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What happens after defeat in Bihar? PM Modi will have to rethink his politics and his economics

What happens after defeat in Bihar? PM Modi will have to rethink his politics and his economics

Modi will have to reboot and recalibrate after Bihar – both his politics and his economics.

In politics, he has to share more power with allies and also reach out to the non-Congress opposition to get bills passed. If he does not do this, he will face more belligerence from them, especially if the BJP loses Bihar.
More important, he will have to drop some of the loudmouths from his own party in the ministry – the Mahesh Sharmas and Sadhvis who serve no purpose but to embarrass him. Modi can only gain by offering more berths to his allies, as long as they are willing to play ball his way. This means giving more ministries to sensible allies like the TDP, the LJP and some of the smaller parties. The Shiv Sena can also be given more berths, but only if it comes to a clear understanding on playing fair in Maharashtra.

In economics, Modi has to ensure that Arun Jaitley’s three remaining budgets are simply superb after two flops shows in 2014 and February this year. We can’t afford any more UPA-type incrementalism, and time is running out. If the 2016 budget is not a “wow” event, it will delay the revival of animal spirits in the economy.
Most important, and this is where politics and economics connect, Modi needs to clean up his cabinet and include more competent professionals if there are not enough party hands with domain expertise available.
The performers, including those likely to perform are Sushma Swaraj (external affairs), Nitin Gadkari (roads), Piyush Goyal (coal and energy), Dharmendra Pradhan (petroleum), Manohar Parrikar (defence), and Suresh Prabhu (railways).

The ministers with acceptable performances are Rajnath Singh (home), Venkiah Naidu (urban development), Rao Birendra Singh (rural development), and Radha Mohan Singh (agriculture), among others.
This does not mean there are no other performers among cabinet and state ministers, but these are the ones with important ministries. The rest are average, indifferent or bad performers.

HRD and health, two of the most important ministries for a poor country, need better, more qualified and diligent ministers. Smriti Irani is sharp and combative, which means she needs a political role; JP Nadda is not the right choice for health when there are so many difficult and complex challenges in this sector. Both these ministries clearly need a change. Ravi Shankar Prasad at Communications needs a nudge, for he hasn’t really done justice to this most crucial of ministries in the digital age.

The key question Modi needs to ask himself is this: if the BJP itself lacks talent, what should he do?
The answer to this is actually both politically important and economically vital. The logical thing to do is to bring in non-political technocrats in key positions. Getting them elected through the Rajya Sabha route is hardly difficult for the BJP, and they would bring deep domain expertise. Using independent MPs like Rajeev Chandrasekhar should also be on the cards.
Policy today cannot be made by ministers who do not understand deeper issues in the domains they rule over.
Even if a competent person like Arun Shourie is ruled out for making unnecessarily uncharitable remarks about the NDA, people like Arvind Panagariya, Raghuram Rajan or Jayant Sinha are clearly talented and could be given more critical roles in economic ministries.

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The problem for Modi is political, where he has to accommodate so many BJP flunkies who have no qualification other than a loyalty to the parivar and its pet peeves. These people cannot help Modi raise the profile of his team or deliver the goods. He needs to go beyond his party for talent, and the post-Bihar period is the best time for this change. With a comfortable majority in parliament, there is no threat to his ministry from within or without and disgruntlement will not spin out of control.

Lastly, Modi now has to pick the themes his government will be known for. The UPA took the rights, entitlement and freebies route to create political space for itself. Modi too must pick his own themes. He cannot be all things to all people.

These are what I would suggest, given early successes.
First, his central theme must be financial inclusion and subsidy reform using Aadhaar identification, Jan Dhan accounts, and mobile technology. If the strategy to push all subsidies to direct benefits transfer is pursued to the hilt, he will be seen as the man who gave the poor money and choice even while eliminating leakages and corruption. This idea must not only be implemented, but sold politically as direct financial empowerment of the masses.
Second, India is already rising in the World Bank’s ease of doing business. It rose 12 places this year, but this is not sustainable if changes are not continually introduced to make life easier for business. Modi should remember that other countries too are making life easier for business. We thus have to improve faster, and not be content with moving from the bottom to lower ranks. Making India one of the best places to do business does not often need legislation; it only needs intelligent tweaking of the rules pertaining to regulation, inspection, compliance, permissions, etc. A separate ministry or team in the PMO to continuously push the idea at centre and state will make India a rocking economy for new investments by 2019.

Third, Modi has to make federalism another themesong. There are two advantages to this. Currently, even though states get 62 percent of national tax resources, we are still primed to think that the centre can give more. This illusion is helpful for Modi’s critics as they can blame the centre for all of their failures, whether it is in creating jobs or maintaining law and order. Modi must make a virtue of federalism and repeatedly point out that the ball in their court even while supporting them. He can do this by making it clear that any state law on subjects in the concurrent list will be okayed by the centre to give them more powers.

Fourth, the fight against black money has to be fought economically, and not just with strong-arm methods. This means reducing incentives for rent-seeking behaviour is many areas – from land to regulation to any area where governments have to decide whom to favour. Discretion in decision-making has to be reduced to a minimum.
The bottomline is simple: with just over three years to go, Modi cannot spread himself thin. He has to focus on the areas where he can get the biggest bang for the buck.

Editor’s Note from firstpost.com, With the people of Bihar handing the Mahagathbandhan victory after the five-phase-long Assembly election, Prime Minister Narendra Modi will have to go back to the drawing board. Here is the way forward for the prime minister, according to R Jagannathan. : With the people of Bihar handing the Mahagathbandhan victory after the five-phase-long Assembly election, Prime Minister Narendra Modi will have to go back to the drawing board. Here is the way forward for the prime minister, according to R Jagannathan.

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