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Wednesday, May 27, 2015

Pluses and minuses of Modi government’s first year - a guest post

The ground-swell of support for the likely installation of a Modi-led government was clearly visible in the stock market last year. The situation has changed quite a lot since then – and the current state of the stock market is a clear reflection of what might have been.

The expectations of ‘achhe din’ from citizens were too high. Change – particularly of the structural kind – doesn’t happen in a hurry. Several initiatives have set the tone of this government’s priorities. Much more needs to be done to get the economy back on the growth track.

The first year was a year of consolidation. Modi needed to comprehend the nuances of parliamentary democracy. In this month’s guest post, Nishit provides an assessment of the achievements and failures during the first year of Modi’s government.

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The Modi Government has completed a year in office and amidst all the hoopla let us try and examine whether it has achieved enough during the first year.

The biggest problem this government has faced is the burden of high expectations which they themselves created. India is a complex country and no Prime Minister can expect to solve all the problems in 1 year or maybe even 5 years. To put things into perspective, this 1 year should serve as a base on which Modi can build for the next 4 years.

The first year is the foundation, years 2 and 3 main building blocks and years 4 and 5 are when results should be visible on ground if Mr Modi expects to be re-elected.

The plus points of Year 1:

  1. Foreign Diplomacy. Ironically what was expected to be the weakest link has turned out to be the strongest part of Modi’s initiatives. Modi has managed to network with who’s who of the International community and this may serve in good stead over the next 4 years. We are now linked to a global economy and it helps if our leaders have a personal rapport with the top leaders of other countries.
  2. Social schemes like the Jan Dhana Yojana. The inclusive concept of everyone having a bank account can lead to much bigger things. The twin insurance schemes are the best thing that could happen to the poorer sections of the Indian population. Many people leave nothing for their families to survive on if they die suddenly. The 2 lakhs insurance will at least give such families some breathing space.
  3. Swachh Bharat and similar slogans are needed for a basic reason; most places in India are pretty unhygienic. Such Initiatives do not need much investment but at the same time can be effective in creating awareness among people.
  4. The Coal auction put in place a mechanism where coal is available for power plants. India does not need more power plants. It needs all the existing power plants to be optimally used. Reforming the State Distribution companies is the next step.
  5. The Land Acquisition and GST bills are the next steps. These are the key steps for Year 2 for Mr Modi.
The negatives:

  1. Intemperate statements made by whole lot of fringe elements - amongst them a few Ministers. When the time is to build bridges and walk the extra mile to assure the minorities, such statements help nobody.
  2. Grandiose claims by some Ministers over road building and other initiatives by trying to claim credit for something which has not yet been achieved.
  3. Needless tax issues created to hassle FIIs. Either the Government goes ahead by taxing these guys or it doesn’t. There is no point by creating a scare and then pulling back from the brink.
All in all a good beginning has been made. More effects should be seen in Year 2. People always have the option of voting out the present government in 4 years time.

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(Nishit Vadhavkar is a Quality Manager working at an IT MNC. Deciphering economics, equity markets and piercing the jargon to make it understandable to all is his passion. "We work hard for our money, our money should work even harder for us" is his motto.

Nishit blogs at Money Manthan. You can reach him at nish.stockid@gmail.com)

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