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May 20, 2014

Probable economic priorities of the NDA government

Exhibition of higher level of economic literacy by all the stakeholders, could help in better communicating public policies and progress towards effective realisation of NDA’s economic priorities.

The National Democratic Alliance (NDA) led by Shri Narendra Modi of the Bhartiya Janata Party (BJP) obtained overwhelming majority in India’s 2014 General Election. The BJP secured a majority (282 out of 543 seats) on its own, a feat last achieved by the Congress Party in 1984.

Long Road

A starting point for analysing probable economic policies of the new government is the three major themes emphasised by the BJP during the campaign. This is elaborated below.

The essence of the first theme is captured in the slogan “Sabka Saath, Sabka Vikas” – denoting Development with all, Development for all – often emphasised during the campaign that without ‘vikas’, i.e., development (meaning broad based economic growth which improves access to basic services and to opportunities by all sections of the society), it is not feasible for India to secure its future with confidence.

The word ‘sabka’, meaning “all”, does not just mean inclusive development. It has a deeper meaning centering on the different requirements of forming and managing a government, and of governing a country.  The incoming Prime Minister Narendra Modi has emphasised that in running a country, all political parties should be regarded as potential partners in finding solutions for development challenges, and that electoral competition should be pursued without harming the overall national interest. It is in this context that the word ‘sabka’ holds significance as overtly partisan approach pursued in the past has been a constraint in India’s progress.

A close reading of Mr Modi’s speeches reveals that he also views the word ‘sabka’ as involving a mass response from all people translating the issue of development as a personal responsibility of each individual mirrored through his/her actions (however small or big). This is a feeling that is invoked by personal enthusiasm and visionary goal at the individual level and cannot come through by any measure of enforcement. The motivation of doing something positive for nation’s progress can be a powerful instrument for improving societal welfare.

The emphasis on mutual responsibilities for addressing India’s challenges has the potential to create much needed experimentation and room for decentralised initiatives. There is a saying that chances favour the connected, particularly in the current digitised economy. Ideals are powerful in enabling emergence of solutions within a local context. Mr Modi can now be expected to provide leadership in operationalising this aspect of the word ‘sabka’. Improving cleanliness of Varanasi as a city with active involvement of citizens is likely to be one such initiative.

In terms of development priorities, indications are that the incoming government will include Chief Ministers from all political parties in forging a more constructive partnership between the Union and the State government. Its focus will be on how each State and sub-region, regardless of which party is currently governing it (such as coastal states, land locked states, hilly states, and North-East states), can address current economic and other constraints, and thereby contribute to national development. Such a partnership does require a level of political maturity on the part of all stakeholders, including political parties, media, and the people. For some, such a shift will be a challenge. It is hoped that the Prime Minister’s strong signal towards a more constructive Union and State Government partnership will be heeded.

The second theme  revolved around delivering good governance. This requires focus on outcomes or results of public policies, including budgetary expenditures on improving household welfare, and not just on intentions or formal administrative procedures and processes. The emphasis is likely to be on improving the functioning of organisations, and enabling the constitutional and other institutions to perform their duties in the spirit intended.   The importance of policy stability, particularly in tax policy and in regulatory environment will also be recognised. The above will be facilitated if persons with both domain competence and integrity (or character) to be found in these organisations and institutions are encouraged through better leadership and accountability.

The economic instincts of the NDA government in promoting good governance would be reformist and incremental. This will, for example, apply to the way major subsidy programs such as those under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA); reforming Food Corporation of India; reforming public sector banks, and non-financial public enterprises. The infrastructure projects such as power, road, railways, and ports will also receive policy focus. The details can be expected to emerge with the formation of the government and the presentation of the first budget.

The third theme emphasised that it is time to formulate, implement, and evaluate public policies on the premise that all Indian citizens are treated equitably, and policies focus on households and individuals, not on groups or sub-groups which have divided the country. The tendency since independence, more pronounced during the last three decades, to single out groups and sub groups, whether by caste, ethnicity, gender or religion has created growing inequities and has adversely impacted social cohesion.

The shift towards policies which help address constraints on households improving their well being, regardless of which particular strata of Indian society they belong is likely to be gradual as it requires a fundamental shift from entrenched ways of thinking of the past six decades. The shift in thinking reflected in specific policies and initiatives can be expected to empower those households requiring assistance in a more sustainable way, while promoting social cohesion and citizen responsibility. Balancing of rights and responsibilities is thus more likely to be encouraged. The vision is to pursue policies which help citizens as Indians rather than as belonging to a particular group or sub-group.

The NDA government’s likely priority on making water and electricity increasingly accessible all over the country illustrates how household empowerment can occur, enabling them to face future with greater confidence and hope.

To be effective, the probable priorities of the NDA government will require much more robust data gathering, data analysis, and data mining capabilities, as well as becoming more skillful at pursuing empirical evidence based public policies.

Exhibition of higher level of economic literacy by all the stakeholders, including the media, could help in better communicating public policies and progress towards effective realisation of NDA’s economic priorities. The economic priorities of the NDA government are designed to enhance trust and confidence in the government, societal institutions, and the country. Nurturing of social trust and capital by all stakeholders is essential for addressing formidable challenges facing the country.

The economic policy priorities emerging from the three themes discussed above are necessarily broad. As the tenure of the NDA government progresses details of different initiatives, implicit trade-offs involved and other aspects will emerge. One hopes for high quality public policy debates, based on empirical evidence and taking of nuanced analysis as the NDA government unveils its economic priorities and specific initiatives.

Photo: Elizaveta Tsitovskaya


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