Narendra Modi as PM will be torn among allies, and hard-pressed to breach structural straitjackets By Swaminathan S Anklesaria Aiyar From: economictimes.indiatimes/opinion/comments-analysis/narendra-modi-as-pm-will-be-torn-among-allies-and-hard-pressed-to-breach-structural-straitjackets/articleshow/32268871.cms == Nine months ago, the opinion polls gave the BJP 145-150 seats in the coming Lok Sabha election, and I gave Narendra Modi zero chance of becoming prime minister. Now the opinion polls give the BJP 200 seats, so I give Modi a 65% chance of becoming prime minister. He is seen as a decisive, relatively honest administrator who has transformed Gujarat. Voters are sick of incompetent, dishonest politicians, and view Modi as a game-changer. Yet, a Modi government will face formidable challenges and deep structural problems that will not go away. Those expecting radical overnight change will be disappointed. Critics fear that Modi will be too authoritarian. In fact, he will probably be too hobbled. No Gujarat Model for Delhi His approach in Gujarat was similar to that in other successful states such as Bihar, Madhya Pradesh, Odisha and Chhattisgarh. In these states, a strong chief minister quashed all opposition within his party, empowered select bureaucrats to act decisively and ignore opposition from sundry vote banks, and micromanaged major development sectors. This model cannot be followed in New Delhi. If Modi comes to power, he will head a coalition with formidable rivals within the BJP and even more formidable ones among allies. None of these can be steamrollered the way Modi has done in Gujarat. Teaming up with Jayalalithaa or Mayawati will be like going to bed with an anaconda. Manmohan Singhs supposed majority in the Lok Sabha meant nothing because Mamata Banerjee could repeatedly blackmail him into submission. Modi will face similar humiliations. Far from acting authoritarian, he will have to kowtow to coalition dharma. Vajpayee ran a coalition for six years because he could charm people and take them along. Modis temperament seems ill-suited to this. Too Far for Comfort Chief ministers run India more than prime ministers. This basic truth has been cloaked for decades by Congress hegemony in the Centre and states. The Centre is certainly powerful in major areas like taxes, the financial sector, international trade, foreign exchange and defence. Yet, daily interaction with the vast bulk of voters takes place only at the state level. Over 90% of rural Indians have never seen a central government official — the only ones they know are state government officials. Most areas urgently needing reform — education, health, police, courts, labour, environment, forests, tribal areas, land, urban affairs — are wholly or substantially state subjects. In Gujarat, Modi micromanaged Collectors of every district, ensuring that his priorities were followed. As prime minister, he will be unable to direct any Collector — only chief ministers can do that. Even if he wins a comfortable Lok Sabha majority, he will lack a majority in the Rajya Sabha. So, he will be crippled in enacting legislation and be tormented by his foes. On economic and administrative matters, structural constraints will hobble him. Remember, P Chidambaram was made finance minister in late 2012 to spearhead radical changes. Faced with paralysis, he devised the Cabinet Committee on Investment (CCI) to bring together bureaucrats and ministers and take joint decisions. The CCI cleared Rs 6 lakh crore of projects. Yet, this did not translate into any boom in capital goods or construction orders. Why? Because our systems are now clogged with so many laws and regulations at the central and state level that Cabinet clearance is just the first step in a long obstacle race. It takes 10-12 years and over 100 permits to open a coal mine. India, with the worlds third-largest coal reserves, has become a coal importer. Seeing Red on Green Nod A new licence-permit raj has come up on four pillars: environment, forests, tribals and land acquisition. This was not noticed earlier because clearances were given quickly after bribes. But once public anger about graft exploded, bribery became difficult and the system seized up. Ministers found decisiveness impossible. India needs protection for the environment, forests and landowners. But laws should provide a better balance between the needs of production and the needs of social protection. Many recent laws have destroyed that balance, and Modi, lacking a Rajya Sabha majority, cannot rescind those. So, files will continue moving slowly, and Indian companies will continue going abroad seeking better conditions. Modi will surely make some quick changes that raise business confidence. Yet, a new investment boom will require massive bank lending, and banks are sinking under huge bad loans. The government lacks the cash to recapitalise them. Modi can find the money if he abolishes fuel subsidies and trims fertiliser subsidies. Does he have the gumption or support of coalition partners for that? Probably not. He will face the same deep fiscal challenges that Chidambaram did. Back in 2012, Chidambaram induced euphoric expectations of radical change. Modi has induced similar euphoria today. But if he becomes prime minister, he will discover how onerous Indias structural constraints are. The main risk to India will be not authoritarianism but ineffectiveness, maybe even Salman Khurshids favoured word impotence.
Posted on: Wed, 19 Mar 2014 12:39:50 +0000
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