March 28, 2016

Modinomics at two

In this Mint article, Vivek Dehejia, Resident Fellow at IDFC Institute, writes that at the end of his two years as the PM, Narendra Modi should be best described as a pragmatic modernizer of the government’s role in the economy.


Commenting on what appears to be the changing perception of Mr. Modi's Prime Ministership, Dehejia writes  "..... just as the “Modi as icon of minimum government” trope was over-hyped and unrealistic, and quickly revealed itself to be just that, the “Modi as non-reforming status quo-ist” is equally at odds with the actual reality."

".....the Modi government made a valiant, and in the end unsuccessful, attempt to rewrite the land acquisition law, a poisoned chalice left by the departed Congress-led government. The Modi government also has empowered states to reform labour laws, and Rajasthan, in particular, has led the way. Plus, further reforms may be pushed by the centre in the second half of the budget session.

Apart from these, the Modi government has reformed the conduct of monetary policy, is in the process of reforming the financial sector, and has proposed sweeping and potentially game-changing new rules on bankruptcy—all of which would enable the capital markets to function much more efficiently, a crucial ingredient of structural transformation and sustained economic growth.

What Modi most emphatically has not done—and this is the principal gripe of the cheerleaders-turned-naysayers—is to dismantle India’s social welfare and redistributive schemes. Rather, his government is attempting to reduce, if not eliminate, the associated leakage and corruption, by moving towards direct benefit transfers (DBTs) as administered via the much-discussed JAM trinity of Jan Dhan-Aadhaar-Mobile.

Modi should, therefore, be described as a pragmatic modernizer of the role of government in the economy, rather than an ideologically motivated economic reformer in the conventionally defined narrow sense. And this is all of a piece with the economic policies that he pursued in Gujarat, which were chiefly about making government work better, without corruption and undue red tape, not slashing the scope and size of government, as a doctrinaire free marketeer would wish."


Read full text of the article here


Topic : State Capacity / In : OP-EDS
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