7 reasons why Modi as PM marks a tectonic shift in India’s history

India Infoline News Service | Mumbai |

Modi has to think long-term, as he has done during his 12 year tenure as Chief Minister in Gujarat.

The outcome of the May14 elections and the elevation of Modi as the Prime Minister heralds a tectonic shift in India’s political and economic history, a new tryst with destiny. Here is it why.

Modi is moving to Delhi for the long haul. He is a man with a lot of ambition backed by copious energy, a will to work hard, boundless passion, an unwavering focus on achieving goals and one who revels in winning again and again. His goal will be to remain the Prime Minister of India not for one term but for more. In him, perhaps India has found a PM not just up until 2019 but much longer. Such long-term assertions no doubt carry risks, but the probabilistic case of it turning out to be true is neither insignificant nor unremarkable if one were look at his more than a decade long track record of winning multiple elections in Gujarat. Unlike Rajiv Gandhi who, despite having no administrative experience, strode to power on the back of a sympathy wave (on account of his mother’s assassination; he blew away that opportunity in the very next election in 1989), Modi earned it the hard way having successfully fought multiple elections on the basis of his administrative performance.

To believe that his focus would be to boost his chances of winnability ever again means that he has but to think long-term, as he has done during his 12 year tenure as Chief Minister in Gujarat. He simply cannot afford to do anything that can potentially derail that goal, especially with the heightened scrutiny by the coterie of intelligentsia orphaned by the change in regime. As luck would have it, he has the gift of an absolute majority in the Lok Sabha and has the luxury of pushing through tougher long-term reforms unconstrained by the compulsions of coalition politics. No other PM in the past quarter of a century has had such an opportunity; and unlike others Modi earned it. A disciple of Swami Vivekananda and a staunch believer in karma yoga, he is less likely to fritter away this historic opportunity and more likely to put it to best use.

Modi’s eternal fixation on development and good governance helped him earn popular support in Gujarat; and that agenda has to a large extent catapulted him to the top political post in the country. Unlike most of his predecessors, he is neither an “Accidental Prime Minister” nor is he privileged by birth to belong to one of the modern political dynasties. He directly went to the electorate entreating to elect him as the PM, not just highlighting the accidents that arose from having an accidental Prime Minister and the ills of perpetuating a dynastic rule in a democracy, but with the promise of providing decisive leadership and turning the poorer regions like UP, Bihar to one as good as Gujarat. Having won the mandate on the back of such promises, he now carries the onus to meet the expectations of voters. It is only fair to assume that his top priority would be to do all that is needed to accelerate growth and improve governance.

The Prime Minister’s office (PMO) is the most critical functionary in the government and the PMO derives its strength from the political authority of the Prime Minister. The key reason why UPA became dysfunctional was because it had a PM with little political authority and coalition compulsions further debilitated it; more often than not, different arms of the government worked in a disjointed and uncoordinated manner, sometimes at cross-purposes. It is akin to having a CEO with neither the required authority to run the company nor the accountability that’s expected of a person in that role. In striking contrast, backed by a landslide electoral victory Modi comes with possibly as strong a political authority enjoyed by any Prime Minister in the past three decades. A strong PMO bodes well for a well coordinated functioning and better control over the various ministries and arms of the government.

For the past twenty-five years, the federal government in Delhi was run by coalitions, with no single party having had a majority of its own. Some of these coalitions were forged together between parties of different ideologies and running the government involved compromises galore. The 1990s saw the collapse of two governments much before their 5 year tenure, due to sudden withdrawal of support by one or other partners. To a reasonable extent, the “two steps forward, one step back” syndrome arose due to compromises that had to be made between coalition partners, as the overriding objective was to prolong one’s stay in power. The whims and fancies of a few of the larger coalition partners dictated at times the economic policy making of the government. Some of the larger scams of the UPA regime, like the coal and the telecom ones happened due to the venality of the coalition partners and the inability of the lead party and the PMO to rein them in. In the process, good governance got badly compromised and as a consequence, decision making stalled and growth momentum weakened. The tyranny of coalition management and compromises now stands broken with BJP having secured a majority of its own. With no room for excuses, Modi has little choice but to deliver.

The Opposition in the newly constituted Lok Sabha would perhaps be the weakest since 1989. The Congress Party is the lead opposition party but has just 44 seats (or 8% of the total strength) in the house. Having secured less than 10% of seats, the Congress Party has lost even the constitutional right to appoint a Leader of Opposition. Juxtapose this with the 282 seats of BJP and 336 seats of NDA. The rest of the opposition is splintered between a large number of regional parties and if one excludes the two large ones (ADMK from Tamilnadu with 37 seats and Trinamool from West Bengal with 34 seats), the tail is indeed a long one. The Modi-led government is thus in a much better position to successfully transact legislative business in Lok Sabha. The NDA is still a minority in the Rajya Sabha, the upper house of Parliament; in a deadlock, it can always call a joint session of both the houses if needed. All said, putting through tougher legislations or raising the productivity of the Parliament should not be as difficult a task as it was for the past few governments.

The basic ethos of BJP is built around the Right-of-Centre framework. India is all set to move away from Nehruvian socialist planning model; it is a well known fact that for the large part of the last seven decades, policy making edifice was built on the foundations of this model. This effectively means that the government will gradually move away from an era of entitlements based welfare state model to a more progressive agenda of accelerating growth and job creation, reviving the investment cycle and having a strong focus on efficient execution and implementation of policies. Modi is personally a great believer in this as illustrated by the growth mantra he unwaveringly adopted while running the state of Gujarat. This policy shift is a diametric and material one that has positive long-term implications on India’s long-term growth potential.

Source: IIFL Institutional Equities

 

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