JOIN USModi’s 5 years: A report card
The Economy
During his election campaign in 2013-14, Modi raised expectations of a great economic revival, high growth and tens of millions of new jobs for the ever-growing workforce. The new government hit the ground running and the first two years were action-packed with new programmes and plans – until he took the arbitrary decision to demonetise 86% of the currency in circulation. At the end of his term, there are many hits as well as major misses.
Goods and Services Tax
The GST is the indirect tax that subsumed a variety of central and state levies and replaced a cascading and complicated tax system. It transformed India’s 29 states into one market with one set of tax rates. The UPA government had sought to pass the GST law, but it was the NDA government that managed to do so. The GST Council, formed with the states having two-third vote and the Centre a one-third vote, is a rare example of cooperative federalism. Where the government faltered was its implementation. It has since realised that it made the system exceptionally complicated, with five tax slabs and a complex filing process, all of which alienated small traders and businessmen, especially coming close on the heels of demonetisation. To their credit, the government and the GST Council have been responsive and have resolved many issues and simplified the tax slabs and procedures. It’s still a work in progress.
Insolvency and Bankruptcy Code
The government inherited a banking system burdened with huge bad debt. The non-performing assets (NPAs) of banks had risen for a number of reasons – from bad credit decisions to poor monitoring, connivance of bank employees, as well as cyclical business downturns. The Insolvency and Bankruptcy Code (IBC), proved to be a game changer as it took NPAs head-on. The code allows either the creditor or the borrower to approach the National Company Law Tribunal (NCLT) to initiate insolvency proceedings and obtain time-bound resolution. While it’s still early days, the recent interest shown by reputed domestic and global businesses to acquire bankrupt companies with large bank NPAs but good underlying assets points to the success of the IBC code. This should restore the health of banks somewhat and enable them to start lending to viable projects. Banks have recovered over 1.1 lakh crore through IBC since 2017-18.
Fugitive Economic Offenders Act
The Fugitive Economic Offenders Act (FEOA) came into force in April 2018. The Act was needed as the number of large fraud cases reported by banks rose alarmingly in the last few years, with over 30 people accused and under probe for various financial scams/frauds fleeing the country to escape the law. Under the law, if an economic offender flees the country to avoid due process, he/she can be declared a ‘fugitive economic offender’ and their properties can be confiscated. Nirav Modi and Vijay Mallya have been declared as economic offenders. Their property, including art collections and cars, can be auctioned off to recover part of their debt.
Demonetisation
On November 8, 2016, Narendra Modi sucked out 86% of the currency in circulation by value in the Indian economy. The decision was taken against the advice of two successive RBI governors, Raghuram Rajan and Urjit Patel. It was done on the wrong premise – that there was too much cash in the economy (12% of GDP); that the currency withdrawn – Rs 500 and Rs 1,000 -- were very high-value notes (and, instead, Modi introduced Rs 2,000 notes!); that the move would eliminate all black money in the system as well as fake currency. We know what actually happened: 99.7% of the currency in the system came into the banks, and so there was no ‘black money dividend’ – the Rs 3 lakh crore that the government expected – to be had; instead, millions of jobs were lost (3.5 million in the year following the move, as per CMIE data, and continuing job losses to this day as thousands of SMEs never recovered, the construction sector slumped and farmers were hit hard as it came just before a sowing season. Demonetisation must stand out as one of the most arbitrary decisions ever by an elected leader in a democracy.
Farm Crisis
By all accounts, India’s farm crisis has worsened in the Modi years. Although the government tried introducing some new ideas at the beginning of the term, such as neem-coated urea, soil health cards and crop insurance, such tinkering did not help. It was only in the fourth year of the government that it began to realise that it had not been able to do much about the farm crisis. While it had won big in the UP elections with a combination of demonetisation and a promise of a loan waiver, it was closer to the December 2018 elections in the Hindi heartland that it conceded the demand for a higher minimum support price. Still later, after losing those elections, it thought of the PM-KISAN Rs 6,000 a year dole for farmers. What it failed to do in these five years was to bring in reforms in the sector, starting with ensuring higher prices for farm produce. As a result, its promise of doubling farmers’ incomes by 2019 (now pushed to 2022) remains just a pipedream for farmers.
Infrastructure
This is the one bright spot in the government’s record. The speeding up of highway construction, the new Bharatmala and Sagarmala projects, the building or revival of regional airports and regional air connectivity, and much work on modernising and expanding railways are all achievements that the Modi government can claim. Similarly, it can count some success in revitalising the coal and power sectors. The claim of having electrified all of India “while the Congress had done nothing in 70 years” is exaggerated. India has more than six lakh villages. The Modi government electrified the last 18,000 of them.
Rather, it should take credit for the successful Ujala LED bulb scheme. Although started by the previous regime, the Modi government expanded the scheme and benefitted from the economy of scale as it halved the price of each bulb.
Disinvestment
The government claims to have not only reached its disinvestment target of Rs 80,000 crore for FY19, but of having surpassed it by Rs 5,000 crore. However, it managed to do so not by ‘disinvestment’ proper but by getting one PSU to buy equity in another. This was the case when Rural Electrification Corporation acquired nearly 53% of Power Finance Corporation, and the government made a neat Rs 14,500 crore; or when ONGC bought the government’s stake in HPCL for Rs 37,000 crore. The government managed to list only five companies in FY19, garnering a paltry Rs 2,000 crore. It also raised Rs 8,000 crore from share buybacks by PSUs. The big failure was the bid to privatise Air India.
Banking Reforms
The government started on the right path with aggressive recognition of NPAs and clean-up of balance sheets. It announced management reforms to be undertaken in the sector, such as hiring professionals laterally at least in five large banks. By early 2016, the Banks Board Bureau (BBB) was in place to recommend banking reforms. But the recommendations of BBB were not implemented and the reforms lost steam. The government did infuse much-needed capital of Rs 2 lakh crore into banks after kicking the can along for some time. But in the absence of reforms, the question is, is good money being thrown after bad?
Petrol Price
The Modi government was lucky as oil prices fell drastically soon after it came to power in 2014. This helped it to continue to deregulate diesel and petroleum prices that UPA had started and substantially reduce the subsidy bill. But the government did not pass on the benefit of lower oil prices, even when it touched as low as $30 a barrel in early 2016, to consumers. Instead, it raised excise duties to keep the price of petrol and diesel as high as it was during the UPA era when international prices were more than three times higher. The jury is out on whether this was economically good or bad. It helped the government raise Rs 2.3 lakh crore in taxes and helped it balance its fiscal numbers. But it forced consumers to tighten spending elsewhere.
GDP, Jobs, Inflation
We could praise the Modi government on maintaining economic growth at over 7% (although the latest data shows slowing growth, especially in the already stressed agriculture sector), we could praise the government for bringing down inflation and keeping it low, and we could praise it for maintaining fiscal discipline by and large, letting it slip only due to political desperation as elections approached. But, unfortunately, by its own revisions and re-revisions of GDP data to prove that the economy is indeed growing fast and by hiding the government’s own jobs data, the Modi government has come under question on all these numbers. So, we must really say that on these, the jury is still out.
Flagship Programmes
Swachh Bharat
The Swachh Bharat Mission was announced to make India ‘open defecation-free’ by 2019. Over 9 crore toilets have been built, and coverage of rural sanitation has risen to 98% from about 40% in 2014. Many municipality areas in the country have been declared open defecation-free (ODF). The program brought discussion about cleanliness and sanitation to the mainstream. This may be the Modi government’s most successful program, and an important one, with effects on the health and dignity of the poor. However, ground-level reports from some areas show implementation failures -- toilets were built in a hurry with no proper water supply or drainage system resulting in unusable toilets.
JAM and DBT
The ‘JAM Trinity’ – Jan Dhan-Aadhaar-Mobile – was first conceived by the Manmohan Singh government. By the time it went out of office, it had built the Aadhaar platform to an irreversible scale, and carried out pilots of Direct Benefit Transfer program. The BJP, especially Modi himself, had vehemently opposed Aadhaar while in opposition. Once in power, Modi not only continued with the program but expanded it vastly (though in doing so it began to raise concerns over the potential of Aadhaar to enable a surveillance state when linked to many aspects of a citizen’s life). Government claims that “Rs 2.8 lakh crore in subsidies were transferred directly into the bank accounts of authentic beneficiaries last fiscal, saving Rs 1.2 lakh crore in leakages over the last four years and eliminating almost 7 crore fake accounts in several schemes”. These figures, however, may not tell the whole story.
Make in India
‘Make in India’ was launched with much fanfare. However, despite opening up several sectoral caps for FDI and improving ‘ease of doing business’ ranking, manufacturing has not picked up as expected. Manufacturing value-added in Q3 2018 is estimated to have moderated to 6.7% ,sharply down from April-June’s 12.4%. The sector is facing headwinds from both demand and supply sides. Demand has softened as can be seen by growing inventory in the auto sector and softer sales figures of FMCG companies. The supply side is still limping back after the disruption of the informal SME sectors by demonetization and GST. The eight core sectors that make up about 40% of India’s total industrial output — coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity — cumulatively grew by only 1.8% in January 2019. Centre for Monitoring Indian Economy data on projects show that the value of new project investments has declined in Q3 FY2019. The government did not make any sincere effort to reform the arcane labour laws and retreated from the early bid to tweak the land acquisition law. Without these reforms, ‘Make in India’ is unlikely to fly.
Ujwala
Millions of us gave up subsidised cylinders when Modi gave a call. Those cylinders were given to poor households in the rural areas under the Ujwala scheme. It showed good intent, but is the scheme sustainable? While the government claims to have given some 8 crore households free gas connection and the first cylinder, the truth is, most of these households are unable to afford the successive cylinders, which cost Rs 600. The government must do a study on how many have continued to buy gas cylinders before it makes claims about Ujwala.
Ayushman Bharat
The Ayushman Bharat health insurance scheme is a recent one and the jury is still out on whether it is the best way forward to ensure healthcare for the poor. Only 18,000 private hospitals across the country have joined the scheme so far. Experts argue that the only realistic way to improve affordable healthcare is to build the capacity of the public healthcare system. The other component of AB – the Jan Aushadi Kendras and the move to bring down the cost of stents, knee implants and essential medicines work better for the poor.
Mudra Loans
The Mudra loan scheme is a repackaged version of loans for small and micro businesses that was already in place. The government’s claims of job creation now rest on these loans, the logic being that the government has given Rs 7-8 lakh crore in loans to entrepreneurs over the last four years and these must have created jobs. The truth is, the average size of these loans is so small that they could not have created sustainable jobs. The government has either not collected data on the jobs created by these loans or is not sharing the data with the public. In either case, we have to take its claims with a jar of salt.
National Security
Pakistan Policy
In these last few weeks, since the Balakot airstrike, the Prime Minister has been going around claiming that his government is the strongest on national security matters, especially when it comes to Pakistan and terrorism. Modi certainly deserves credit for taking the political decision to hit terror camps based inside Pakistan. With it, India overcame an important psychological barrier – that posed by Pakistan’s nuclear sabre-rattling. But with the details of what exactly transpired during the airstrike being in dispute (especially over whether the target was hit and terrorists were killed) and with the way the episode ended with Pakistan returning Wg Cdr Abhinandan to India, Modi and the BJP lost some of the sheen. Moreover, the claim that Congress was soft on Pakistan while Modi is hard on it is not borne out by evidence since 1971.
Kashmir Policy
Where the Modi government has much to answer for in national security matters is Kashmir. It inherited a state where militancy had been calmed down by a combination of policies. The government should have taken forward the policy of talking to Kashmiris and bringing them closer to Delhi’s position. Instead, it embarked on a security forces-led hard approach to deal with discontented Kashmiri youth. It has driven more Kashmiri youth into militancy than any previous government since the 1990s. Local support for militants and terrorists, which had subsided in the years since Vajpayee, has grown. Kashmir, in the Modi years, has become more estranged from India than ever before.
Institutions under Stress
Judges’ Press Conference
The January 12, 2018 press conference by four Supreme Court judges was an unprecedented event that sent shockwaves through the entire edifice of Indian democracy. Although on the surface it looked like an internal issue among judges, the immediate triggers were the Judge Loya case in which petitioners had asked for a probe into the judge’s death (Loya, a CBI judge who was hearing the Gujarat Sohrabuddin Sheikh fake encounter case and had insisted that BJP chief Amit Shah appear before the court, had died under mysterious circumstances); and the government’s refusal to ratify the Memorandum of Procedure and end its obstruction to appointment of judges to the higher judiciary.
The CBI Mess
In December 2016, Karnataka cadre IPS officer and CBI Special Director RK Dutta was tipped to become the next CBI director, but was transferred out of the agency three days before then director Anil Sinha retired. In Dutta’s place, Modi placed Rakesh Asthana, a Gujarat cadre IPS officer who had been brought in earlier as additional director. Asthana was made interim director and would have become CBI chief, but for a PIL against the move citing corruption charges against him. Modi then brought in Alok Verma, former Delhi police commissioner, as director. Asthana was made No. 2 in the organisation but was being probed in half a dozen corruption charges. He, in turn, charged Verma with bribery. When things got too ugly, Modi stepped in and benched both Verma and Asthana, eventually leading to Verma’s ouster despite the CVC saying there was no evidence against him and the SC reinstating him. Verma had accepted a complaint on the Rafale deal and, just before the government’s ‘midnight coup’ at CBI, the buzz was that he was about to file an FIR in the case, as he was duty-bound to following the complaint.
RBI as Handmaiden
We now know, thanks to an RTI query that forced the RBI to release the minutes of the meeting that it held to approve Modi’s demonetisation, that then RBI Governor Urjit Patel and the Board of RBI did not agree with the government’s reasoning for demonetisation and also did not believe that it would achieve the stated objectives. But they still commended the move to the government “in the larger public interest” after a perfunctory meeting less than three hours before Modi announced it on TV on November 8, 2016. We also know what a disaster it proved to be. But the government didn’t stop there. As the economy slowed down, it began to pressure RBI to lower interest rates, allow banks that were already reeling under non-performing loans to give out more loans and to hand over RBI’s reserves, built up over years, to the government. Urjit Patel resigned as Governor. Modi had his way.
Whither Academic Freedom!
An ideological attack on universities and academic freedom began almost as soon as Modi came to power, spearheaded by the BJP’s student wing ABVP and making the Jawaharlal Nehru University a special target. The whole university was branded Leftist, supporters of Maoists and terrorists, anti-nationals and the like. Sedition charges were thrust against JNU students’ union president Kanhaiya Kumar. Since then, the attack on higher education has taken many forms. The latest is a Ministry of HRD directive that PhD students can conduct research only on “nationally relevant” topics! Indeed, a nation-wide protest movement of teachers, students, parents and eminent educationists has formed against the government’s policies.
Scams, Crony Capitalism
Rafale Deal
One of the main claims of the Modi government is that there was no corruption scam in his five years. In the Rafale purchase, government documents show that the UPA-era purchase of 126 fighter aircraft for the IAF was changed to only 36 fighters without necessary approvals. The benchmark price of the aircraft was arbitrarily pushed up by nearly $3 billion by the PM-led Cabinet Committee on Security. The PMO inserted itself into the negotiations and gave concessions to Dassault, the French supplier, on sovereign and bank guarantees; deleted the anti-corruption clause; gave up India’s right to examine Dassault’s financial books. The clause on offsets in the Defence Procurement Procedure was changed with retrospective effect.
It has been alleged that all these were done to facilitate Anil Ambani to get the offset contracts from Dassault (as well as Thales and MBDA). The opposition has been demanding a probe and a Joint Parliamentary Committee on the matter. The government has done everything to ensure no probe takes place.
A Mallya & two Modis
Businessman Vijay Mallya fled to London, through the diplomatic channel at the Delhi airport, apparently carrying 300 bags (as per Enforcement Directorate). Mallya met Finance Minister Arun Jaitley in the corridors of Parliament just before he fled. Somebody diluted a look-out notice issued against Mallya to enable him to escape. Who?
PM Modi was associated with Nirav Modi and his uncle Mehul Choksi almost until the very time they fled the country. Nirav Modi was in the PM’s group photograph at Davos last January. External Affairs Minister Sushma Swaraj intervened on behalf of Lalit Modi with the British authorities.
More recently, the criteria for winning contracts to run airports were changed. In the bidding that ensued, the Adani Group of PM Modi’s friend Gautam Adani won the contract for all six airports that were put up for bid.
Was there no corruption and crony capitalism in PM Modi’s reign or was there no investigation?
Social Fabric Damaged
Cow Terrorism
Under the Modi government at the Centre and BJP governments in 15 states across the country, ‘cow terrorism’ by cow protection vigilante became the norm, especially in much of North India, between 2014 and 2018, aided and abetted by BJP state governments. Cow terrorism has subsided only in recent months, after the Dalits in Gujarat, the other victims of Gau Raksha gangs apart from Muslims, protested against attacks on them, and especially after voters in the Hindi heartland states of Rajasthan, Madhya Pradesh and Chhattisgarh voted out their BJP governments.
Mohammad Akhlaq in Dadri, UP; Pehlu Khan and Ummar Khan in Alwar, Rajasthan; Mazlum Ansari, Imteyaz Khan, only 15 years old, and Alimuddin in Jharkhand; Inspector Subodh Kumar Singh in Bulandshahr, UP, were a few of those murdered by cow terrorists.
Many others were lynched and left to die. In many cases, police booked cases against the victims rather than their attackers.
Urban Naxals
That has become the description, propagated by no less than the prime minister himself, for civil society activists who have for years and decades worked for the rights of Dalits and Adivasis in Naxal-affected areas. Several such activists – including Sudha Bharadwaj (65), an IIT-Kanpur graduate turned lawyer-activist – have been thrown into jail. Some have been accused of plotting to kill Modi.
Sabarimala Issue
The Supreme Court has ruled that women of all ages must be allowed into the Sabarimala Temple and that entry cannot be denied, as has been the practice since 1991, to women of reproductive age. The Modi government did not challenge the court order, but he and his party have taken to the streets and made it an election issue, polarising society with its “Hindu traditions are in danger” war cry.
Information
Surveillance Society
The Modi government has made several attempts at creating a surveillance state and has partly succeeded in those attempts. The Aadhaar number was sought to be linked to everything from one’s bank account and PAN number to mobile number to EPFO and insurance policies, etc. This was struck down by the Supreme Court, with only the Aadhaar-PAN link held valid. Instead of abiding by the judgement, the government has issued an ordinance to permit Aadhaar linkages. The government also issued a tender for the creation of a nation-wide social media surveillance machinery that would watch what people were saying on social media networks. It had to withdraw the tender after the media, activists and opposition leaders opposed the move and took the matter to court. The government recently issued an executive order allowing 10 central agencies – spy, internal security and tax agencies – to spy on any information available on any citizen’s computer, phone and other digital devices, including reading your emails and messages.
While the Modi government wants to know everything about all citizens , the government has blocked much information regarding itself and its performance. For instance, most recently, it has held back NSSO data on jobs; the CAG report on the Rafale deal is not available to the public though it was tabled in Parliament (albeit on the last day of the last session of Parliament thus with no discussion on it).
Surgical Strike on RTI
In July 2018, the government sought to amend the RTI Act to empower itself to decide the salaries and tenures of Information Commissioners. The RTI law gives Information Commissioners a term of five years. Salaries of members of the Central Information Commission (CIC) and heads of the State ICs are equal to that of Supreme Court judges, while ICs in the states are placed on par with a Chief Secretary. The Modi government did not put out this amendment Bill for public debate; a Good Samaritan leaked it. The government justified the proposed changes saying Information Commissioners are statutory authorities. So, they cannot be equated with judges of the Supreme Court, who are constitutional authorities. But only months earlier, the same government had hiked the salaries of the Central Vigilance Commissioner and the members of 17 other statutory appellate bodies to the same level as that of Supreme Court judges. The RTI amendment proposal was never tabled in Parliament, thanks to protests by civil society, the media and opposition parties.
PM’s Certificates
RTI queries on a whole host of issues have been blocked in violation of orders of the central information commission (CIC). Thus, an RTI seeking the PM’s education certificates from the universities that hold them have been blocked despite the fact that this is part of the information he submits to the Election Commission; information on the educational attainments of Smriti Irani, who was earlier the Union HRD minister presiding over the education system of the country, have been denied.
PM’s Entourage
The UPA government had in 2012 issued a directive to make all information regarding the foreign tours of the PM and ministers public. This category of information was padlocked 2014-15 onwards. The PMO has refused to reveal which businessmen accompanied PM Modi on his foreign tours, despite being ordered by the CIC to do so.
Black Money Reports
Research reports on black money commissioned by the government since 2012 are under lock and key. The National Institute of Public Finance and Policy, the National Council for Applied Economic Research and the National Institute of Financial Management conducted these studies, but they cite a confidentiality clause in their agreement with the government to reject RTI applications. Recently, Finance Minister Arun Jaitley said these reports can be shared only with members of the Parliamentary Standing Committee on Finance. Other MPs and citizens do not have a right to read these reports, he declared in Parliament.
Electoral Bonds
In 2017, the government introduced Electoral Bonds, a system for political parties to receive unlimited donations while donors remain anonymous. Donors do not have to reveal to anyone which party they donated to and how much. Political parties do not have to reveal who donated to them and how much. They only have to declare the aggregate figure of donations received. Information about the discussions within government on the desirability of EBs, sought under RTI, have been denied.
Parliament and Politics
3 Instances of Subterfuge
The government enjoyed majority in the Lok Sabha but did not have the numbers in the Rajya Sabha. Democratic spirit required that the government tabled and allowed debate on every bill in both Houses. But the government resorted to subterfuge to pass certain bills.
The Aadhaar bill was hidden in a Money Bill, although it contained provisions that could not be part of a Money Bill, and was passed through Lok Sabha, denying the Rajya Sabha a chance to debate these provisions. Most of these were later struck down by the Supreme Court, but the government has issued an ordinance to overcome the judgement.
The amendments to four laws to enable the secretive Electoral Bonds scheme that allows anonymous and unlimited donations to political parties were hidden in Finance Bill 2017 and pushed through in the Lok Sabha, allowing no debate on the matter.
The validity of the Electoral Bonds is now a matter in the Supreme Court. Meanwhile, the BJP has been the biggest beneficiary of these anonymous donations – collecting over 95% of the total such donations. There is a fear that the BJP is pouring in humongous amounts of money collected through Electoral Bonds to win this election.
Foreign Contributions
Regulation Act (FCRA) was amended to make the BJP, Congress and the Left Parties immune to investigation on their foreign fund sources with retrospective effect from 1976, just when the Delhi High Court was about to order a probe into these donations.
S. Raghotham, Geetima Krishna Das, Venkatesh Nayak,
(Geetima Krishna Das is a research scholar at Indian Institute of Foreign Trade, New Delhi; Venkatesh Nayak is with the Commonwealth Human Rights Initiative, New Delhi)