NDA’s Abysmal Scorecard – A tendency toward ‘liberal’ cozying up to corporates

    Prime Minister Narendra Damodardas Modi made many promises which he is yet to fulfill. His government's scorecard is disappointing
    Prime Minister Narendra Damodardas Modi made many promises which he is yet to fulfill. His government's scorecard is disappointing

    The UPA government was rightly thrown out for its poor performance on the economic front (among other fronts). The NDA government was voted in with a massive mandate which – despite its insistence to the contrary – is not justified by the view that the incumbent government’s own economic performance is no worse than its predecessor’s. Whether one likes it or not, there is a fundamental asymmetry between being in power and being in the opposition. Not only will it not do, but it is in downright bad taste and insulting to the electorate for a government to enjoin silence on a critical citizenry on the grounds that, having tolerated an old bad government for ten years in the past it must now tolerate a new bad government for at least ten years into the future. It is in the nature of things that the new dispensation must and will be held to stricter account: it was voted in on the strength of its many extravagant promises of improvement, not on the strength that the previous government wasn’t much better (even assuming that that is true).

    Judged by these standards, the scorecard on the economic/development front since May 2014 is really rather abysmal. Principled legal scholars such as Usha Ramanathan have expressed considerable apprehension over recent trends in the State’s attitude toward the law of the land in respect of the environment and acquisition of land. In a lecture delivered at the Madras Institute of Development Studies in January 2015 (see https://chaikadai.wordpress.com/2015/01/18/understanding-reforms-in-environment-land-and-labour-laws-in-india/), she draws attention to how the UPA government began bypassing the law, through executive fiat, in respect of requirements of the Forest Rights Act and the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996, when these requirements were seen to come in the way of the State’s priorities regarding ‘developmental’ projects. The present government seems to be pushing the frontiers in the matter.

    Consider, in this light, the amendment to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The move to implement the amended Bill through an ordinance, that is to say by force majeure, has been stalled in the Rajya Sabha, and has attracted the widespread perception that it is an anti-farmer and pro-corporate piece of legislation. For a dispensation which came to power by deriding its predecessor for pursuing crony-capitalist policies, the former has succeeded in making the latter appear almost radical through its soft-pedalling of issues relating to consent for acquisition from landowners, duration of time over which acquired land can be left unutilised, requirements of socio-economic impact assessments, and liability of officials for prosecution in the event of questionable acquisition.

    Consider, in a similar spirit, the government’s efforts at ‘labour reform’, which is predicated on the pro-corporate and anti-labour view that the requirement of ‘labour flexibility’ is at the heart of economic development. This orientation is reflected in amendments that are being sought to be introduced in the Factories Act, the Industrial Disputes Act and the Apprenticeship Act. Medium, small and micro enterprises are being exempted from the provisions of minimum wages and maternity benefits. Violations in these areas are increasingly being brought within the purview of civil rather than criminal litigation. The duration of apprenticeship is sought to be indefinitely prolonged and the working day extended by enhancing overtime hours. Once more, the tendency is pronouncedly toward even more ‘liberal’ cozying up to corporates than the previous government, which was justly maligned for such an orientation, was guilty of.

    Are these the routes to development, or must one still rely exclusively on the (reported) performance of national income over time in order to judge progress?Unhappily, the most distinguished feature of national income in recent times has been the unreliability of its official estimates. The new estimates of Gross Domestic Product (GDP) for 2012-13 and 2013-14 put out by the Central Statistical Organisation (CSO) are widely believed by economists to be overstated in relation to the figures put out by the old series. This is mainly on account of the suspicion that the new methodology employed for assessing the non-financial corporate sector’s contribution to GDP has been blown out of proportion.

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    These criticisms have been scrupulously recorded by economist R Nagaraj in recent issues of the Economic and Political Weekly, and they command respect in professional circles despite the claim of NITI Ayog’s Vice Chairman to the effect that he has not heard compelling criticisms to the contrary.

    One of the first acts of the NDA government was the dismantling of the Planning Commission, and its replacement by NITI Ayog. The autonomy of institutions engaged in economic planning and policy has been further diluted by the government’s thinly-veiled interference in the Reserve Bank of India’s interest rate management. The interest rate has been kept up by the RBI in a bid to contain inflation, while the government, again presumably in the interests of the business community, has been exerting pressure for lowering the rate of interest. Equally worrying are those parts of the revised Indian Financial Code which seek to place four government nominees in a seven-member Monetary Policy Committee that will also see withdrawal of the RBI Governor’s veto power. “Minimum Government, Maximum Governance”?

    And what of the Prime Minister’s election promises of clamping down on unaccounted income? This has achieved some notoriety as the Rs 15 lakh commitment, in terms of which the citizens were vouchsafed a gift of the stated amount each from the proceeds of recovering illicit funds banked abroad. As it happens, press leaks suggest that the National Institute of Public Finance and Policy (NIPFP) had submitted its report on the unaccounted economy to the Finance Minister of the UPA government as far back as December 2013. The UPA government did not release the report into the public domain. Neither, since then, has the NDA government. The NIPFP apparently estimates the size of the unaccounted economy to be 75 per cent of legitimate, accounted GDP! There is sufficient slack, by way of fraud and non-compliance, to wipe out a great bulk of officially reported income poverty in the country. But no such move has announced itself with a bang. Nor, indeed, with a whimper.

    Other economics/development-related election promises, explicit or implicit, have been with respect to ‘One Rank One Pension’, ‘Make in India’, transparent defence deals, and a clean and corruption-free government. What we do have is an army of disenchanted defence veterans, the Rafale fighter aircraft deal with France, and Vyapam, DEMAT, Lalitgate and chikki scams.

    All right, children: why does the economics/development scorecard of the new dispensation put you in mind of India’s second-innings scorecard against Sri Lanka at Galle? Might it have something to do with hubris, bluff and defeated promise?

    (British English)

    (The author is National Fellow, Indian Council of Social Science Research)

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