Prime Minister Narendra Modi’s recent gambits, the budget and the alliance with the PDP in Kashmir, can both be subject to a snarky scepticism that comes easily to us. But they are, in their own different ways, a delicate attempt to take Indian politics into uncharted waters. They are fraught with risks. But it is worth thinking about the underlying radicalism of the politics that could potentially be unleashed.
This budget does not fully live up to the bold strokes of the Economic Survey. But think of the context. Modi was politically vulnerable. His early silences in the face of communal baiting, the loss in the Delhi elections and the sense of a little drift in government cost him political capital. He had to restore authority to government and not give the Opposition more openings. His speeches on religious toleration helped. But he also needed a budget that, while being reformist, did not give the Opposition a handle. There are things to take issue with in the budget, but it gives little ground for potent political mobilisation in opposition.
There are three charges against the budget. Purists balk at the postponing of fiscal consolidation. But private sector investment is not picking up for a variety of reasons. The extent of the institutional mess this government inherited will take time to reform. The budget was more candid in its depth of understanding of the institutional mess. It was no accident that large sections of the private sector were clamouring for more public investment as a means of making India competitive. The budget is premised on some self-belief in government, that is far more progressive than those who make the silly assumption that you can build competitiveness and markets without the state. It could have invested more in building the state. But the greatest strength of the budget is that it has a range of institutional reforms — from the much-debated monetary policy committee to a new bankruptcy code.
The second charge is that it lacks the courage of its own conviction on cooperative federalism; transfers to states could have been greater. I have some sympathy for this view; the push towards decentralisation has for too long been stymied by bureaucrats at the Centre. But it is reasonable to think that this transition should be over a two- to three-year period. The states now need to put alternative allocations and schemes in place. Imagine the reaction if all Centrally sponsored schemes, including the MGNREGA, had been abolished effective tomorrow, without any alternative in place. Presumably, the budget is just one move in a series of moves, ranging from flexibility in labour laws to phasing in more allocations. But make no mistake: if this trend continues, India will have an altered politics and perhaps even civil society in a few years. For one thing, it will need a more decentred civil society.
Suffice it to say that, at the moment, government is more ready to decentralise than civil society is to work at the state level.
The third charge is that there is not enough tax, subsidy and welfare rationalisation. The government will be hurt by the increase of the service tax to effectively 16 per cent, and there are formulations in the service tax (on reimbursements, for example) that are going to make it an administrative challenge for citizens. But the rate is a pathway to the GST. Combined with not raising tax exemption limits and increased fuel charges, the government has made its middle class constituency uneasy. It has a short window to ensure these effects are not lasting. The government has retained its commitment to a participative welfare state, recognising that morbidity and old age are pathways to poverty.
But both welfare and subsidy reform are not like jumping across a gorge in one leap. They require building a platform to go across to the other side. The architecture and commitment to that platform is clear, though the government is hugely underestimating the problems with things like insurance in the Jan Dhan Yojana. The criticism of the budget that is valid is that health and education still remain the two relative black holes of Indian policy. But the potential radicalism is not the radicalism of number crunching; it is the radicalism of institutions.
Our polity is disabled by two proclivities: an inordinate joy in scoring hypocrisy points, and wanting change but becoming sceptical when it comes. Developments in Jammu and Kashmir will be seen through this lens: two phlegmatic parties, with uncompromising core ideologies and odd-ball characters in an unlikely coalition. What could be more hypocritical and unbelievable than that? Talks with Pakistan are restarting, when conditions inside Pakistan are not propitious for deals. There is a big risk for the BJP in managing this concoction. No government in India has escaped the charge of incoherence in its Pakistan policy.
But the responsible thing is to keep trying. If this goes wrong, it is hard to predict the direction in which politics will unfold. But god knows if there is one place that needs new political experiments it is J&K. But this experiment will call upon an unprecedented degree of tact, forbearance, ability to live with contradictions and subtle ideological realignment. If parties don’t change, they are accused of being intransigent; if they chart a new course, we discover how much we liked old frozen certainties. At least Modi has taken a risk.
But contemplate the larger picture: a senior RSS figure like Ram Madhav (also often behind greater engagement with the outside world) negotiating with the PDP and characters like Sajjad Gani Lone, willing to engage in arduous politics rather than ideological purity, is itself a huge shift. That it is not announcing itself as an ideological shift but is being conducted almost as if it were routine politics is even more reassuring. It at least suggests the possibility that social undercurrents are shifting far more than is captured in public debate.
Modi has been able to instinctively grasp this possibility more than his opponents and regain political ground. If used wisely, this can give him cover for a few months to infuse momentum into government. He can still be derailed by the lack of a proper execution structure within government, by supporters who, reared on adversarial aggression, won’t understand half the changes in the offing, by his own political centralisation, where grasp of detail may elude the government, and by misjudgements on how to marginalise the rabid lot within his party. But Modi has made moves with long-term significance. Just hope they don’t get bogged down in the eternal trivia which we so love in our politics.
The writer is president, Centre for Policy Research, Delhi, and a contributing editor for ‘The Indian Express’