Thursday, Oct 30, 2014

Change management

It would be simplistic and incorrect to expect a replication of Narendra Modi’s successes in Gujarat at the national level. (Source: Express Photo by Neeraj Priyadarshi ) It would be simplistic and incorrect to expect a replication of Narendra Modi’s successes in Gujarat at the national level. (Source: Express Photo by Neeraj Priyadarshi )
Written by Neelkanth | Posted: May 28, 2014 12:09 am

The strength of the electoral verdict is breathtaking and rare. First, the BJP does not have to “compromise” any of the 12-15 economically relevant ministries: just think of the railways, whose stagnation largely stems from being run by regional parties for most of the last two decades. Second, the NDA is just “one party” away from a two-thirds majority in the Lok Sabha, and will have majority in a joint session of Parliament, clearing the way for legislative changes. Last but most important, sweeping wins in states where the NDA is not in power suggest that in a year’s time, up to half of India’s population could have a chief minister and a prime minister from the same alliance. In a federal polity, this is a remarkable and rare alignment of stars, which opens up great prospects.

At the same time, any smart politician knows that the window of opportunity for reform is normally smaller than it seems, and meaningful change is never painless. It won’t be long before the euphoria of hope gives way to restlessness at the pace of change or, at least, gets diluted by the inevitable dissonance from the replacement of the old with the new. It will be change management on a gargantuan scale, and it won’t be easy, painless or quick.

What the new government starts with, therefore, becomes extremely important. To be sure, there are few, if any, “low hanging fruit”. Given the panic that set in starting 2012, the previous government has already done the relatively easy things: diesel price hikes, rail tariff increases, clearing most of the stuck projects, visa on arrival, among others.

What, then, should be the economic reform priorities for the new government? It would be simplistic and incorrect to expect a replication of Narendra Modi’s successes in Gujarat at the national level. This is not just because the jurisdictions of chief ministers and prime ministers are different: power distribution, urban infrastructure, irrigation, land acquisition and other areas where Gujarat really stands out are, after all, state subjects, and a PM can at best have an indirect impact on these. But more than that, the strength of the verdict and the office of prime minister offer bigger challenges and opportunities. We highlight five below.

Fifteen of the 18 sectors that the government opened up to private participation in 1991 have seen dramatic improvements: it is hard to imagine the economy today without private telecom companies, airlines or banks, for example. Of the three that remained government monopolies, that is, railways, defence production and nuclear energy, the stagnation of Indian Railways has been the most harmful.

Travelling by continued…

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