Right instincts

A political argument for economic reform has not been convincingly made. It could be Modi’s opportunity.

Updated: March 3, 2014 12:11:45 am

A political argument for economic reform has not been convincingly made. It could be Modi’s opportunity.

In his recent speeches, Narendra Modi has made some gestures towards a forward-looking economic agenda. He has made two significant reversals, batting for a goods and services tax (GST) and also telling traders not to feel intimidated by foreign retailers and online commerce, but to be invigorated by these changes. Modi had been the only serious obstruction to the GST, despite consensus among other chief ministers, industry bodies. Now he says his objection had only stemmed from a lack of faith in the technology backbone required for successful implementation. He had also opposed FDI in retail when it was advocated by the Centre, but seems to have changed his position, to one more in keeping with Gujarat’s entrepreneurial energies.

Modi’s economic statements have tended to focus on a few important areas — urbanisation, infrastructure, greater freedom to states, more productive PSUs, tax reform, etc. He has spoken of how the external affairs ministry must focus on economic diplomacy. These are encouraging signals, but Modi needs to make sure the message isn’t lost amid the conflicting statements put out by his party. Some of Modi’s own rhetoric and actions have blunted his credentials — he has attacked the UPA’s reduced gas subsidies, and his party’s economic manifesto sounded like an NAC dream, with its “right to health”, promise of higher procurement prices, etc.

Some of his lightbulb ideas like optic fibre networks and new cities are already being implemented. Modi has spoken of reducing corruption, but has yet to explain how he intends to roll back state capture by powerful business interests. He speaks of better PSUs without offering his roadmap for labour law reform.

There is an empty space in our politics as the Congress, AAP and others tilt further leftwards, building their brands on grievance rather than aspiration and buoyancy. Modi has tried to speak of tapping the power of markets, in creating an efficient, grit-free administration that gets out of the way of entrepreneurship.

If he hews to these beliefs, he would offer a much-needed alternative that could give heft and shape to the economic debate ahead of a crucial election.

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