#dnaEdit: Policy twilight

The just concluded World Economic Forum’s annual India Economic Summit in New Delhi has always been a sounding board for both government and industry. But this year’s summit has not shown itself to be much of a talking-shop or a mart for ideas. Going by media reports, the event lacked the usual spark. Prime Minister Narendra Modi did not attend the event. Finance minister Arun Jaitley has not done exactly any thinking aloud about what the government wants to do to kick-start the economy after the slump years of UPA II. Jaitley observed that it would take time to pull the economy out of the pit as it were. He was careful in not declaring that the Modi government was for privatising public sector units (PSUs). ‘Divestment’, the finance minister said, would be the route for private sector participation and there could be, if need be, an outright sale of loss-making PSUs.

Jaitley talked of easing some of the stringent conditions of the Land Acquisition Act as they stand now. Some of its provisions — according to him — needed tweaking to enable the Prime Minister’s mega-project of 100 smart cities. Caution was the defining marker of his pronouncements on labour reforms. Labour laws need to be improved was all that Jaitley said on this significant subject. These are tepid, if realistic, statements that are not likely to enthuse the private sector.

There is not as yet a clear blueprint of the NDA government’s thinking about the economy. Modi’s ideas about smart cities, digital India and ‘Make in India’ remain well-sounding catch-phrases, but there are as yet no definite road maps on achieving those goals. Business sentiment is, no doubt, positive because it expects the Modi government to swiftly cut red tape and remove policy hurdles to enable a smooth functioning of businesses. 

This mood of anticipation is likely to endure till Jaitley presents the  2015-16 Union Budget in February next year. The work has already begun with new inductions in the top echelons of the finance ministry, and the Prime Minister’s recent meeting with top bureaucrats where he asked for idea inputs from the officers to structure the programmes. The big ideas to give a push to the economy and to reforms have, however, not emerged. It seems the government is still in the act of forging its economic agenda, where specific measures will be spelled out to take the country forward. 

Unsurprisingly, the government is tentative about what needs to be done. It should be a matter of debate if Modi is more reformist than the former Prime Minister Manmohan Singh. It has been argued that not allowed to be his own man, Singh could not take forward the reform measures that he was so keen to implement. Modi is indeed his own man after the impressive mandate he secured in May this year. But he is yet to show his hand as to where he stands on the question of economic reforms. He shares the Rashtriya Swayamsevak Sangh’s (RSS) ideological reservations about unbridled economic globalisation, though he is willing to venture out farther than the RSS would perhaps want him to. Modi is not in a position to junk the ‘swadeshi’ ideology as championed by the ideologues in Nagpur. He has to tread carefully whatever his aggressive rhetorical declarations. This runs the risk of leaving the domestic and global investors confused.