Big gamble, or best chance?

Ever since the near inevitable has happened and Narendra Modi has been named the BJP’s candidate for prime minister in the upcoming Lok Sabha elections, most of the media coverage around his candidature has been centred on the big ‘risk’ the BJP is taking with this nomination. Several articles and editorials assert that his nomination is a big gamble on the part of the BJP, which has been in the opposition for almost a decade now.   

They suggest that Modi’s refusal to apologise for his actions (or inaction) during the Gujarat riots and his reluctance and failure to reach out to the Muslim community—which makes up about 14% of India’s population—since, will greatly hamper the BJP’s chances in the 2014 elections. His history is enough to make even several Hindus squirm.   

While this is not incorrect, far from being the BJP’s big ‘gamble’, this column is of the view that he is the BJP’s best chance, and perhaps even the ideal choice from the party’s point of view. Since the fading—and pushing—away of the old guard, he has emerged as the strongest leader in the BJP, a party without many other forceful personalities.  

His impressive, albeit frequently challenged,record of economic growth and development in the state of Gujarat make many young people yearn for a leader as ‘decisive’ as him at the centre. Frustrated with years of mismanagement of the country’s economy and a near paralysis in policymaking, many Indians favour a leader such as Modi, who they believe will do a better job. Economic growth in India has petered out over the last few years and there is more than a shadow of doubt about its prospects going forward. To many, Modi is seen as the person who could, at the very least, give the country some sort of direction.  

One other area where Modi has distinct advantage over whoever the Congress puts up as its candidate for prime minister is his reputation for clean government. The scale—and even diversity—of corruption scandals that have plagued the current Congress administration has meant that corruption will be a key campaign issue, something that sits perfectly within Modi’s ‘good governance’ platform. In a country where corruption is rife and has never been more prominent on the national conscience as over the last couple of years, Modi’s reputation for clean government is no trivial matter.   

What I have gauged from my interactions with young Indians who would typically fit the bracket of intelligent and well-educated is telling. Many of those uncomfortable with the idea of Modi as prime minister even two years ago, are not today. These are not religious hardliners or right-wing nutcases, and they fully acknowledge that Modi has a chequered past.  

While as recently as two years ago they were willing to overlook his impressive economic record and formed their opinion of him on the basis of his chequered past, now they are reluctantly willing to overlook the same past and are hopeful of him winning the election on the basis of his agenda of good governance. This is admittedly not a large enough sample, but is nevertheless indicative of a possible change in the mindsets of several Indians.  

It is a wave the BJP ought to ride. There is no better person than Modi to steer this ship, that has, for the better part of the last decade, struggled to find direction. He is their best chance.

 

(This appeared as a column in The Himalayan Times on 22 September 2013).

Two sides to a coin

The UPA government has had a troubled term, with the Congress having to grapple with a variety of scandals and controversies incessantly dogging its administration. In the lead up to the General Elections, the government has attempted to implement several policies to purportedly benefit India’s poor. It is no secret that these policies have been implemented with more than a key eye to the upcoming elections.

The government has come in for a lot of criticism from several quarters and much of this criticism is indeed warranted.  In a bid to salvage the situation somewhat and to counter the seemingly irrepressible Narendra Modi tide, the Congress is attempting to use any tool available at its—or rather, the state exchequer’s—disposal.  Populist policies designed to appease scores of millions of the Indian poor are designed to win the UPA another term in government. While one bill passed is grossly irresponsible, another is likely to stand the country in good stead.

The food security bill, for long the Congress’ chief policy goal, has been successfully passed and is on the verge of becoming law. The bill proposes to make food a legal right for Indians by subsidising it for about two-thirds of the population. The bill will provide the poor with grain such as rice, wheat and millet for almost free, in the process costing the exchequer about $20 billion every year, a luxury India most definitely cannot afford.

The will place an immense strain on its already floundering economy. Problems relating to corruption and the logistics of such a grand operation are another matter altogether.

On the other hand, the land acquisition bill passed last week is perhaps as populist, but—in this column’s view—is different in that it will actually benefit the Indian economy. The bill ensures that farmers and small landowners will get paid fair compensation for the sale of the land, and also requires that 80 percent of people living on the land must acquiesce for anyone to buy it.

Furthermore, the bill lays out that farmers and small landowners will have to be paid up to four times the market value for land acquired in rural areas and twice the market value in urban areas for their land. This is good news for small landowners in India.

The bill has naturally come in for criticism from Indian industry, which contends that it will hamper industrial investment in the country and could make projects unsustainable as a result of the high costs associated with the acquisition of land. This view conveniently overlooks the fact that at least a template has now been laid for the acquisition of land, a bitterly divisive issue over the last few years with little to no clarity.

The lack of regulatory clarity over land acquisition has been one of the major reasons stalling investments in several industry sectors, with projects sometimes having been put on hold for years or sometimes even scrapped altogether. It has also been a pressing issue for those looking to invest in the country’s infrastructure.

What this bill will (hopefully) do is remove uncertainty surrounding the purchase of land. It does so at a high cost that the government stipulates should be borne by industry, but the benefits likely to accrue to them are only going to be significantly greater.

And unlike in the case of the food security bill, the land acquisition bill may actually serve to solve some problems rather than creating others.

(This was a column that appeared in The Himalayan Times on 8 September 2013)

Private fears

Over the last few weeks, this column has looked at ways for the government to revive Nepal’s economy and suggested measures it can take in certain sectors to boost activity. The government does not have enough in its coffers to kick start economic activity across multiple sectors and hence, the need for private participation and investment cannot be emphasised enough.  

It is abundantly clear that for Nepal’s economy to grow at anything more than 5 percent there is a need for considerable private investment in sectors such as tourism, hydropower, education, infrastructure and agribusiness. These sectors are key for the economy and present a plethora of opportunities for the private sector, either because Nepal has a distinct advantage in them, or because it has a dire need for services in some of them. Either way, there are opportunities for entrepreneurs.  

Over the last few years, large scale capital investment has slowed to a trickle in Nepal despite all these opportunities that we speak and write about. Sure, there’s a need for private capital and the returns from private investment in Nepal can be high – yet there’s a barrier preventing investments. 

This barrier is the presence of a government, and the lack of a functioning one. For all the opportunities that are seemingly available for private investors, there has been only minimal participation from them. This is largely because the government has not been able to create an environment conducive to private investments. The country has not had an elected government for the longest time now and there obvious problems with accountability. Needless to say, continuity in policy is now an almost alien concept.  

The writing of the constitution was of paramount importance before the constituent assembly failed miserably at doing so, and so now the focus has shifted to another election. So the political process in the country has actually moved backwards, contrary to what several observers believe. There are now parties working hard to ensure elections in November do not go ahead as planned. All the parties spend their time in trying to ensure they can come up with some sort of a working solution that is acceptable to parties along the political spectrum. It is not an easy task, because it is sometimes not clear what the parties themselves want out of this process.

As a result of all of this, the economy continues to be ignored and economic policy just remains a textbook phrase. With little to no attention from the politicians who are too busy buying time from one another to decide what it is they really want, Nepal’s economy continues to stutter along. From time to time, some senior politician or the other will play up the need for private investment and foreign investment in the country and perhaps assume that will do. Private entrepreneurs in Nepal are frustrated and have been experiencing what can only be described as an implementation of ‘how really not to run a country’ manual.  

For them to invest more in Nepal—with the continued policy paralysis and paralysis of all other kinds—is rather wishful. There are opportunities, but the environment needs to change and systems implemented. Give the private investor at least a degree of confidence to invest, and the money will come. If the trepidation investors have is not addressed, private investment will also become merely a textbook phrase.

 

(This was a column that appeared in the The Himalayan Times on 1 September 2013)