Right to die
Beyond binaries

No Proof Required: Watch what we do, not what we say

2014 will be remembered as the year India comprehensively rejected its old mindset and changed course.

Prime Minister Narendra Modi Prime Minister Narendra Modi

Budget July 2014 was supposed to be a major policy statement of the first non-Congress elected majority government in India’s 66-year history. Expectations of a solid reform statement were high, if not higher; the opportunity for a vision statement was never so palpable; the faith in and credibility of what the finance minister would say was never more; and the goodwill generated by the election result for the BJP was only matched by Rajiv Gandhi’s 415-seat victory in 1984. So what happened post-Budget 2014? Everybody (100 per cent) criticised the speech, and many felt that Narendra Modi, Arun Jaitley and the BJP (in that order) had missed a historic opportunity. So much so that one senior and seasoned journalist called it a Chidambaram budget with saffron lipstick. Ouch, that must have hurt.

What Swaminathan Aiyar said was a valid reasoned opinion, albeit somewhat different from my own impression of the budget as the best content-wise in the last two decades. I had also mentioned in my budget review article (‘From hope to reality’, IE, July 11) that, in monotonous delivery and in preoccupation with minutiae, the budget seemed to be nondescript and certainly not revolutionary. However, while the devil in the budget was in the detail, the angel of reform was there, in abundant display, in the content.
Just look at the evidence.

On labour reform, what every reform commentator has been crying hoarse about for decades is happening. A big step has been taken by the Rajasthan government (a BJP enclave) to reform labour laws; however, the reformed laws should not have prevailed even in 1960s India. Such reforms still have a long way to go, but considerable progress has been made from the original 1860 labour laws, conscientiously followed by every Indian government. Haryana (Congress-ruled) has now joined the movement to make our draconian labour laws effective only if the firm has 300 employees. This is not reform but significant progress from the previous mindless law that stipulated state intervention for firing of workers if a unit had more than a hundred.

Also, state governments are now getting together and collectively demanding that the Neanderthal land acquisition act, passed by all parties, be changed to something that the people of India want, and not what the entitlement-socialist Congress brigade wanted. This could be a game-changer.

On tax reform, suddenly, unlike with the Sonia Gandhi government, the previously not possible is now feasible and likely. The much needed and overdue national Goods and Services Tax is likely to be in place by February 2015 and very likely, the overdue reform on personal and corporate income taxes will also happen by then. Don’t be surprised if corporate taxes are also reduced. And cesses and surcharges become part of (bad) Indian tax history. And the irresponsible corporate social responsibility rules either significantly reformed, or junked.

Agriculture is a large, important sector where the heavy hand of government has been most present, and most damaging. This sector has been unreformed for 65 years. Indeed, by the mix of policies pursued, it has been the sink for all the anti-rational, anti-farmer and anti-poor policies one can think of, and then more. There is great hope and expectant reality that whether it is the price stabilisation fund or the reform of the APMC market (essentially allowing the farmer to sell his cereals, fruits and vegetables to anybody he chooses to and at whatever price) or the gradual dismantling of the regressive Food Corporation of India, agriculture will see the largest set of reforms in the near future.
Considering the reform of how we do not transfer incomes to the poor, we have more schemes to help the poor than the number of really poor districts. Prime Minister Modi has endorsed Aadhaar to more effectively identify the poor and deliver targeted income support to them. A complete overhaul of the subsidy policy should be in place by next February.

Though social policy was not part of the budget, it is definitely the concern of the people and the government. Just Thursday, Health Minister Harsh Vardhan endorsed the drive to make homosexuality legal, that is, repealing the archaic and anti-human (and just as old as our labour laws) Section 377 of the Indian Penal Code that criminalises homosexuality.

If there is so much reform that will happen, why did the BJP choose the path it did — a path of obfuscation, of diversionary tactics (numerous allocations of Rs 50 and 100 crore, etc)? It may have done so in recognition of the defeated. The Congress and the Left (what’s left of it) opposition so loves rhetoric, as witnessed by their own policies over the last 60 years, that the BJP decided to give them what they are used to — rhetoric. The Congress was very pleased that its accounting gimmickry on the deficit was not revealed in all its gory detail and that the deficit was kept at the UPA magic figure of 4.1 per cent of the GDP.

Note that the deficit is not at 4.1 per cent due to increased expenditures or higher rates of taxation. Indeed, the effective rate of income tax has declined. The deficit is targeted at 4.1 per cent with sales of family silver that the political opposition thought the BJP would never do. Rest assured, if the government does fall short of the target, it will make it up by selling more family silver assets.

There is historical precedence to what the BJP is doing. The headline of this article is a reference to former US Attorney General John Mitchell’s comment on the then new Nixon administration’s policy on civil rights. The year was 1968, and the US had recently embarked on a comprehensive forward reform path on desegregation. But the American population, and especially the opposition Democrat component, was apprehensive that the new Republican and presumed anti-civil-rights, and presumed “right-wing”, presidency would not take the process forward. It did. And the same is very likely to happen in India.

This can easily be inferred from the acts of commission by the BJP government prior to the budget and reform acts likely, as documented here, post the budget. At this pace, count on 2014 being remembered as the year India comprehensively changed course for the future, and for the better.

And 2014 will prove the old adage (if there isn’t one then there should be one) — that those who talk the most about helping the poor, or being secular, or being holier than thou, do the most for themselves and the least for others. Oh yes, there is a saying — the road to hell is paved with good intentions.

Can you now name me one critic, or even one supporter, of the BJP who would have predicted that they would act on not one but several economic and social reforms? So just be careful when you say either that the budget was a disappointment or that it was not reformist, or that there is not much difference between the UPA and Modi’s BJP other than their lipstick!

The writer is chairman of Oxus Investments, an emerging market advisory firm, and a senior advisor to Zyfin, a leading financial information company

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