They say every crisis is an opportunity. The coronavirus lockdown has spurred the Modi Government to undertake a comprehensive, all-embracing reform of the economy. The humongous Rs. 20-lakh-crore economic revival package evoked skepticism. Where will such a huge amount of money come from? Nowhere was it suggested that all Rs. 20-lakh crores would be freshly minted currency notes. Post-pandemic packages in most other countries were a mix of new and old allocations — and some readjustments. Besides, money is not the only thing you need to reform. Policy reforms can be far more important. Remember the 1991-Narasimha Rao reforms. They were important for removing artificial roadblocks in the path of growth. So, the big-bang economic revival plan Modi announced on Tuesday and which on the consecutive five days Finance Minister Nirmala Sitharaman has valiantly tried to flesh out with some details is a mix of fresh allocations, reordering of a few old ones, and, above all, a new set of bold policy measures for faster growth.
The long-overdue reforms of land, labour and capital, as also the dismantling of the monopoly Agriculture Produce Market Committees in selling farm produce, and opening of the coal and mining sectors to private parties, etc., are no less important than the reforms undertaken at any time before. Should these be implemented sincerely there is no reason why the economy cannot return to the path of double-digit growth. The government will have to ensure that the ossified mindsets of the babudom, and the conduct of vested interests in the private sector which have prospered exploiting a system of crony capitalism, do not obstruct change. Everyone needs to be on the same page for the game-changer reforms to bear fruit.
Meanwhile, one wonders which is the real Modi? When first elected in May 2014, the captains of industry and business had pinned great hopes on him. He was expected to open up the economy like no one else before him. As a leader of the Jana Sangh-BJP, Modi was supposed to be a natural votary of an open and competitive economy. But soon he dashed the hopes of the business classes, setting the Income Tax, CBI and ED against them on a mere suspicion. The business class was disappointed. But with the coronavirus pandemic still tormenting the country, Modi seems to have metamorphosed into a Great Reformer, the one he was originally expected to be before his election as prime minister in May 2014. The change ought to be welcome. For this is a great opportunity for the economy to break free from the shackles successive socialist governments had clamped, these past seventy-plus years. The challenge now will be for the entrepreneurial class to try and realise its full potential. It has a ready-made continent-sized domestic market alone of over 130 crore consumers to serve. The reforms unveiled in the past couple of days, and, if implemented well — granted, that is a big if — hold the promise of transforming the face of the economy. The business community can no longer excuse its failure by blaming politicians. Ideally, the role of the government will be two-fold. One, to put in place a strong regulatory mechanism to oversee private sector, and, two, to ensure a level-playing-field in a fiercely competitive marketplace, with each player bringing his own productive and marketing skills to bring to bear on it to get ahead rather than relying on his proximity to the rulers to succeed, as had been the case under the malign socialist regimes.
Meanwhile, Modi is bound to meet resistance from the Sangh parivar, especially from the BMS and the Swadeshi Jagran Manch. Given his position as the foremost leader of the country, he can easily brush aside their objections. He can also dismiss pro forma protests by the Opposition. Into his second five-year term, Modi remains in an unassailable position. He had sought ten years to set the country on the right path in his maiden speech in the Lok Sabha in 2014. In 2020, there is no credible challenger in sight from both within and without who can replace him. Thus, he can dare to be tough and stand his ground in order to pull the economy out from the rut of artificial clamps and chains on expansion and growth. Set to enter into his seventh year as prime minister in a few days, he will have one eye fixed on his legacy.
For, without changing the face of the economy, without putting it on a path of fast growth, he would remain in danger of frittering away the opportunity a decade in office offers him. Besides, given the ruling party’s natural antipathy towards anything associated with Nehru, dismantling the wasteful vestiges of the Nehruvian controls and licenses on growth should really be a cause of celebration for the Sangh parivar.