When Modi took charge of the world’s largest democracy in May 2014 after leading his party BJP to a spectacular victory in the general election, the country was passing through very difficult time. India’s growth and development was crippled due to challenges on multiple fronts. The worst victim was governance. Decision making process had hit a roadblock, leading to “policy paralysis”. There were talks of corruption everywhere. Corruption and policy paralysis were dominating the public discourse pushing growth and development to the back burner.
Modi claims that he has brought “new spirit” and “new energy” to take the country forward. According to the Prime Minister, the new spirit and new energy have resulted in transformative changes in several sectors over the last four years. The pace of construction of highways has more than doubled. The construction of new houses has gone up four times in the villages. The food production in the country today has reached an all-time high; there has been a record production of mobile phones; the sale of tractors has touched a new high. On the one hand, a record number of tractors are being bought by the farmers today, at the same time, the country has witnessed a record number of aeroplane purchases since independence. Toilets are being built in schools; new IIMs, new IITs and new AIIMS are being established. Giving momentum to Skill Development Missions, the country is setting up new centers in small towns. At the same time, tier-2 and tier-3 cities are being flooded with start-up enterprises, bringing regeneration.
What are the basis for Modi’s claim of change in the last four years? No doubt, corruption and policy paralysis dominated the political and media discourse in 2014. Has Modi been able to change that discourse? The measures like demonetisation, revival of major infrastructure projects and implementation of Goods and Services Tax (GST) are considered to be bold measures and clearly show that policy paralysis is the thing of the past. The NDA government has also introduced Insolvency and Bankruptcy Code and considerably eased the foreign direct investment regime. The government has been largely taint-free so far. There is no major corruption scandal. However, questions are being raised on implementation of the key policy measures especially demonetisation and GST. Job creation remains another major area of concern.
Let’s put it bluntly: Indian banking system is in a mess. The mess started during the first tenure of Manmohan Singh with a push to easy money flow by the government in order to boost growth. This mess has become murkier over the years. The Reserve Bank of India began the process of early identification of stressed assets in January 2014. The central bank has forced lenders to dig out the dirt in their balance sheets. As a result the combined Non-Performing Assets (NPAs) of Indian banks surged to Rs.9.62 lakh crore in March 2018 from Rs.2.52 lakh crore in March 2014. Nearly 90 per cent of these NPAs are on the accounts of the government-run banks. Modi Government has pushed for stronger regulatory measures and recapitalisation of banks, with a view to clean the mess in the system.
On 8 November 2016 Prime Minister Narendra Modi announced demonetisation of all Rs.500 and Rs.1,000 banknotes. As a result 86 per cent of the currency in circulation ceased to be a legal tender. This is positioned as the boldest move by the government to weed out the black money and corruption. The move was also aimed to choke the funding to terrorists, Maoists and other anti-social elements that thrive on fake currencies and black money. Promotion of digital payments and formalisation of economy were among the other major objectives of the demonetisation move.
As per the government data, close to Rs.3 lakh crore, which was earlier not part of the banking system, had been deposited in banks. Over Rs.2 lakh crore of black money reached banks, while around Rs.1.75 lakh crore deposited by people post-note ban are under suspicion. Around 18 lakh people with disproportionate income are under government scrutiny now.
It is today amongst the most debated issue whether the government has been able to achieve the objectives of demonetisation. According to the RBI annual report for 2017-18, out of the total Rs.15.417 lakh crore worth of Rs.500 and Rs.1,000 notes in circulation at the time of the announcement of demonetisation, Rs.15.31 lakh crore or 99.3 per cent have returned to the banking system. While the opposition parties argue that demonetisation has failed to make any significant impact on black money as most of the money came back to the banking system, the government’s argument is that just because the money is back in the banking system does not mean that it has become white.
Goods and Services Tax
A majestic ceremony was held in the Central Hall of Parliament on the midnight of 30 June 2017. The occasion was to launch the Goods and Services Tax (GST), India’s biggest tax reform. This has overhauled the country’s direct tax system.
Before implementation of GST, Indian taxation system was a farrago of central, state and local area levies. In the constitutional scheme, taxation power on goods was with the Central Government but it was limited up to the stage of manufacture and production while States had the power to tax sale and purchase of goods. Centre had the exclusive power to tax services. This sort of division of taxing powers had created a grey zone, which led to legal disputes since determination of what constitutes a goods or service became increasingly difficult.
The introduction of GST is truly a game changer for Indian economy as it has replaced multi-layered, complex indirect tax structure with a simple, transparent and technology-driven tax regime. The target is to integrate India into a single, common market by breaking barriers to inter-State trade and commerce. By eliminating cascading of taxes and reducing transaction costs, it will enhance Ease-of-Doing business in the country. By subsuming more than a score of taxes under GST, the road to a harmonised system of indirect tax has been paved making India an economic union.
True, GST had been in the works for more than a decade and a half. Successive governments including the NDA government led by Atal Bihari Vajpayee and UPA government led by Manmohan Singh was not able to implement the tax reforms largely due to differences with the states. Modi Government deserves the credit of bringing all the states and major political parties on board and successfully implementing the reform.
Modi Government has taken several bold policy initiatives and introduced structural reforms. These measures have been endorsed by the World Bank in its Ease-of-Doing Business report. India has moved up 42 position to be among the top 100 in the Ease of Doing Business ranking. In 2017, India jumped 30 places. This is the highest jump that any country has made in the World Bank ranking.
The Ease-of-Doing Business ranking takes into account certain regulations based on 10 parameters including starting a business, getting electricity, dealing with construction permits and paying taxes among others. Of the 10 parameters, India got its highest ranking on “protecting minority investors” by rising to the fourth position globally from 13th last year as the country’s corporate law and securities regulations were recognised to be highly advanced. Its worst performance came in “dealing with construction permits” despite improving its ranking to 181 from the 185th position last year.
There was a historic achievement in the power sector this year. On 28 April 2018 electricity reached to Leisang village in Senapati district of Manipur from the national power grid. This was the last village in the country to be electrified. Now all villages in India have access to electricity.
When Modi assumed office in 2014, there were 18,452 un-electrified census villages in the country out of the total 597,464 census villages. The NDA government had set a target to electrify all villages by December 2018. This is indeed commendable that the target was reached before the deadline.
The government considers a village to be electrified if the number of households electrified is at least 10 per cent and electricity is provided to public buildings including schools, health centres, dispensaries, community centres and village councils. Under ‘Pradhan Mantri Sahaj Bijli Har Ghar Yojana’ - Saubhagya scheme, the target is to achieve universal household electrification in the country by 31 December 2018.
A significant increase in power generation capacity has almost eliminated India’s energy deficit. As per a Care Ratings report, energy deficit in India’s power sector came down to 0.7 per cent in 2017-18 from 4.5 per cent in 2013-14. It was around 10 per cent in 2011-13. This has happened because of a massive push to power infrastructure by NDA government.
According to Power Minister R K Singh, 1 lakh MW of power generation capacity and 1 lakh circuit Km of inter-state transmission capacity was added in the first four years of Modi Government. Power generation capacity was increased by around 25,000 MW per year, this was 4,800 MW during the previous government. Circuit transmission capacity addition increased to 25,000 km annually from 3,400 km in the previous government.
Electrification of very village is a big achievement. It is indeed a historic moment in the development history of India. However, the focus should now shift to connecting every household with the power grid and ensuring uninterrupted quality power supply.
Women are increasingly playing a bigger role in the development of the nation. Be it sports, judiciary, bureaucracy or politics, women are not only making their presence felt but in some cases outperforming their male counterparts.
However, the Indian women still remain amongst the most discriminated and prone to domestic and sexual violence. An opinion poll report of Thomson Reuters Foundation recently termed India as the most dangerous country for women to live. The parameters used for the survey were access to health, sexual violence, non-sexual violence including domestic, physical and mental abuse, lack of access to economic resources, human trafficking and the continuation of cultural practices including child marriage, genital mutilation and acid attacks. Although the government has outrightly rejected the findings of the expert poll report, it clearly highlights the challenges faced by women on several fronts.
In order to overcome the challenges the government has made several women-centric policies. The flagship schemes focused on women empowerment include Beti Bachao Beti Padao, Pradhan Mantri Ujjwala Yojana and Pradhan Mantri Sukanya Samriddhi Yojana. Launched on 22 January 2015 at Panipat, Haryana, the Beti Bachao Beti Padao scheme is today implemented in all the 640 districts of the country. Two major components of the Scheme are: (i) Multi-sectoral intervention and media advocacy in 405 districts (including initial 161 districts) is being implemented by District Collectors; and, (ii) 360 degree approach in alert media advocacy and outreach activities is in operation in the remaining 235 districts. Multi-sectoral intervention in selected districts led to innovative initiatives to generate awareness and created enabling environment for girls.
Under Pradhan Mantri Ujjwala Yojana, free LPG connections are being provided to BPL families. The idea is to prevent women from falling prey to diseases caused by cooking through firewood. Apart from causing pollution, the smoke from cooking firewood adversely affects the health of women and children. Smoke inhaled by women from unclean fuel is equivalent to burning 400 cigarettes in an hour, according to a WHO report. Due to Ujjwala Yojana more than three crore poor women are now living smoke free lives. Under the Sukanya Samridhi Yojana, which seeks to ensure a secure future for the girl child, 1.26 crore accounts were opened and an amount of Rs.19,183 crore was deposited till November 2017. The Pradhan Mantri Surakshit Maitritva scheme ensures comprehensive ante-natal care to pregnant women. Another important decision taken by the Government was to enhance maternity leave from 12 weeks to 26 weeks under the Maternity Benefit Act.
More than six crore toilets have been built to make sanitation safer and more accessible, directly impacting the health and dignity of women. This is not a culture of temporary handouts that keeps people dependent on the government but is a culture of true and irreversible empowerment. Under Swachh Vidyalaya, many schools saw separate toilets being built for girls, to reduce girls dropping out of schools. MUDRA and Jan Dhan schemes have brought formal financial inclusion and entrepreneurial opportunities to crores of women.
One of the key focus of the government in the last four years has been on extensive use of technology in governance. A whole host of citizen services are now provided electronically. Almost all bills of the government services are now shared electronically and payments are also made electronically. With the introduction of Goods and Services Tax (GST) almost all the taxes can be now paid electronically. This has brought transformational change in service delivery system making the process more efficient and transparent.
e-Governance is an important component of Digital India programme, which was launched in July 2015, with an aim to transform India into a digital economy with participation from citizens, businesses and promises to transform the country into a digitally empowered society and a knowledge economy with high intellectual capital. The major objectives of this programme include the development of a secure and stable digital infrastructure, digital literacy and delivering government services digitally, among other things.
A substantial progress has been made to achieve the objectives of creating a digitally empowered society. The progress has been recognised and appreciated globally. In the United Nations e-Government Index India jumped 22 places in the last four years to break into the top 100. In the latest Index ranking released in 2018 India occupies 96th position among 193 United Nations member states. The report is released once in two years.
The e-Government Development Index, which assesses e-government development at the national level, is a composite index based on the weighted average of three normalised indices. One-third is derived from a Telecommunications Infrastructure Index based on data provided by the International Telecommunications Union (ITU), one-third from a Human Capital Index based on data provided by the United Nations Educational, Scientific and Cultural Organisation (UNESCO), and one-third from the Online Service Index (OSI) based on data collected from an independent survey questionnaire, conducted by UNDESA, which assesses the national online presence of all 193 United Nations member states.
There is a sharp increase in digital penetration in India. The total number of mobile phone users rose to 121 crore in December 2017 from 103 crore in 2016. The number of smart-phone users have grown from 30 crore in 2016 to 40 crore in 2017. The number of Internet users have grown from 40 crore in 2016 to 50 crore in 2017. Digital transactions surged by 300 per cent in 2017 over the previous year data.
India has witnessed astonishing pace of digitalisation in the recent years. Although, telecom and Internet penetration has reached almost every nook and corner of the country a huge gap persists between urban and rural India. Telecom and broadband services have expanded in urban India at much faster pace than rural India. Urban Tele-density reached to 172.28, while Rural Tele-density stood at 55.89 at the end of May 2017, as per the Telecom Regulatory Authority of India (TRAI) data. There is also a wide gap in internet penetration in urban and rural India. Internet penetration in urban India reached 64.84 per cent in December 2017, it stood at 20.26 per cent in rural India. What’s more disturbing is that the pace of increase in rural India is slower than urban India. While the Internet penetration in urban India rose by over four percentage points to 64.84 per cent in December 2017 from 60.6 per cent in December 2016, for rural India the increase was by just around two percentage points. It grew from 18 per cent in December 2016 to 20.26 per cent in December 2017. Growth rate in rural India is low despite the low-base. An estimated 182.9 million urban users access Internet daily as compared to 98 million users in rural India, according to data released by the Internet and Mobile Association of India (IMAI).
Plugging the Leakage
On a visit to drought-affected Kalahandi district of Odisha in 1985 the then Prime Minister Rajiv Gandhi had said that out of one rupee spent by the government for welfare of the downtrodden, only 15 paise thereof actually reached those persons for whom it is meant. The biggest reason for that widespread leakage in public welfare fund was the lack of means to correctly identify the genuine needy person. As a result, major part of the fund was misused by ghost beneficiaries, corrupt bureaucrats and middlemen.
Aadhaar and other government measures have helped eliminate ghosts and duplicate beneficiaries. So money now reaches to the genuine needy. Money is now transferred directly to the bank accounts of the intended persons. There is little scope of middlemen or even bureaucracy taking the cut. Addressing a public gathering at Jujwa, a village in Gujarat after a collective ‘e-Gruha Pravesh’ (online house warming) event for beneficiaries of the Prime Minister’s Housing Scheme for rural areas, Prime Minister Narendra Modi claimed that the government eliminated the leakages from the system. “If one rupee is released from Delhi, the entire 100 paise (now) reaches the house of the poor,” Modi asserted.
Under Direct Benefit Transfer (DBT) scheme money is directly transferred to the bank account of the beneficiaries. Most of the money spent by the government on social welfare is now transferred directly. As on 9 May 2018, 435 schemes from different ministries and departments are being implemented under DBT. Total DBT (cumulative) R389,596 crore has been transferred to the beneficiaries. As per the government claim, DBT, Aadhaar and other governance reforms have led to the estimated savings / benefits of R82,985 crore to the exchequer. However, critics argue that this figure is exaggerated. Significant reduction in subsidies on food grains, gas and other welfare schemes are not only because of Aadhaar. Many other factors are also helping in weeding out ineligible beneficiaries. How much is due to Aadhaar? The jury is still out on this question!
India has huge development deficit. It is argued that growth and development have not kept pace with the rising aspirations and needs of the people. In the past over four years, the government led by Prime Minister Modi has worked on multiple fronts through targeted schemes and programmes to bridge the development deficit. There are not just reforms and social welfare schemes. Concerted efforts have been made to influence the common people’s thought process and behaviour on the issues like cleanliness, health, energy conservation, promotion of girl child and so on. Nation will have to wait for the verdict of 2019 election to arrive at a conclusion whether Modi Government was able to keep pace with the rising aspirations and needs of the people!
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