Structural Failures of The NDA’s Governance
Massive centralisation at the Prime Minister Office (PMO) and the lack of powers for the Council of Ministers has resulted in a dearth of political solutions amidst an economic and humanitarian crisis.
Dr. Sirivella Prasad
June 24, 2020
India has finally overtaken China, not in its economic prowess but in the number of COVID cases which exceeded over one lakh and shows no signs of reduction. The unplanned lockdown for over two months made an already slowing economy to a complete halt, destroyed the lives and livelihoods of the migrant labourers and the poor, and it did not contain the spread of Coronavirus. Amidst this grave situation, India was subjected to an elaborate PR exercise – a series of 4 PM press conferences by the Finance Minister and her Minister of State (for translation) in addition to the surprise ‘8 PM appearances’ by the Prime Minister. These were purportedly to announce details of the ’20 lakh crore package’ to revive the economy, which was declining even pre-COVID period –growth in April-December 2019 was 5.1% as against 6.3% in April-December 2018.
Furthermore, an analysis of the ‘package’ reveals that out of the 20 lakh crore, the ‘fiscal stimulus’ or actual additional government spending comes to about Rs. 1,86,650 crore, amounting to barely 0.91% of GDP; whereas several economists have recommended a fiscal stimulus of at least 8-10% of GDP. A large number of key analysts, rating agencies and banks have also pegged the size of the fiscal stimulus in the range of 0.8 and 1.5% of GDP. This stimulus package is grossly inadequate, non-inclusive, apathetic to the poor, and an absolute failure on the part of NDA Government’s ‘spin doctors’ to give a much needed injection to an economy on ventilator.
To better grasp why such a massive catastrophe has taken place, it is imperative that we structurally examine the deeply rooted problems in the approach and functioning of Modi Government lack of understanding of the character and dynamics of Indian economy, absence of a civil society perspective and the dearth of political solutions.
Lack of Understanding
As British author JK Rowling puts it – “Understanding is the first step to acceptance, and only with acceptance can there be recovery.” Modi Govt severely lacks in its understanding of the basic character of Indian economy and still has not realised that the Indian economy is primarily demand driven, esp. rural demand has been a key engine of growth for India. NSO survey data shows that consumer spending fell (by 3.7%) for the first time in more than four decades under Modi’s watch, primarily driven by slackening rural demand while unemployment has risen to the highest in four decades. The fall in consumption spending is not a mere coincidence. It began with the disastrous implementation of demonetisation and GST, which led to a severe loss of jobs, livelihoods and a crippling of the MSME sector. Simultaneously, a dilution of social safety nets and programmes like MGNREGA dealt a body blow to consumption and purchasing power of the common Indian, which accelerated rapidly as a result of the lockdown.
Conversely, the ’package’ brimming with supply side measures and RBI’s liquidity measures does very little to enhance consumption demand from the bottom 50% of the population. The ‘easy loans’ worth Rs. 3,00,000 crore may not even trickle down to the required businesses and if they do, will only enhance their indebtedness instead of providing relief. Similarly, the reforms announced for agriculture like overhauling mandis might take at least five years to come to fruition and will not have an impact today, when the crisis is heading for its peak. Apart from a token amount of Rs. 2000 to a limited number of beneficiaries under PM Garib Kalyan Yojana, there is very little in the package which even comes close to the minimum recommended cash infusion of Rs. 5000-7500 per month. This shows a lack of understanding that such a direct cash transfer to whoever is in need will not only help them tide over the crisis but also give an instant boost to demand in the economy and assist the industry in rebooting faster. The government has lost an opportunity to revive demand, and it stems from an absence of a civil society perspective due to the PM’s aversion to citizen groups and organisations working directly with the people at ground zero.
Absence of Civil Society Perspective
It is no secret that the Modi Government has been openly antagonistic to civil society groups. It repeatedly denounces human rights, minority rights, student rights and environmental activism as “anti-national”. His resentment against journalists who also highlight issues on the ground are well-known. India has dipped to the 142nd rank in the press freedom index and has recently been reported as the 3rd most dangerous nation for journalists in the world.
With such hostility towards civil society, the government has naturally not had an iota of interaction with them and therefore, it is deficient in the ability to comprehend or recognise issues relating to the most marginalised groups. The dearth of such a perspective has made them turn a blind eye towards migrant workers, landless farmers, contract labourers, street vendors, daily wagers, safai karmacharis, unorganised sector workers and labourers, self-employed who have no work, lower middle class families who have run out of cash and are forced to borrow; or for small shopkeepers and businesses who can ensure a reasonably stable income for the above classes. If PM Modi had been magnanimous in reaching out to civil society, the government would have had its ear to the ground and prevented the severe hardships and exodus of migrant workers, who contribute about 10% of India’s GDP.
Moreover, they have stayed away from any kind of social impact assessment for their policies before or after the implementation, be it demonetisation and GST or the more recent adventurous policies of diluting environmental laws and suspension of labour laws and safeguards which none other than Dr. BR Ambedkar fought for in 1946. Studies have shown that regions which have suspended labour laws have had capital intensive and jobless growth and employment in establishments within the purview of labour laws grew faster than those that did not have it.
Dearth of Political Solutions
The NDA Government is not just hostile to civil society groups, but it also despises the cabinet system and the strength which lies in having an able set of ‘Council of Ministers’. The Council, which has its origins in Buddhism, has always been a beacon of wisdom, especially while solving doctrinal disputes. Similarly, it was envisaged that an effective composition in the Council of Ministers would resolve people’s issues amicably through their practical experience, broad perspectives and subject knowledge. For instance; experts such as Dr. BR Ambedkar were roped into Jawaharlal Nehru’s Cabinet despite his differences with the Indian National Congress. Successive prime ministers including Indira Gandhi, Rajiv Gandhi and Dr. Manmohan Singh have continued with this time honoured tradition. However, massive centralisation at the Prime Minister Office (PMO) and the lack of powers for the Council of Ministers has resulted in a dearth of political solutions amidst an economic and humanitarian crisis.
The same applies to the PMO’s attitude towards states, particularly those not led by BJP/NDA governments. Their step-motherly treatment in not releasing GST dues of Rs. 34,000 crore on time, not providing adequate trains, not allocating funds based on states’ requirements and shifting the entire burden of tackling the COVID crisis on to state governments is a symbol of the failure of the federal structure of governance and a threat to cooperative federalism. There has been such little consultation with Chief Ministers that even when a meeting has been held, we have seen instances of Kerala CM deputing his chief secretary for the meeting and Mizoram CM expressing his grief on not understanding Hindi during the Prime Minister’s address.
As India faces lockdown-5, we believe it is still not late for the Modi Govt to take corrective actions to rectify the systemic failure it has subjected India to. The Government is well within its right to enhance the fiscal borrowings as India has done time and again to tide over a crisis so that safety nets like pensions & MGNREGA are made more universal. The additional 40,000 crore given to MGNREGA also is barely sufficient for a ‘normal’ year as it includes 16,500 crore of previous year arrears. It is the constitutional duty of the government to ensure the right to life with dignity. Therefore, the centre government needs to change its approach and functioning in this unprecedented crisis of Corona pandemic.
Dr. Sirivella Prasad is a noted activist and currently a Secretary, All India Congress Committee (AICC).