This is not to belittle a slew of ‘yojanas’, potentially beneficial to the people, like financial inclusion, and catch-phrases like ’Make in India’ still in embryonic stages. But major reforms are still hanging in the air.

The Prime Minister, most widely travelled in the early months of his term, can claim some achievements, especially putting India at the front, among nations to be reckoned with, and as a potential investment destination which at some time can also turn into a global centre for innovation and skills.

But these need strong back-up policies, before other developing countries, even advanced nations, can look to India for inspiration and meaningful cooperation. While Mr Modi has successfully re-established India’s good image broadly in South Asia, he may still be on a learning curve on evolving better relationships with the less than friendly neighbors – the traditionally hostile Pakistan and an expansionist China.

With all his charisma and the command he holds over the country, the question is whether his Government has settled down at home to the gut issues of growth and development and jobs in a conducive and more promising climate in the second year. Not germane to these basic issues, BJP Ministers have been pushing sectarian and other policies cited, which seem designed to curb not only autonomy of institutions but are also impinging on democratic rights of civil society and the media.

These are indeed distracting attention from what should be an year of economic consolidation and laying foundation for solid growth, with continuing low oil and commodity prices, slowing inflation, improving monsoon and a relatively stronger reserve position. An effective intervention by the Prime Minister could perhaps have calmed tempers in Parliament and restored focus on the reform agenda.

In a continuing stand-off, investors, domestic and foreign, are dismayed with the Modi government’s inability to live upto the hopes the PM and his government had raised about an array of reforms – land, labour, a stable tax regime, and GST coming into realm. Be it not overlooked that projections by global institutions of growth at 7.5 to7.8 per cent in fiscal 2016 and higher at 8 per cent in fiscal 2017assume implementation of the reform agenda.

Instead, Government looks like being on a weak wicket, unable to overcome the opposition wails over alleged misdeeds of his party-men holding power related to Modigate, Vyapam and the like, and the Parliament’s monsoon session disrupted to proceed with business, awash-out in the first week, when the Leader of the House Mr Narendra Modi remained a silent observer, a negation of his responsibility to an elected House.

The Prime Minister, given his contempt for the UPA and wedded to bring about a ‘Congress-mukt Bharat’, may think the opposition, whatever its noise, cannot block his Government’s majoritarian policy thrusts. Even with image somewhat shaken, he prefers to play it down and has left it to his colleagues to rebut allegations of impropriety and corruption and turn the tables against the Congress.

Mr Arun Jaitley is doing this job with great vehemence, conveniently overlooking his own party’s continuous disruptions paralyzing the work of the 15th Lok Sabha. What is worse, Mr Jaitley defended in 2012 on more than one occasion that obstructionism sometimes is in the interest of democracy and would bring greater benefits to the country. He argues now that issues that agitate opposition are not such as to justify a total disruption, when other courses are open.

Meanwhile, Mr Modi has resumed doing things in which he excels, electioneering, and has launched BJP’s campaign for the Bihar poll in Oct-Nov. Magnificent special packages for development of the State are announced, more valid apparently if his party comes to power. His Government has been making a virtue of necessity by letting it appear that higher fiscal transfers under the 14th Finance Commission are a largesse by the Centre.

Bihar and UP hold are crucial for the Modi grip on power for a decade. In between the still many visits abroad on his calendar this year, the Prime Minister would also carry his party’s battle for power in states like Tamil Nadu, West Bengal and Kerala, due for polls by May 2016. A pre-poll mode is already building up in Tamil Nadu with BJP working at the grassroot levels and this may get a boost with Mr Modi’s first visit to Tamil Nadu as PM on August 7 for a national convention of handloom weavers.

On the economic front, Mr. Jaitley, busy defending some of his colleagues in Parliament, has unfinished tasks to re-establish credibility with foreign investors. He may score on fiscal deficit target with spending cuts but his concern to end “tax terrorism” is not over, with several MNCs slapped with tax dues (MAT), an area his two budgets could not bring about clarity. Now, the outcome is awaited with the A P Shah Committee report on the applicability of MAT to foreign firms.

A major controversy, avoidable for Mr Jaitley, has also been ignited with the Finance Ministry’s notification of draft Indian Financial Code (IFC) designed to abridge RBI’s responsibility in framing and implementation of monetary policy. It envisages a Government majority in the proposed Monetary Policy Committee (MPC) and takes away veto power of RBI head.

This runs counter to the February 2014 Government-RBI agreement on monetary policy framework which fixed RBI’s responsibility to contain inflation within the 6 per cent in CPI by January 2016, and 4 per cent over medium-term. With four Government nominees in the seven-member MPC, the RBI head cannot even have an effective casting vote, as RBI would have only two representatives besides the Governor..

Also, the draft comes out at a time of ongoing pressures on RBI for a rate cut in its next policy review on August 4. Government’s Chief Economic Adviser Mr Arvind Subramanian and Niti Ayog Vice-Chairman Mr Arvind Panagariya have both called for rate cuts. Governor Rajan has in stages brought down repo rate to 7.25 per cent by June and the banking system is yet to fully transmit these reductions.

Whatever the official clarifications for damage control, the draft IFC, vetted by FM, is widely seen as an attempt to undermine even the limited autonomy the central bank has in the sphere of monetary policy. Government, more concerned with growth than prices, would have a major say in monetary policy formulation. (IPA Service)