Most reform since 1991

This government is the first to clearly stress the importance of manufacturing for growth and employment.

Written by R C Bhargava | Published: May 22, 2015 12:00 am
Narendra Modi, PM Narendra Modi, BJP government, Modi govt one year, BJP, UPA 2 government, Planning Commission, PSU, Indian economy, Corruption Act, indian express, India latest news, PM Narendra Modi, PM Modi,  India foreign policy, Modi foreign visits, Modi abroad vitis, express column, Indian express Infrastructure has to be improved and the importance of manufacturing and entrepreneurs recognised. Captains of industry, for their part, need to appreciate the political and social conditions in the country and generate trust.

Towards the end of 2013, India was in a very despondent mood. The future looked bleak and no clear road forward was visible. Most people were expecting another coalition government, probably led by the BJP. But there were doubts that such a government could provide effective leadership. This changed completely when the BJP secured an absolute majority and Narendra Modi became prime minister. Most people’s expectations soared to entirely unrealistic levels. Modi was expected to perform feats of magic. His first-year performance has to be seen in that context.

This is the first government in India’s history that has clearly enunciated the importance of manufacturing for the inclusive development of the country and the generation of jobs for young people with aspirations. This itself is a major change of policy and of vital importance to our future. Action is being taken to make “Make in India” a reality. Doing business is becoming easier and the process of making manufacturing globally competitive is under way. A lot still has to be done to change the work culture, policies and attitudes created by decades of socialist ideology and the licence-permit-control raj. State governments have a leading role to play in this task and should not treat industry as merely a means to subsidise other sectors of the economy. Infrastructure has to be improved, and the importance of manufacturing and entrepreneurs recognised. Captains of industry, for their part, need to appreciate the political and social conditions in the country and generate trust that they are interested in nation-building and will work towards that. They need to develop a productive work culture in their industries. They cannot rely on the Central government alone to make manufacturing in India globally competitive. The automobile industry has shown that this can be done.

I believe more reforms and measures to restore our sick economy to health have been implemented this year than ever before in the past, except perhaps for 1991. The corruption and scams that plagued the UPA 2 government have been absent. The adoption of a transparent system of auctioning valuable resources like coal and spectrum has been successful. Domestic coal production should increase in the near future. The decision-making process of the Central government can no longer be accused of being paralysed. Major defence contracts have been cleared and the agreements made will lead to sophisticated products being manufactured in India. Most infrastructure projects that were stuck are now moving. Environmental clearances are no longer a major obstacle to projects. The public-private partnership model is accepted as necessary for progress, and it has also been recognised that private parties to such agreements need a fair return on capital. The logjam in the coal and mining sectors has been cleared, and new and more practical laws have been approved by Parliament. Foreign direct investment limits in defence, insurance and railway infrastructure have been raised. State governments have been substantially empowered, Centrally sponsored schemes have gone and the Planning Commission has been replaced by a body that does not allocate resources for the plan. Diesel prices are not being subsidised, and the direct transfer of subsidies to beneficiaries is becoming a reality due to the Pradhan Mantri Jan Dhan Yojana. Subsidy outflows are coming down. PSU shares are now selling faster, though I believe there is scope to considerably step up sales of both profit-making and other PSUs. The efforts to create confidence in our tax administration have so far yielded some results, but it seems more has to be done.

The prime minister, by starting the cleanliness campaign, has made us aware of our past failings. The drive to build toilets, especially for girls, is commendable. This programme is moving forward and we, as citizens, have to keep the momentum going.

Achievements in our external relations are visible for all to see. We have built better relations with all our neighbours. Modi has developed a personal rapport with the heads of all the leading global economies. International interest in India is perhaps at an all time high and will result in large investments in the near future.

Still, some areas remain to be tackled. The willingness of civil servants to take decisions is one. The proposed amendments to the Prevention of Corruption Act, 1988, should remove a major barrier. Assessments of performance and promotions of civil servants should be based on how well programmes are executed and their outcomes, not on how perfectly paperwork is done and a lack of mistakes.

Political funding is also a major area of concern. The expenditure limits for elections need to be made more realistic, and fundraising should be transparent. A strong audit system for all expenditure should be instituted. Respect for laws and rules needs to be restored. This requires effective and fair enforcement, irrespective of a person’s position or wealth. We cannot become a leading manufacturing nation if we have a culture of violating laid-down rules, processes and systems.

The writer is chairman, Maruti Suzuki India Ltd.

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