|the Modi government's two signal achievements this year are the Atal Pension Yojana and the transfer of more revenue to the states so as to make them financially viable.
By Ashok Malik
In May 2014, India moved from the BC era to the AD era: Before Chaiwala to (the promise of) Acche Din. A year on, writing a review of the Narendra Modi government's first 12 months is not easy. How does one approach it? Does one resort to a dhobi list of new projects and initiatives, diplomatic events, blockbuster announcements and actual achievements? Does one obsess almost exclusively with the economy, a principal factor behind Modi's mandate?
In a country where substantial sections of people are still poor, is Modi's record on welfare the true benchmark? On the other hand, there is that intangible: perceptions of corruption. Anecdotal evidence would suggest the upper echelons of this government are scrupulously clean and the pay-as-you-go regime of the UPA years has ended. Is this achievement enough?
If it's hard numbers that are preferred, should one be looking at investment figures - at FDI proposals and FII inflows? The latter have been substantial, but it is the former that are more important. Foreign and domestic investment in the real economy, as opposed to the stock market, will decide Modi's re-election chances in 2019. The signs have been encouraging, but the investment cycle has not quite begun.
The Modi mandate of a year ago was majestic and seminal. Its true import, the subterranean aspirations and forces that shaped it, has perhaps not been appreciated enough. It spoke for an urgency and a tectonic transformation that Indian society is seeking. Crucially the expression "tectonic transformation" should not be confused with that lazy term "big bang reforms" - and with individual policies that op-ed writers describe as must-haves. A better benchmark would be the very political philosophy Modi has embraced.
Those who backed Modi made two bets on him: that he would understand the limits of what the Indian state could do vis-a-vis the Indian citizen, and understand the limits of what the Union government should do vis-a-vis state governments. The first was a revolt against an overdone statism and a socialist hangover that had resisted the liberalisation of 1991 and made a strong comeback in the Sonia Gandhi years. The second was a recognition that India's contemporary polity was far more federal than when the Constitution was written. A grand bargain between central and state governments, or at least a corrective, was needed.
Both these frameworks are cross-cutting. They have implications for economic growth, social welfare, development, and empowerment of the community, the family and the individual. They expand the purview of what we call "reform". The ability to privatise a loss-making government-owned hotel reflects a sensitivity to what the state should or shouldn't do, and what should be left to society and citizen. So does the abolition of a system of attestation of papers by gazetted officers, and trusting the citizen to validate his own documents. Modi has not done the first, not yet; but he has done the second. He has indicated his direction.
To this writer's mind, the Modi government's two signal achievements this year are the Atal Pension Yojana and the transfer of more revenue to the states so as to make them financially viable. These may sound boring and unglamorous when compared to a high-octane event at Madison Square Garden or yet another television debate on the "Idea of India", but they do reveal a strategic vision.
The Atal Pension Yojana is a social inclusion scheme designed for the underprivileged, those working in the informal economy, and those in that grey zone between poverty and middle class. It asks the citizen to invest in a pension fund and promises to match his contribution up to a reasonable limit. It incentivises the citizen to plan for his (or increasingly her) future and retirement and to take ownership of life decisions. It promises the government will help if the citizen helps himself. This suggests a gradual but clear shift from bottomless-pit welfare programmes that budget for nothing but a community on permanent dole, with no motivation for seeking employment opportunities. In pushing such a pension scheme as a flagship welfare programme, Modi is attempting not economics but social engineering.
The attempt to redress the skewed equation between New Delhi and the states has been no less dramatic. The acceptance of the Finance Commission report is being complemented by a devolution of welfare and anti-poverty programmes and programme design to state governments. This is revolutionary in a country where 60 per cent of IAS officers in the Union government have hitherto focused on issues such as Health and Education, which are in the state government list as per the Constitution.
The decision to give the bulk of income from coal and mineral auctions to the states where these resources lie too reflects a new politics. The winners here include non-BJP run states such as Orissa, Bihar and West Bengal. In the latter two, the BJP is to take on regional rivals in tough elections in the coming year. Yet, this did not tempt the Modi government into a re-think. In private conversations, regional parties have appreciated this and contrasted it with the UPA years.
Eventually, the key to Modi's economic success lies in the states. "Make In India" cannot happen without state governments taking charge of projects and being welcoming of investment. In his first year, Modi has promised to facilitate them by allowing flexibility in labour and land acquisition laws, and in quick, fair and politically-agnostic environmental clearances. He has started to institutionalise a new federal culture. His rewards - and India's rewards - will come in subsequent years.
(Ashok Malik is a columnist and writer living in Delhi.)