Barry Pearton's picture

ATI Magazine June-July 2014 issue

NARENDRA MODI can cut his own cloth on policy – and the implementation of that policy . . .

WHILE the Indian press gleefully reports that the former ruling Congress Party has been “Modified” (reduced to a rump of just 44 seats in India’s new Parliament), the real challenge for incoming Prime Minister Narendra Modi is the climate of expectation – or, more accurately, over-expectation – in the electorate. Having won an overwhelming majority of the vote, Modi can now cut his own cloth on policy — and the implementation of that policy.
But the task – of implementing reform of both Government and industry, which involves reshaping the way government does business and industry copes with a changing world – is immense. And that is without mentioning endemic corruption.
Modi has one term in which to make his mark, and if he is seen to fail expectations, the BJP will not win government again in 25 years, according to seasoned observers.
Over the past 12 years, India’s new Prime Minister has won the hearts and minds of business in his home State of Gujarat. To do the same nationally, he will be seeking as a priority the removal of government red tape and corrupt bureaucracy to smooth the way for investors, both domestic and foreign, who can help reshape the national economy.
He has already gone out of his way to reassure key public servants that he will back their judgements if they fast-track decisions on business investment and Government programmes.
Some are expecting huge change at the top in key State-Owned Enterprises. Privatisation is unlikely, because the land holdings acquired by India’s SOEs over many years offer a huge carrot for those who would seek corruptly to seize the spoils in a pre-privatisation process.
Rather, Modi may seek to transplant top bureaucrats in these monoliths with talent drawn from the private sector – in effect privatising the management of huge entities able to leverage the power of Government funding guarantees. That would create a considerable force through which to transform the face of Indian resources and manufacturing.
The new Prime Minister is also expected to draw on the Chinese experience in his plans to modernise India’s vast railway network, with free trade zones to be strategically developed across India on land adjacent to these vital steel arteries, providing a convenient logistics network to both domestic and international markets.
He is said to want to revisit existing Free Trade Agreements and to seek out new FTAs, including one with Australia. He has invited Australia’s Prime Minister, Tony Abbott, to India, with a visit likely in September. Modi may take the opportunity to reciprocate in November by attending the G20 meeting in Brisbane.
In setting domestic priorities, Modi has said that Kolkata (Calcutta) – which till 1975, when seized (politically) by the Marxists, was recognised as India’s most vital city – will see an injection of funds enabling it to recapture its former position as a business and cultural hub, servicing West Bengal and what are today seven of the most difficult and under-developed States of India’s Northeast – Arunanchal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.
Areas of many of these States are off-limits to tourists because of crime, illegal cross-border migration and local forms of terrorism – the stuff of poverty and neglect.
As an example of what could happen, Modi points to Sikkim, which, over the past 10 years has developed a fully organic agricultural industry, expected be internationally certified by the end of this year. This, Modi says, could see India become a global hub for such produce.
“Sikkim is a small State. It is sparsely populated. But it is set to become a fully certified organic State soon. This is a matter of pride,” Modi told the Lok Sabha (Parliament) at its first joint sitting following the election.
“If a small State like Sikkim can do it, why can’t we dream of developing the whole of our north-east as an organic State? The Government of India will help it capture the global market.”
What happens in India’s North-East could well create a template for development of other needy corridors. Modi is acutely aware that he cannot hope to do everything at once. He is also acutely aware of public expectations. Early success in one or two States, so the wisdom goes, will energise others to join the new Prime Minister in seeking to remake their own economies.
If he can get the bureaucratic settings right, Modi will not be backward in coming forward to encourage massive foreign investment to speed that process. He has already travelled widely as Chief Minister of Gujaraj State.
Reforms in what are now considered ‘sensitive’ areas – such as foreign participation in India’s retail sector – are expected to accelerate provided the Prime Minister is convinced that the immediate interests of his own people will not be jeopardised – and that future India will benefit from the new ideas and technologies that flow in from abroad.

♦ Our Bombay correspondent, N Hariharan, reports that Modi is reaching out to Opposition MPs, wanting to carry all Members of Parliament with him. A devout Hindu, he believes in team spirit, and
consults informally with experts in particular fields. He woos old foes to become his supporters. Respect for elders is a dominant aspect of the Hindu culture (85 per cent of India’s population is Hindu). Modi visited his mother first after being sworn in as Prime Minister.  She fed him sweets and gave him Rs100 from savings she has pooled from gifts provided by others seeking her blessings.
Modi collects pens as a hobby, and has a huge collection. To him, the pen symbolises study and learning, and he freely gifts pens to friends.

*Barry Pearton is Publisher of ATI Magazine.