, if not decades to get justice.

I have not heard any statement or action plans to solve this heart rending problem of pending cases from Justice Chelameswar or his brother judges. Maybe I missed it. But their silence on the real problems of the judiciary is indeed deafening.

The huge backlog of cases also indirectly impacts the daily life as well as the long term economic well-being of the country. For example litigations relating to land acquisition delays new road and rail infrastructure. Putting corrupt politicians in jail too is impacted by these backlogs. It can thus be argued that the inefficiencies in the delivery of justice and other judicial services in India has contributed a great deal, albeit indirectly, to its economic backwardness.

Needless to say, the impact of the backlog of cases on India is huge and often not easily quantifiable and has the potential of even destroying the country’s democratic framework. Hence the need of the hour is a collective effort from all three branches of government – legislature, executive and the judiciary to quickly clear the backlog of cases. The government’s Digital India and other initiatives to use technology to enhance delivery of services is something the judiciary can learn from.

In this context it must be reminded that the Supreme Court is not just made up of its CJI and the other justices who sit on its benches. Any number eminent judges have occupied its high offices   as judges and Chief Justices. But as an institution, it is larger than all of them – the current and past incumbents put together. In fact it stands tall as the last and final beacon of hope in a democracy and India is no exception.

To trade its stature and importance for few minutes of national spotlight on television or media is nonetheless a sacrilege that most ordinary Indians cannot easily countenance. For them, the career fortunes of individual opportunistic judges is of no consequence when crores of cases are pending and every day unknown numbers of lives are lost or wither away in prisons just because justice could not delivered on time. If this is not rank opportunism, what else could be? Any amount of tall talk and no action will not cut ice in a resurgent India we are witnessing today. The writing on the wall is clear.

 
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Posted by on July 13, 2018 in India, Media

 

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Chidambaram Peddles False Narratives on Indian Economy

Chidambaram Peddles False Narratives on Indian Economy

Two news items in the recent past caught the attention of many. They deserve closer scrutiny since it provides good insights into a thriving business in India. It is indeed representative of a deep and well entrenched industry that has prospered by profligate peddling of false narratives in India.

The first was observations made by none other than the former Union Finance Minister P.Chidambaram. He led the economic fortunes of the country during his days in the Union Cabinet and arguably presided over an economy that tanked the fastest despite strong fundamentals. That he is in the news for investigations by concerned agencies and related court cases for alleged corruption is beyond the scope of this piece.

The erudite former Minister – a Harvard alumni – has opined that the country’s current economic conditions were akin to a vehicle with three punctured tires. He went on to paint a very dismal picture where almost everything about the economy was wrong. If one were to believe him, it would appear that most Indians are rotting in poverty and even unable to sell pakodas to make a living. As a politician in the opposition camp, this was not unexpected.

As expected, this statement was lapped up by the media and reported 24/7. Many pseudo experts and self-acclaimed economists joined the fray, pontificating on why all these imaginary ills can be attributed to none other than Prime Minister Modi himself. Mercifully, the false narratives did not carry on for more than a few days of print and airtime.

The second item was a glibly written piece that subtly casts doubt on the sustainability of the high growth rate that India is currently witnessing. It again questions PM Modi’s statements where he called for a double digit growth rates in GDP. Eminent economist Dr. Subramanian Swamy has also talked about India’s inherent capacity to grow at double digits. With a touch of finesse the article cites other pundits who are not sanguine about double digit growth for India. It is certainly reminiscent of the days when socialists lectured us on why India can only grow at a “Hindu rate” of growth of 3.5% or less. The article pompously advises that it would do India better to aim for growth rates of less than 8%.

India has seen too many of these arm chair pundits and ministers of bygone eras attempting to water down the unprecedented growth we are witnessing. The fact is that this is not well intentioned advice or political strategy, but churlish rant emanating from those quarters where the sun has begun to set. It is indeed incumbent on Mr. Chidambaram, in particular, to tell the nation the initiatives that he had undertaken to stimulate the economy that provided better results, if any. That would garner better Television Rating Points (TRP) than the story of a vehicle with three flat tires.

The point is to not question anybody’s freedom of expression or the right to have an opinion that is different or even counter intuitive. On the contrary, such cross winds fertilize the idea pool and the ultimate winner is the country. But this virus strain is different. At a minimum, balanced punditry is morally duty bound to signal and call out the existence of a thriving industry that peddles false narratives.

Many politicians, together with some sections of the media, have excelled in consummating this art of creating false narratives via obfuscations, distorted and skewed opinions that is ably supported by presenting selective data.

Now let’s look at another set of data that provides a counter or shall we say a neutral narrative. In a recent article published by World Economic Forum (published well before Mr. Chidambaram’s statement), a researcher using World Bank data has shown the performance of the Indian economy over the last fifty years. Please refer to chart.

WB1The author argues that India’s growth rate has been consistent and has accelerated over the long run.  The author further projects “…..  GDP growth to be 6.7 percent in 2017-18 and accelerate to 7.3 percent and 7.5 percent respectively in 2018-19 and 2019-20”. (Emphasis added). The observation of the author – derived from data presented in the chart – seems tenable. Since the readers themselves can visually verify the data, it irons out any potential for mischievous interpretation that may ensue when data over a shorter window is observed.

This chart belies both the news items referred to above. The Indian economic vehicle does not have three flat tires, as alleged by Chidambaram. On the contrary it seems to be kicking and doing very well, despite pessimistic projections. Secondly, if we look at the performance over the last fifty years, a high trajectory i.e. double digit GDP growth may well be within India’s reach.

That leads us to the well-known truism that most Indians are aware of. In the worst days of socialism that beggared India, many exasperated but wise Indians would remark that no government rules India, for India governs itself. For them, India was on auto pilot on “Ram Bharosa”, meaning India was governing itself on the will of Lord Ram. The chart referred to earlier just seems to reinforce this dictum on India’s potential, well known only to ordinary Indians, and apparently not to some Harvard educated elites. In short, India’s growth is unstoppable, albeit it can be slowed down by the likes of Chidambaram in the short to medium term.

But that should make reasonable Indians stop on their tracks and ponder. Fashionable opinionistas in India and their allies elsewhere, as is their wont, have repeatedly lamented that India has missed the bus. But has it really? Today, when data is democratized and can be accessed by anyone in a matter of few clicks, it is indeed easy to review and draw their own conclusions.

But India has always been a paradise for peddling false narratives – be it economic growth, religious freedom, Aryan invasion theory or even the latest fad – intolerance. Some wisecrack puts out a skewed misinterpretation or blatant falsehood and this gets lapped up by the media like hungry wolves and then repeated ad nauseam. Finally, this becomes the established narrative – completely obliterating the underlying facts.

That has been the established and well tested strategy of the narrative peddlers who sell their views for a price, for a motive, in full disregard for India. And many of them happen to be politicians and opinion makers who presume they preside over the economic future of India.

The necessary and sufficient condition for the false narrative industry to thrive is a grossly ill-informed society. They had a free run for so many decades, but not anymore. Digital India has bought internet to every home and now information is free and the biased are being called out. This is the new ground reality politicians in India have to contend with. False narratives, be it from the government, the opposition political parties or for that matter from any quarter, will now be easily spotted and called out.

 
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Posted by on June 30, 2018 in Economics, India, Indian Economy, Media, Modi

 

Political Impact of Modi’s Transformation

Political Impact of Modi’s Transformation

In two earlier  pieces,  Modi’s transformation of India using the twin pillars – choosing the right policies and then executing them well – was examined in detail. The impact on the ground is for all to see. It is in this context that news of the plot to assassinate Modi by extremists groups has come as a shocker. Undoubtedly it is a serious issue and reports have indicated that the police as well as the intelligence agencies are looking into this.

The plot itself was not unexpected given that two former Indian Prime Ministers have been assassinated. But it comes as a living reminder that country’s leadership continues to face threats from forces inimical to India – both within and outside the country. More importantly, this is symptomatic of the deeper churn in the political ecosystem ever since Modi became Prime Minister. It is worth pointing out here that many opposition parties, particularly the fringe elements, have been drumming up so much hatred and spewing venom that may it have directly or indirectly contributed to such plots. But that is for the police to determine.

Modi’s focus on “development”, besides unleashing the economy, has enabled him to wrest control of the political narrative and lay down a new set of agenda for India. Muslim appeasement has lost its sheen – particularly after the banning of “triple talak” thus endearing himself to millions of Muslim women. Also the absence of targeted attacks on minorities that many Cassandra prophesied has only aided the shifting of the narrative. In many ways, much of the angst of these entrenched anti-national elements can be sourced to their complete disappointment in the successes of the ruling establishment.

This shift in narrative has immense consequences. India is witnessing a slow migration from ghetto politics – a perverted brand of politics of pandering to minorities at the expense of the majority that has only fissured India for seven decades – to one dominated by performance, punctuated by key statistics and data on the economy. The ground reality is that it is sounding the death knell for many political careers and parties. A careful examination of changes occurring in the political campaigns seem to suggest the movement in that direction.

The Congress party, India’ largest opposition party in terms of organization and resources, has been forced out of office all states save one.  India’s very own grand old party with a long history is today reduced to a mere rump of their erstwhile past. The massive mandate in favor of Modi has created severe long term damages to the party. Their banding together with all and sundry – disparate and desperate parties has only degraded India’s opposition polity into a chaotic agglutination for whom political ideology has become nothing more than a disguise. This short sighted calculus to gain political power at any cost has been their undoing.

Their responses to the government’s “development first” agenda have been bizarre – from a mix of standard divide and rule gimmickry to engineering violent protests to create a false aura of deteriorating law and order situation. They talked about unending oppression of Dalits, repression of Muslims, denial of equal rights to women, refusal to share river water sources between states, linguistic chauvinism, and north versus south India and on and on. But all these time tested strategies seem to have fallen flat on their faces and only succeeded in leading them further into dark political wilderness. The people seem to have called the bluff.

Aiding the Prime Minister in building his massive support base, albeit unintended, is the almost complete lack of thought leadership in the opposition camp. Their only answer to his development programs is a dysfunctional opposition to anything and everything he does. They seem to have mistaken rabid Modi-baiting for strategy. Engineering street protests and attacks on Dalits and minorities is now misconstrued as political stagecraft. So rapid is the erosion of their support base that today Congress is not even confident of being elected in their “safest” constituencies despite all allurements to the voters.

This truth is that Modi’s mindshare of Indians is real. He has captivated different demographic segments by providing different programs that appeal to them. With his powerful engagement on social media he seems to have captured the imagination of the younger segments. They see the fruits of his initiatives – from sleek railway coaches to soil data cards for farmers – and have massively backed him.

The expectations of the people on delivery of developmental agenda is high and there is no going back. In every village people are talking excitedly about electrification or the introduction of new railway lines or the spanking new highway that snakes though their town. They have now seen and experienced for themselves how things can change fast. The most important learning for the people is that these massive public investments and welfare programs, if executed well under watchful eyes can swiftly impact their economic fortunes. That is the essence of Modi’s economic transformation.

The fall out on the political ecosystem is that many political careers will be ruined and we may never again see the faces of many politicians. Fringe elements, arguably the loudest anti-Modi voices and the most virulent anti-national forces, have been corralled and their sources of funds have been shut down, thanks to demonetization. For others, the writing on the wall is clear. Perform your duties as expected or exit the political life.

The focus on governance and development may have found a long awaited cure for anti-incumbency that ailed India for decades.  This does not mean that 2019 election will be a cake walk for the BJP or Modi himself. There is lot of unfinished work. More importantly, he has to step up his publicity machinery to bring to the attention of every Indian in every village what has been achieved in these four years.

Good governance and data on economy may provide fuel to debates and score brownie points on the television talk shows and may even win thunderous applause. But winning elections is another matter altogether. The 2018 elections in Karnataka shows that BJP has much work to do. But at least one thing is clear. The days of perverted appeasement politics is definitely over and seems to have had a quiet burial.

 
 
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