Let us first list his achievements so far. After a spectacular victory in May 2014, the Prime minister has been winning election after election for his party – the most recent one being Jharkhand - and has also restored the primacy of the PMO in policy matters.
He is not just primus inter pares, but numero uno in all things that matter in this government. He has made waves in foreign policy, which is probably his most successful side so far. He has also made good changes in defence and railway leadership, with the induction of Manohar Parikkar and Suresh Prabhu as cabinet ministers.
Otherwise, the promise of his government exceeds performance by a wide margin. Modi has, for example, announced some bold policy initiatives (Make in India, Swachh Bharat Abhiyan, et al), and pushed through some modest legislation through parliament (the judges appointments bill, some minor labour law changes, and the small factories bill). Regulations (environment, etc) that can be changed by executive fiat are, however, being changed quickly, and their impact will be considerable in the years to come.
However, operative words in the previous paragraph are “announced” and “modest”. His announcements speak of high vision, but the actual achievements – especially in terms of path-breaking legislation – have been small and far between.
There are several reasons for this. First, there was the election cycle. Modi has had practically no respite from state assembly elections from the time he was elected Prime Minister in May. They will continue all the way to February 2015 with the Delhi polls. Second, Modi seems to prefer incrementalism to big-bang changes of the 1991 type. And third, just when he was getting ready to push through some new laws (on insurance, GST, etc), elements of the Sangh parivar have been acting up, shifting the focus of the media to extraneous issues like conversions and Godse. This has given a handle to his wounded opponents to strike back and block his moves.
This is why 2015 will be a make-or-break year for Narendra Modi. If the negative tides of December 2014 continue into 2015, Modi will have a tough time delivering what he promised the electorate.
If Modi does not use all the powers at this command – powers to lure, threaten or pressure allies and opponents - to back his legislative moves, he would have lost momentum and he will increasingly face more and more headwinds as he gets embroiled in more state assembly elections by the end of 2015. After Bihar towards end-2015, Tamil Nadu and West Bengal will follow in 2016, and after that comes the very big one in Uttar Pradesh in 2017.
2015 is when Modi will have to decide whether he is willing to risk his party’s political fortunes for something that is even more vital – the revival of India’s economy and the sidelining of the fringe elements of the Sangh who are sure to derail his “development messiah” image.
The problem, as always, is the end of a government’s proverbial “honeymoon” period. Six months is what governments usually get, and Modi probably got that. He might have got an extension, but with the Sangh’s fringe creeping out of the woodwork this month, he will no longer be given the benefit of doubt by his critics – and some friends as well.
Modi probably made the mistake that all politicians make – of waiting too long to get the difficult things done. Long before he got elected, I had suggested that he should get the most difficult parts of his legislative agenda passed in the first 90 days – but the only thing he got done was the National Judicial Appointments Commission bill – which still has to get the approval of 15 states that are needed for a constitution amendment bill.
However, all is not lost, for the basic goodwill for Modi remains. He probably has time till around June 2015 to get his legislation passed, and this means he has no time to waste.
The last budget by Arun Jaitley was lacklustre, but the next one needs to be truly path-breaking. The next budget is key to reviving animal spirits in the economy, but budgets cannot ensure legislation beyond money bills.
Four or five pieces of legislation have simply got to get passed if the economy is to move beyond the UPA terminal years of 4-5 percent. These includes changes in the growth-retarding Land Acquisition Act, the Insurance Bill, the Goods and Services tax, the Companies Act, among others. If these are not passed in the budget session, they will be permanently held hostage to politics.
Given the government’s weak position in the Rajya Sabha, can Modi really get this done? I believe it can happen if Modi deploys all the levers at his command – sops to state parties, threats to others, some skullduggery – to get them to pass his bills. This may have to include a willingness to go on bended knees to the Congress for help. No price is too much if the cost of failure is the country’s future.
It also means that Modi has to gag and mothball the Sangh’s wild elements till all his legislation is passed, or else they will never happen.
At the heart of Modi’s ability to turn India around – whether politically or economically – is a fundamental problem: the centre’s ability to bring about change is severely limited by the fact that it is states which have to implement crucial policies. Whether it is food security, or land legislation, a manufacturing revival or even toilets for girls in schools, it is states which can make or mar Modi’s programmes. And states have less reason to be on his side if his party is going to be threatening to steal their political bases.
This dilemma is relevant not only in states ruled by the opposition, but also BJP-ruled states. It is a mistake to believe that BJP-ruled states will be over-eager to implement Modi’s policies for the simple reason that each state has its own priorities, and Modi’s rise threatens state-level BJP leaders too. The Sangh will be giving them the muscle to resist Modi.
The only logical way out for Modi is to accept the reality that he can impact only the areas that the centre can directly control – which means the budget, foreign affairs, defence, and the macroeconomy.
This means, even policies like Make in India or Swachh Bharat can work only if the states buy in, and the best Modi can do is offer them money and the centre’s expertise in these areas to enable states to do better. He could start competitions between them, help them share best practices, etc. He can’t do it all himself.
If Modi is really looking for a long-term legacy that will outlive his tenure, whether one term or two, he has to adopt federalism as his main mantra – not just good governance. In fact, he can use the offer of more power to states to get states to sign on to GST and other laws.
The deal could be this: the centre will shift more economic powers and reduce the list of subjects in the concurrent list so that states can legislate on them without Delhi’s interference. All central funds for schemes will be fully grant based, and states will have flexibility to use them where they think it is important.
Modi should focus on getting states to compete for business and reforms, for the era of centre-driven reforms is rapidly coming to a close. If Modi thinks he can do it all, he will come a cropper.
His only option is to focus on delivering the goods in the areas that are his by law – which means defence, foreign affairs, etc. In other areas, the centre can only be a facilitator. He must challenge states to do the rest by giving them more power.
2015 is make or break for Modi, but he also has to set limits on what he himself attempts to do. He can’t do what only states are equipped to deliver. He has to define success as equipping states to succeed.
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