At a time when many felt the government would push the building of the Rama temple at Ayodhya in order to attract votes, it is reassuring to hear prime minister Narendra Modi tell ANI that he will wait for the judicial process to be over; only after this would he contemplate anything. And he did well to point out that the Congress has tried to delay the proceedings. While condemnation of anti-Muslim rhetoric and lynching in the name of protecting cows is a line Modi has taken before, his inability to ensure that states ruled by the BJP – UP and, at that time, Rajasthan – were able to deliver on it is worrying. Indeed, the gaurakshak movement – and the draconian cattle-trading rules that emanated from it – are hitting even Hindu farmers who need to dispose off their cows after their productive years are over. Reassuring Muslims, and the non-fanatics among Hindus, will take more than just statements, and farmers who are facing a problem in terms of crop prices not being remunerative must view the cattle restrictions as a double-whammy; it is unclear if UP’s cow-cess to take care of cows abandoned by hapless farmers is going to help reduce the farmers’ anger.
Modi is right to point out that loan waivers haven’t helped farmers – apart from the final waiver being a fraction of what was promised – but while he talked of the need to give farmers better market access and better infrastructure, including seeds, there is little on the ground to show for this. Apart from the fact that BJP states like UP and Maharashtra have also promised large loan waivers, Modi’s MSP promise never really took off and market prices are 20-30% below MSP. And while the Shanta Kumar panel recommended moving to acreage-based cash transfers in 2015, Modi didn’t act on this or move towards replacing wasteful farm subsidies – around Rs 2 lakh crore annually – with cash transfers of around the same amount. So while he was right to dismiss the Congress talk of loan waivers as ‘lollipops’, he has not offered a workable alternative so far.
Not surprisingly, given all the black money came back into the banking system, Modi just repeated his rhetoric on the need for demonetization; he wasn’t questioned on the need for it since, with GST, much of the informal sector would have come into the tax net anyway. While Modi was right to dismiss the criticism of GST – introducing a tax that strikes at the heart of tax evasion isn’t easy and takes time to settle – his plan to raise the exemption limit to Rs 75 lakh is a bad one and will increase evasion. And while having a single rate may have been more efficient, finance minister Arun Jaitley’s deft handling of the GST Council – all decisions so far have been unanimous – has ensured we are moving in that direction, even if a bit slowly.
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Modi is right to worry about his middle class voters, but while inflation-control benefits the middle classes, as do more medical seats – he even mentioned the encouragement to startups – education reforms mostly remain a non-starter and a lot more reforms are required for both growth and jobs to pick up. The PM suggesting that Urjit Patel wanted to resign anyway, and that no pressure was put on him is unconvincing. If anything, it suggests the government has been trying to get the RBI’s reserves and getting RBI to relax PCA and other norms for even longer than what was originally believed. The fact that so many of the government’s schemes, like subsidized housing, LPG, insurance etc – Modi mentioned some of them – have not made as much of a difference to the electorate is genuinely puzzling. One possible explanation is that the gaurakshak/lynching rhetoric – and the BJP’s hollow promises on MSP, etc – has tilted the narrative against the BJP. By how much, and whether Modi can reverse this in the next few months remains to be seen, but it cannot be done without a burst of reforms.