This has been a long first 100 days. The government’s sweeping electoral success brought with it high expectations of big changes in the direction of economic policies and reforms. So far, that hasn’t happened. Instead, we have seen a remarkable continuity with the previous government’s policies and worldview. To be sure, such expectations were largely created by us. For its part, the government has consistently argued — both in its election manifesto and in its first budget — that the economic woes of the last three years are a result of the previous government’s dysfunctional decision-making, that they did not stem from a wrong reading of the underlying drivers of the economy and consequently, wrong policies and reforms. In keeping with this belief, the new government has proffered better governance and more efficient decision-making to turn the economy around. We, on the other hand, had presumed that the new administration would decisively break away from the policies of the past to usher in a Margaret Thatcher/ Ronald Reagan moment in India.
Perhaps such a breakaway will happen over time, but restoring faith in government was the need of the hour when the new administration took office. This has been done by controlling government communications to remain on message, centralising decision-making and speeding up implementation. It was the last bit that startled the market, as almost all the policies implemented are those planned either by the previous government or by the NDA when it was in power in the early 2000s. These include liberalising FDI rules in select sectors; carrying on with the same old problematic PPP arrangements in infrastructure; continuing with the extant food security and other subsidy programmes; sticking with the unique identification system for direct cash transfers; pushing for the opening of bank accounts to bring the unbanked into the formal financial system — incidentally, proposed by former Prime Minister Manmohan Singh in the 2012 Independence Day address — and keeping to the previous government’s approach to WTO rules on farm subsidies.
Of course, there have been some differences, such as a more active management of grain reserves to better control food inflation and speeding up environmental clearances for projects. But nothing dramatic: no breaking up of PSUs, no mass-scale privatisation, no unfettered liberalisation of labour laws. Instead, the government seems focused on trying to restructure PSUs, turning these into efficient organisations and weaning them off the budget. Much like what the prime minister did when he was in charge of Gujarat. Ironically, this belief in the power of the public sector is a strong reminder that the legacy of Nehruvian socialism is alive and cuts across political affiliations. Disbanding the Planning Commission, whose wings had already been clipped — there was widespread consensus that the institution had outlived its role — isn’t really a sign of a strategic shift …continued »