India’s Hamstrung ‘Reformer-in-Chief’

Natalie Tan – Singapore

India was born as a bureaucratically inefficient nation. Despite maintaining an almost pristine historical record of compliance with democratic norms and institutions since independence (something relatively unique to the postcolonial world), the Indian state continues to fight its way through pitifully entrenched political traditions of red tape, corruption, and inertia. Having accrued significant political capital by leading the fight for self-rule for over 100 years under Mahatma Gandhi and Jawaharlal Nehru, the Indian National Congress formed India’s first government in 1947 and went on to rule the nation for 49 out of its 67 years of independence. But after years of corruption, nepotism, and sluggish rates of development under Congress governance, the electoral preferences of the Indian public suddenly took a dramatic turn. In the General Election of 2014 the Hindu Nationalist BJP stormed to power on the back of its charismatic leader Mr. Narendra Modi, whose promises of economic development—and a few visits to Indian villages via hologram—ultimately won the BJP an unprecedented 282 out of 543 seats in the Lok Sabha (the Lower House of Parliament).

However, with almost a year of incumbency under his belt, Modi is beginning to be accused by investors and businessmen of not delivering on his promises. The Upper House of the Indian Parliament currently poses the biggest blockade to Modi’s ability to fulfill his mandate, as it clings to an opposition majority. Modi’s eye has therefore fallen on state elections, which are his only hope for winning Upper House seats and allowing smoother passage for reform. Yet, in order to win votes for these seats Modi has been forced to delay key legislation, and temper his policies. In an ironic twist, it seems that the electoral processes that enabled Modi’s ascension to power are now preventing him from fulfilling the mandate given to him by his people.

hop over to this site The Modi Vaada

At the very core of Modi’s campaign was a promise (or vaada, in Hindi) that reforms based on his doctrine of ‘minimum government, maximum governance’ would reboot the stalling Indian economy. Indeed, maddening layers of bureaucracy and restrictive regulations have built up against Indian businesses for decades, largely due to government administrations clinging to outdated Nehruvian ideas of socialistic state intervention and planning. Even after the previous Congress party administration finally abandoned Nehru’s Soviet-influenced political legacy and liberalized the economy in 1991 (only just after the fall of the Berlin Wall) by deregulating the market, encouraging foreign investment, and pushing bumbling public enterprise out into the private sector, a World Bank index of Ease of Business Operation shows that India in 2014 still ranks as one of the most difficult countries in the world in which to do business, coming in after Pakistan and Sierra Leone.

Both a frustrated India Inc. (the Tata-Birla-Ambani’s who make up most of India’s elite) and India’s acutely unemployed youth (desperately searching for jobs to emerge from pro-market reform) thus began to see Modi as an emblem of hope for reviving the vibrancy of the Indian economy. More importantly, even India’s rural constituencies (which outnumbered urban constituencies in voter turnout for the 2014 election) seemed to have lost faith in the shamelessly corrupt Congress party, whose panderings to the rural vote have been the backbone of Congress campaigns since the advent of Indira Gandhi and her Gareebi Hatao (End Poverty) slogan of the 1980s. Even farmers and many in marginalized classes looked to Modi to improve their lot, making it the first time in decades that the otherwise very divided Indian electorate stood largely united behind one man.

more information Fulfilling his Mandate

In a bid to bring ‘Better Days’ to his people, Modi has embarked on a long series of international voyages (most recently to Canada, Germany and France) to encourage investment from multinationals and to petition NRIs (Non-Residential Indians) to bring their skills and wealth back to the Motherland. These appeals are made based on Modi’s claim that business flexibility and culture in India is improving. But despite building strong bilateral relations with various states and making several ‘rockstar’ appearances in New York and Sydney (the former taking place at Madison Square Garden no less), skepticism toward India’s claims of increasingly freer markets and more flexible business regulations abounds. For example, after aggressive pro-business campaigning in Japan resulted in strong bilateral trade relations and a fast friendship with Shinzo Abe–indeed Modi is one of the 5 users Abe follows on Twitter–the number of Japanese companies in India increased by 13% over the course of a year. Yet, Japanese companies still complain of structural inefficiencies in the form of poor infrastructure, complex tax codes, and the slow passage of the myriad of government permits and licenses that are required to set up and sustain business processes.

Modi’s inability to implement the ‘big-bang’ reforms that are desperately needed to rectify these issues after a year in office are not for a lack of trying. His cabinet has identified key nodes of bureaucratic obstacles for businesses, and has tabled a number of crucial Amendment Bills in its first session of Parliament to address them. Two of these bills, the Factories Amendment and the Apprentices Amendment, pushed for vital labour reform which would reduce the central government’s restrictions on a corporation’s dealings with its labour force. More controversially, the Modi administration is also pushing for the passage of the Land Acquisition Amendment Bill, which will reduce the permits and clearances required from landowners and government bureaucracies in order for a private individual or corporation to acquire land. Opposition parties, however, have pounced at the opportunity to use these bills as political fodder. By painting Modi as an ‘anti-farmer’ India Inc. lackey, they are regaining the trust of their voter base amongst the rural and urban poor and galvanizing them to oppose Modi’s much-needed reforms.

State Elections and the Burden of Democracy

Modi’s thunderous victory in 2014 gave the BJP a majority in the lower house, but the BJP is still desperately in need or more seats in the upper house in order to implement broader reform. Rajya Sabha members can retain their seats for up to six years, which means that today many of these representatives are still relics of the old order. The Congress party still holds on to 69 seats while the BJP only has 45. This has made for painful political gridlock and slow progress with respect to the critical reforms Modi was hoping to make, not unlike that which Obama is facing in the United States (a likely foundation for the growing friendship between the two statesmen).

The fight for the Rajya Sabha has begun, but it is damaging Modi’s reformist zeal. Rajya Sabha MPs are nominated by state governments, making state elections (which are staggered over each 5-year term) crucial for Modi to fulfil his mandate. However, after his unprecedented victory in 2014, Modi proceeded to lose the Delhi state election by an embarrassingly large margin to the Aam Aadmi Party (the Party of the Common Man)–an upstart two-year old political organization calling for an end to corruption and for better infrastructure and support for the urban poor. This loss is largely attributed to Modi’s growing reputation as being indifferent to the plight of the downtrodden (despite he himself starting out life as a tea-seller along the tracks of the Indian Railways), which is being made increasingly worse by opposition rhetoric. After being routed in the Delhi elections of February 2015, Modi’s aggressive reform policy is on the defensive. The BJP came out with a lackluster budget in March, and has delayed the push for Modi’s vital Labour and Land reforms in Parliament. Having said that, just a few weeks ago an important Insurance Laws Amendment was, in fact, passed by both the Lok Sabha and Rajya Sabha to raise the limit of foreign investment in the insurance sector from 26% to 49%. However, while beneficial, this change is still relatively cosmetic.

India needs fundamental reform in resource allocation to create a healthy framework for development, yet it is these reforms that run most counter to prevailing populist agendas. To accommodate the opposition’s cries, Modi is allowing for his Factories Amendment to be revised and re-revised, which means Parliament will likely either produce a mangling of the original amendment to the original bill or discard it altogether. His Land Bill has caused such an uproar that Congress President Sonia Gandhi and her absent Vice-President son (see #WhereIsRahul) have managed to organize marches made up of thousands of farmers protesting the Bill, and have pushed them to submit complaints to the Supreme Court—leaving the fate of this crucial Amendment uncertain, despite Modi’s desperate efforts to push it through. In order to respond to his diminishing popular support and ensure Rajya Sabha seats emerge in the hands of the BJP from state elections, Modi is tempering his rhetoric and delaying implementation of vital change–thus defeating his motivating thrust for winning state elections in the first place, which was to administrate reform. Modi is stuck in a critical Catch-22.

Elections exist to provide political representation for a nation’s people and to create checks and balances on the incumbent party. In India, however, they are also inhibiting reform and reinforcing legislative inertia. With every passing election, India’s exhausting legacy of being a nation of unfulfilled potential is prolonged, and Modi’s vaada becomes more and more elusive.

Illustration – Natalie Tan