he recent general election has not only given a clear mandate to a single party, after a gap of three decades, it has also driven home two clear messages: one, the development-stagnation-policy paralysis and corruption in high places has seen its impact percolating to the lowest level of the economy with the common man, in fact, being the worst affected by them. And two, the elections can no longer be won by just throwing freebies at the poor. One only hopes that the ruling party has realised these facts.
Narendra Modi took less than a year to reach New Delhi from Gandhinagar. It took only a few hundred rallies, a few thousand kilometers of air travel and some extraordinary oratory skills. He was ably supported by dumb opponents and lavish funding from India's industrial powerhouses who are known for their ‘cash and carry’ business model. Having scored a decisive victory over his opponents (both within and outside the party), Modi is now facing his ‘Sophie's Choice’ moment.
While the Modi-wave has already engulfed domestic and foreign investors alike, all eyes are now on how the new government faces economic challenges that lie ahead. Activating stalled projects, restoring investors’ confidence and, above all, restoring India's long-term economic growth trajectory remain priority for him, and people are expecting results almost immediately. In fact, the list of ‘things to do’ is endless and prioritising them is even more difficult as all of them need his urgent attention.
It should be noted that the present downturn in economy is not a part of the economic cycle but the result of structural inadequacies. Two major factors have had a negative bearing on investment in the country: the first is corruption and the second is the prolonged phase of indecisiveness. The major victim of these two factors is the infrastructure sector. Evidence of corruption is widely prevalent in capital intensive industries such as power, telecom, mining, energy, construction and the like. But eliminating this will be a tall order given that politicians themselves have vested interests in these industries and so the willingness to do away with corruption will be minimal. There is an endless list of projects, especially in infrastructure, which are stuck up due to policy paralysis and indecisiveness.
However, many things, be it domestic economic condition or external political environment, don’t seem to go right for the present regime. The weather gods don’t seem to be too kind to Modi government either with initial monsoon reports showing scanty rainfall in major parts of the country. Food inflation, which appeared to have softened in the beginning of the year, has once again resurrected. Instability in Iraq may impact the supply as well as the price of crude oil. Danger of terror attacks, both from religious fundamentalists and Maoists within and from Jihadis outside,
is a perpetual problem with no solution in sight. Modi has got all these on a silver platter.
Most importantly, Prime Minister Narendra Modi should remember that people have already tasted 8 per cent plus economic growth and anything less than that will disappoint them. So it is up to him whether to opt for the Gujarat model (of development) or the Lalu model, so long as he ensures 8 per cent plus growth in the foreseeable future. Anything below that will be considered a failure.
Let us hope that the new government won’t pour cold water on the aspirations of millions of people, because if it does then it would mean the sun has already begun to set on the New Dawn, the theme of this special anniversary issue.