In 1991, Dr Manmohan Singh, as Finance Minster under Prime Minister, Dr Narasimha Rao, spearheaded big ticket economic reforms within two months of forming the government by Congress. He was assertive that the better economic growth would pave the way for poverty alleviation and create platform for social reforms. At that time, the economy was engulfed by miserable downturn and was on the brink of recession. The big ticket reforms embarked on scrapping of License Raj – the most notorious drag on the growth of the economy, downsized the role of public sector by pruning a large number of industrial sectors from the clutches of government monopoly, unclogged the international trade and investment from regulatory complexities and put onus on the private sector to develop the economy . The bold reforms by Dr Singh set up a new doctrine of ‘open economy’ as the base for growth in the economy.

In contrast to Mr Modi’s socio economic reforms, Dr Singh followed subsidy economy. He doled out debt relief to the farmers in 2009. For increasing employment, Dr Singh introduced rural employment guarantee schemes.

Mr Modi has -made only incremental changes in the reforms, which were pioneered by UPA, the economists lamented. There is no new economic reform which Mr Modi can boast for revival of the sagging economy. Hundred days have passed. But, the country is reeling under unabated inflation – the crucial economic ill. Abatement of inflation, which was one of the major hopes reposed on Modi’, continues to hurt the kitchen of the poor. Despite giving thrust in the election mandate for setting up a separate tribunal to nail the hoarders, no attempt has been made to put it in practice. Land acquisition reform, another ill for manufacturing growth, goes without much necessary actions. Labour reforms, focused to be industry friendly, remained on discussion table only.

PM circles argue that the intent of Mr Modi’s bold socio-economic reforms is to establish a close connect with the people and the vote bank of the country. Mr Modi’s insistence on MPs to implement toilet and One Village model programmes, instead of bureaucratic routes such as block development officers and district level bureaucrats, is to emphasis for a sustainable uptick in the close connect between government and the people.

Dr Singh‘s bold economic reforms in 1991 might have cemented the platform for better economic growth and led the country aligned with the global economy, but, the windfall of the reforms did not trickle to the poor. Congress failed to establish a strong cord between the government and the common masses.

Empowerment of states is another new challenge, Mr Modi adopted, to establish a real federal structure of the government and vie for the people’s hearts. He reiterated that without state’s active participation, development of the country is not plausible. Gearing up of employment opportunity is the key task of every State Government. To accomplish this, Mr Modi’s foremost task will be expansion of manufacturing activities in the states. BJP was assertive in making India a manufacturing hub in the world and creating a pool of new 250 million jobs over 10 years.

But, there is a rider on the Investment binge. Unless land acquisition hazards are minimized and environment clearances are speeded up, the investors will shy away. The new Land Acquisition Act 2013 is more cumbersome and non-friendly to the investors. Amendment in the act is an uphill task since BJP is in minority in Rajya Sabha. Modi team wants to encourage amendment in land acquisition act at State level. Professor Arvind Panagarya of Columbia University, advised that since land is listed in Concurrent list where Central and State can make laws, President should confer special right to states to amend the Central law for applications in their respective states. In that case, President assent will be an executive decision and does not require legislative action. Rajasthan has already made a move in this direction.

Why is Mr Modi languishing in reforms and disappoint those who were yearning for bold reforms? One reason is that BJP is in minority in Rajya Sabha. Any major reform needs Parliament approval. It will be difficult to get through the reforms with the minority in Rajya Sabha. The insurance bill for raising FDI cap from 26 percent to 49 per cent is stuck in Rajya Sabha.

Second, Modi government focused on implementation of the projects which are stuck due to environment permissions and forest clearances. There are about US $ 50-70 billion worth stalled projects, which are waiting for environment and forest clearances. According to RBI Governor Raghuram Rajan, once the projects would be back on the road and start functioning, the output would help in taming the inflation. Mr. Modi seems to believe that administrative reform is essential before he moves for bold economic reforms. (IPA Service)