By Jayshree Sengupta
A striking feature of the recent LokSabha polls was that it clearly showed people are unhappy with doles and handouts. The UPA was known for its kindness/generosity towards the poor and that is why for generations, the poor voted for Congress. Things are changing in rural India. The rights based programmes that the left of centre in the UPA government lauded and took credit for may have created many millions of jobs, but now people want more. Alongside the popularity of MGNERGA, there have been allegations of corruption and deferred payments. People were saved from starvation, no doubt. But they aspired for more.
Aspirational politics is a new reality. It is about the poor aspiring to earn much more and even becoming leaders. The Chaiwala label served Narendra Modi well. It went to show that the arrogant western educated elite of the previous UPA government were not the only ones who are entitled to occupy seats of power and have the right to rule. Modi does not have western education or degrees but people relate to him much more. Many of the members of his cabinet are not even graduates. It is a real paradigm shift from the past.
Secondly, people became fed up of their own miseries while seeing the wasteful foreign trips of ministers of the UPA government as reported in the media. People have not been convinced that it was all being done to serve the country’s interests. More often than not, these were junkets in which ministers and politicians travelled first class with their families and had a great time, living in the best hotels and availing of the local Indian embassy’s hospitality. Profligacy and corruption in the ruling party became apparent to the common man who was stuck fighting inflation and lacked basic amenities. People clearly want more accountability and transparency in all government deals now and Prime Minister Modi has to fulfill this expectation.
Modi’s appeal is due to the fact that he is simple in his habits and personally not corrupt. Also, he is a brilliant orator who has worked hard for his state. People are expecting him to work hard for the country. They hope he will be able to govern and this will lead to the efficient delivery of public goods and services. Good public hospitals, better quality of primary education, affordable housing for the poor, sanitation, clean drinking water are the basic needs people want. An improvement in governance will also mean greater safety for women.
Regarding the economic policy, whether the World Bank and IMF’s influence will be less important during Modi’s tenure, is yet to be seen. The World Bank was very happy when the UPA government appointed Raghuram Rajan, a top western trained economist, as the Reserve Bank of India Governor. Prime Minister Modi has stuck with him so far. But it is likely that a new team of economists, who are more in tune with the nationalist ideals of the BJP, will surface soon. Inflation control and growth are both important targets of the new government. There may be a loosening of the monetary policy in the future as has been evident in the recent RBI move to reduce the Statutory Liquidity Ratio, to increase liquidity. We need to raise demand for manufactured goods (cars, white goods) and high interest rates are leading to high EMIs.
Fiscal consolidation is an important segment of economic policy and the fiscal deficit has been brought down quite drastically by former Finance Minister P. Chidambaram through various expenditure cuts. This must be reviewed by the new government. Important sectors such as health and education should not experience drastic cuts. There should be austerity in government’s own consumption expenditure — through cutting the many perks given to ministers/high officials. The big challenge before the new Finance Minister will be how to raise more revenue. Hastening the pace of the Goods and Services tax proposal is needed.
The States and their policies would have to be coordinated with the centre’s policies, especially in the area of agriculture. If Modi could turn around Gujarat’s agriculture so dramatically, he can be instrumental in turning around agricultural productivity, marketing and storage in all States. He has to act quickly. Otherwise, there would be more problems in rural areas with people migrating to cities in droves in search of jobs because much of the small scale agriculture is unsustainable. Many critics of Modi are expecting a drastic reduction in subsidies. Some subsidies that benefited only the well-to-do, should go. There will surely be a review of various farm subsidies and those that do benefit the marginal farmers when administered more efficiently, would probably stay.
As everyone knows, India is losing out to China in the area of manufacturing. Revamping the manufacturing sector with new investments and skill training for the young labour force seeking jobs will spur manufacturing. The youth bulge that India is enjoying is a temporary phenomenon. It will be over soon if the opportunity is not grabbed right now. The youth expect him to create jobs. But Modi does not have a magic wand and so the work will have to start towards building proper infrastructure for job creation. Jobs will empower the young and increase their demand for goods and services which will give a boost to the economy.
Last, but not least, is the banking sector which is cash strapped and burdened with rising NPAs. As everyone knows, inclusive growth is not just a slogan. It involves more banking services for the poor and the small scale manufacturing sector. There is need to have more banks in the rural areas and granting loans to the small scale sector on easier terms. Recapitalisation of banks will have to become a priority for the new government.
More privatisation is expected from the Modi government which will not displease many, because private sector can often revitalise production. But mindless privatisation will hopefully be avoided. Crony capitalism and corruption should be eliminated but it is not going to be an easy task. In any case, the aspirations of the poor will have to be addressed and these can never materialise if there are growing inequalities of income and opportunities.
(The writer is a Senior Fellow at Observer Research Foundation, Delhi)
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