PK Vasudeva
The Narendra Modi Government completes three eventful and tumultuous years this month. Taking over from the UPA Government, that was voted out on charges of corruption and indifferent governance, it promised a clean and purposeful regime.
Ever since then, the Centre has been focusing on curbing unaccounted money flow. The crackdown on black money has, in effect, become its key reform plank, which has won the BJP elections in States as well. It began with auctions for telecom spectrum and coal blocks and peaked with the ‘shock and awe’ demonetisation exercise. If there were any UPA initiatives this Government embraced wholeheartedly, it was the use of Aadhaar as an instrument of reform, and other reforms like the Goods and Services Tax (GST).
The transfer of welfare payment is increasingly being linked to Aadhaar, enabling the Government to target its subsidies. The concerted push for Aadhaar as well as cashless transactions has attracted criticism, with concerns about security and privacy being raised. The cash-oriented informal sector, which accounts for 40 per cent of the GDP, has taken a hit. But the Government has not wavered in its resolve to change altogether the way this country transacts.
The rush to meet the July 1 deadline for moving to GST fits into this scheme of things. With a large share of flow of goods and services, besides income, now is set to be duly recorded, the tax base and collections are likely to improve tremendously.
The Centre has also rung in changes in renewable energy and agriculture. There has been a sharp rise in solar power capacity, supported by the worldwide fall in module prices. The Pradhan Mantri Fasal Bima Yojana can become a game-changer in improving crop insurance coverage. The focus on pulses production in 2015-16, by raising minimum support prices has worked, but the challenge is to keep that going. The electronic-National Agricultural Market (e-NAM) initiative can improve price discovery, but it remains a work-in-progress.
However, the Centre would be acutely aware that despite the fanfare over Make in India, it has been unable to make good on its employment-generation promise. Investment shows no signs of picking up, not least because the rising proportion of non-performing assets (NPAs) in the banking system has reduced the ability and willingness of banks to lend. The present growth rate of over seven per cent looks fine on paper, but in the absence of a pick-up in bank credit and investment, seems unconvincing.
Another important sector, which needs important concentration is national security and defence. The Defence Minister’s post is not a part-time job and it requires immediate attention to appoint a competent, professional, bold, well-meaning and mature leader.
There has been a flurry of new initiatives and policy decisions on several fronts in the gigantic defence ministry, with all its national security imperatives and complexities.
However, while marking a decisive shift from the status quo era under the risk-averse AK Antony’s eight-year stint as Defence Minister, good beginnings are yet to translate into concrete realities on the ground. The Government has fulfilled its promise to implement the long-pending One Rank One Pension (OROP) scheme for over 26 lakh veterans, notwithstanding some disgruntlement over its final form.
The Army also carried out surgical strikes against terror launch pads in Pakistan-occupied Kashmir, a departure from past. The functioning of the defence ministry has been scam-free so far. But, from the crucial Chief of Defence Staff (CDS) post and Tri-service Commands to handle space, cyberspace and special operations – to bold measures required to invigorate India’s moribund defence-industrial base, the ‘radical systemic changes’ promised by the 2014 BJP manifesto are still missing in action.
No major Make in India defence project, for instance, has actually taken off till now. The proposed National Maritime Authority (NMA) is nowhere on the horizon. Far-reaching measures like the ‘strategic partnership’ policy to boost the private sector’s role in defence production, finally approved by the defence ministry recently, will take at least another year to be rolled out.
The planned defence procurement organisation, in turn, will take another two years to take shape. Yes, the Government has cut through the stupefying red-tape and long-winded arms procurement procedures to push through deals like the ones for 36 Rafale fighters, 145 M-777 ultra-light Howitzers, and 22 Apache attack and 15 Chinook heavy-lift helicopters.
It also creditably empowered the beleaguered Armed Forces to buy emergency stocks of ammunition and spares to ensure they could undertake at least 10 days of ‘intense fighting’ if matters come to a head with hostile neighbours. But the Armed Forces still continue to battle critical deficiencies in areas ranging from submarines and fighters to multi-role helicopters and night-fighting capabilities.
The direct acquisition of 36 Rafale, ordered from France for Rs59,000 crore last September after scrapping the deadlocked Medium Multi-Role Combat Aircraft (MMRCA) project for 126 fighters, for instance, will in itself not do. The Indian Air Force (IAF) is making do with just 33 fighter squadrons (each with 18 jets) when at least 44 are needed to tackle the ‘collusive threat’ from China and Pakistan. The backlog is so huge it cannot only be managed in three years.
Decision-making has become faster though. Since 2014-15, initial approvals have been accorded to around 140 capital procurement projects worth over four lakh crore rupees, with 96 of them worth over Rs2.5 lakh crore involving domestic production. Similarly, around 150 actual contracts worth over two lakh crore rupees have been inked. These include around 80 capital procurement contracts worth Rs1.50 lakh crore inked with foreign vendors. But there has hardly been any hike in the country’s annual defence budget.
The 2017-18-defence outlay of Rs2.74 lakh crore works out to just 1.63 per cent of the projected GDP, the lowest since the 1962 war with China. It requires to be raised to at least 2.5 per cent of the GDP if not three per cent to build up strong military base.
With the exception of sectors such as roads, ports, and a robust foreign policy, execution continues to lag intent. Having begun with a promise of ‘minimum Government, maximum governance’, bureaucracy reform is on the back burner; rather, state authority has assumed disturbing proportions. The Centre should consult the Opposition in areas of national interest especially worsening Jammu & Kashmir problem.
An open economy and a tolerant, pluralistic political climate are two sides of the same coin. Having proved his point in State elections, the Prime Minister should focus his energies on seeing his vision for a new, aspirational and digitally transformed India translated into reality.
(The writer is a retired Professor in international trade)
