One year of Modi government


It has been one of the most closely watched governments not only in India, but across the world. After powering its way to be at the helm of affairs of one of the most significant if not economically powerful emerging countries in the globe, the Bhartiya Janata Party (BJP), government led by its astute and charismatic leader, Narendra Modi finishes one year in office this month.

The past one year has been replete with bristling activity, unprecedented in the past and unmatched by previous governments in the scale of the works undertaken. Again, the work undertaken by this government has been so huge that it does eventually span its influence stretching from the common man to the richest countries of the globe today.

Yes, the scrutiny does get intense here, just because of this very scale of the work in progress kicked off by Modi and co. a year ago.

Wading through a legacy of high inflation, unemployment, policy paralysis and corruption –just to name a few headline headaches, the government has done its bit on many fronts — be it the humanitarian front to rescue Indians from Yemen called the Operation Rahat; in clinching the Rafale fighter deal with France; in its efforts to bring a tottering economy back on its feet; while easing the India’s famous bureaucratic hurdles by making procedures simpler for the common people or even building 5 million toilets for starters in a country which is known for its people defecating in the open.

Last month, Forbes India and BMR associates had conducted a survey based on the Modi government’s achievements. Some of the revelations from the respondents were:

 87 percent said the government has been pro-business and development oriented
 78 percent felt steps taken by the government will lead to a better investment climate/business potential for domestic investors in India.
 85 per cent praised measures taken by the key ministries including the e-auction of coal and telecom spectrum, efforts to bring back black money from foreign bank accounts, Jan-Dhan Yojana, and the direct transfer of subsidies and nearly two-thirds of respondents believe that the realignment of ministries with the objective of ‘Minimum Government and Maximum Governance’ has shown positive results
 There were some reservations on the Modi government’s stance on getting through the non-adversarial and simplified tax regime
 About 55 percent of respondents believe that appropriate steps have been taken to improve the ease of doing business in India which had been ranked 142 out of 189 economies in the World Bank’s index for ease of doing business
 About 71 percent believe the ‘Make in India’ campaign would have the highest long-term impact on the economy by giving a boost to local manufacturing.

There have been some embarrassing moments for the government too, especially during the past couple of weeks when it had to back pedal on issues like the creation of an independent agency to manage public debt and vexed issue of the minimum alternate tax on foreign portfolio investors, proposed changes to the land acquisition law and the goods and services tax.

But there are scores of plus points that has overshadowed these grey areas like the doing away with a plethora of special groups to take critical decisions; deregulating diesel prices; using excess food stocks to cool down food prices; increasing foreign direct investment limits in Insurance and several other areas like Defence, Railways, Medical Devices, Construction & Development; successfully auctioning coal blocks as well as telecom spectrum; moving towards providing insurance cover to most Indians; a new monetary and trade policy framework; a push for financial inclusion; shutting down the Planning Commission etc.

The incidents of corruption, which the previous Congress led government was replete with has gone down and is rarely heard off now.

A sector wise look at the developments that had taken place would give a fair idea of not only the work in progress but the scale of that work too. Let us first look at the Economy as a whole and its sectors:

Energy—Sector—The government is keen on making India energy independents and has decided to come up with a new national energy policy. It will replace the Integrated Energy Policy of the UPA government adopted in 2006.
• The government estimates that the share of imported coal for generating power will increase to 30 percent by 2030 and that of fossil fuels will rise to 80 percent.
• India’s renewable energy market is showing the first signs of revival as the installed capacity jumped by 12.9 percent during the 12 months to 31 March 2015, latest data released by the Ministry of New and Renewable Energy shows.
• India added 4,089 MW renewable energy capacity in financial year 2014-15, a capacity addition of 8.5 percent more than the targeted figure of 3,770 MW.
• The capacity addition target of 250 MW for the small hydro power technology was also achieved. In India, hydro power projects with less than 25 MW installed capacity are considered renewable energy projects.
• The total renewable energy installed capacity in India at the end of FY 2014-15 stood at 35.77 GW. The Indian government plans to increase this capacity to 175 GW by end of 2022.
• The government is planning to build a 100,000-Mw solar energy capacity by 2022 through award of 10,000-Mw projects in the coming three months.

Hydrocarbons
• The new government deferred the hike in natural gas prices by three months and decided to go in for a comprehensive review of the controversial pricing formula of the UPA government.
Mining sector

• In an attempt to prevent an increase in electricity tariffs due to coal block auctions, the government offered coal blocks for power generation firms through reverse bidding earlier this year.

• This led to aggressive bids and, for a lot of blocks reserved for the power sector, companies quoted zero price. Till now, 29 blocks have been auctioned and another 38 allotted to state-owned entities.

• Of the 67 blocks auctioned or allotted, a total benefit of Rs.3.35 trillion will go to the states and another Rs.69,000 crore will be unlocked by way of tariff benefit to the consumers.

Conventional Energy

• The government is looking to set up ultra-mega power projects (UMPPs) which have capacity of 4000 MW at sites where there are inefficient or old plants – for more than 25-30 years.

• This will help the government to put up ultra-mega power projects faster and there will be no hurdles for issues like land acquisition, water, forest and environment clearances.

Infrastructure Sector

Asserting that India’s infrastructure is a mismatch with its growth ambitions, Finance Minister Arun Jaitley has proposed a sizeable Rs 70,000 crore (700 billion rupees) increase in investment in the sector besides a slew of steps to spur its growth.

Smart Cities

Gearing up to roll out its ‘100 smart cities’ scheme across the country, the government is likely to finalise the guidelines for the Rs 48,000 crore (480 billion rupees) mega project. The NDA government’s flagship project got Cabinet’s approval on May 6, paving the way for the Ministry of Urban Development to work out details for the selection of cities for the project. The detailed guidelines of the project, aiming at recasting the urban landscape, is likely to be notified

• The smart cities project that was announced in July 2014 in the Union Budget has been cleared by cabinet.
• The project includes 100 smart cities spread across the country and a new urban renewal mission named after former BJP PM, Atal Bihari Vajpayee with a total outlay of Rs 98,000 crore (980 billion rupees) for the next five year.
• The move is expected to recast the urban landscape of the country to make them more livable and inclusive.
• Countries such as Singapore, Japan, France and the United States have shown interest in partnering with India on this project.

Delhi—Mumbai Industrial Corridor
• Japan has invested US$4.5 billion in the first stage of the Delhi-Mumbai industrial corridor through lending by Japan International Cooperation Agency (JICA) and Japan Bank for International Cooperation. They together hold 26 percent equity in the project.

Railways

• A foreign player can invest up to 100 percent in most segments of rail infrastructure such as suburban rail, metro rail, locomotive and rolling stock and dedicated freight lines.
• In high-speed rail projects — informally called bullet trains — a foreign player is now allowed to run a parallel and fully privatised railway company, completely detached from the existing IR network.
• The Reserve Bank of India notified the new rules and foreign corporations such as Bombardier, GE, Alstom, Siemens, EMD, Mitsubishi, Toshiba and Mitsui are expected to bring in both the money and state-of-the-art technology.
Roads

• The Modi government has managed to award contracts for about 4,000 km of roads of its target of 8,500 km in the current fiscal.

• The road transport and highways ministry has a target of another 8,500 km for 2015-2016.

• The government plans to construct some 5,300 km of new roads at an estimated cost of about Rs 12,000-14,000 crore (120 billion to 140 billion rupees) for covering India’s entire west-to-east land border.

Manufacturing Sector
• Government said it has taken several steps, including reduction in number of documents for foreign trade and online application for environment clearance to improve ‘ease of doing business’ in the country.
• Significant improvements have been made in regulatory environment through deregulation, delicensing and simplification of procedures.
• Initiatives taken for ease of doing business, include reduction of required document for export and import to three, payment of ESIC and EPFO made online with 56 accredited banks and elimination of requirement of ‘no objection certificate (NOC)/consent to establish for new electricity connection.
• Also, the process of applying for environment and forest clearances has been made online.
• Isuzu motors India Private Limited is setting up its manufacturing plant at Sri City in Andhra Pradesh.
• France’s Dassault Aviation will soon initiate moves to identify Indian partners, notably private sector firms, to eventually make its Rafale aircraft in the country.
• The government has extended the initial validity of industrial licences to seven years from three, keeping in mind the long gestation period of defence contracts.

Social Sector

Jan Dhan Yojana
The government’s financial inclusion scheme,Pradhan Mantri Jan Dhan Yojana (PMJDY) focuses on mobilisation of savingsto offset its decline. Under this flagship financial inclusion scheme over 11.5 crore accounts have been opened in less than five months of its inception in August last year. It paves the way for the government’s plan to transfer annual subsidy of around Rs 51,029 crore directly to bank accounts of 15.45 crore beneficiaries in the next year thereby plugging system leakages. With a new bank account each family will be getting a RuPay debit card that they can use to withdraw money from the account. They would also get Rs 30,000 as life cover. Swabhimaan, a similar campaign was run by the UPA government.

Swach Bharat Abhiyan
The campaign which is the country’s biggest ever cleanliness drive is expected to cost of Rs. 62,009 crore and major corporate houses such as L&T, DLF, Vedanta, Bharti, TCS, Ambuja Cements, Toyota Kirloskar, Maruti, Tata Motors, Coca Cola, Dabur, Reciktt Benckiser, Aditya Birla Group, Adani, Biocon, Infosys, TVS have joined the effort. The projects vary from building toilets in distant villages, running workshops to bring in behavioral changes, waste management to water hygiene and sanitation. Most of these projects are funded under their corporate social responsibility (CSR) heads. The previous government too had a similar scheme called the Nirmal Bharat Abhiyan.

Beti bachao, beti padhao programs

The government launched twin programmes of “Beti bachao, beti padhao” and “Sukanya Samriddhi account” in a bid to encourage birth and education of girls and tackle the abysmally low child sex ratio of 918 girls for 1000 boys. Also, launched were Sukanya Samridhi Yojna (girl child prosperity scheme), under which girl children below 10 years will have bank accounts with more interest and income tax benefits. The UPA government had also come out with a National Commission for Protection of Child Rights and had created an independent Ministry for Women and Child Development.

Clean Ganga Front
As a pre-poll promise, the government had told the Supreme Court that it is committed to clean Ganga, one of the most important river systems in the country. The cleaning of the river had been on for the last 30 years and around Rs 2,000 crore (200 billion rupees) has been spent so far. The government also plans to enact a law for permanent protection of the river from pollution.

All these and more have been on the fore-front of Modi government’s agenda and there are some that is yet to be addressed like the issues on tax reform, greater ease of doing business, fiscal consolidation and better infrastructure. But unfazed, on May 26, when the D-day comes, the government when it completes a year, will be ready to show-case its achievements.

The information and broadcasting ministry is busy collecting information from all ministries and departments. Information and Broadcasting Minister Arun Jaitley is currently reviewing the feedback and reports. And finally, Modi himself will finalise the reports after he land in Delhi on Tuesday-Wednesday (14-19) from abroad.

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