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Coalition Won't Block Modi's Reforms

By Mihir S Sharma
June 29, 2024 15:07 IST
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'The BJP's numbers in this government are almost the same as those enjoyed by the Congress under P V Narasimha Rao when the reform process was kicked off in 1991.'

'As before, the only constraints on the prime minister's actions are internal, not external.'

'They come from his own assessment of the political consequences of any action,' points out Mihir S Sharma.

IMAGE: Prime Minister Narendra D Modi with Andhra Pradesh Chief Minister N Chandrababu Naidu and Bihar Chief Minister Nitish Kumar, who head the Telugu Desam Party and Janata Dal-United respectively, the Bharatiya Janata Party's main allies in the National Democratic Alliance government. Photograph: ANI Photo
 

The biggest takeaway from the last month appears to be that Indian policy making is back in the age of coalitions.

So far, the National Democratic Alliance's pivotal constituents -- the Telugu Desam Party of N Chandrababu Naidu and the Janata Dal-United of Nitish Kumar -- have largely laid low and made few demands of Prime Minister Narendra Modi.

The prime minister has chosen to emphasise continuity in governance by reappointing much of his Cabinet.

But it is far from certain how long this honeymoon will continue.

The ministries allocated to the coalition partners may be of interest.

The TDP has been assigned that old mainstay for 'allies', the ministry of civil aviation.

Interestingly, the ministry of railways -- usually much in demand -- remains with the former civil servant Ashwini Vaishnaw.

Other ministries granted to the constituent parties include the ministry for panchayati raj, for fisheries and animal husbandry, for steel and heavy industry, for food processing, for small and medium enterprises, for skill development, and for traditional healthcare systems.

On the one hand, none of these might immediately strike one as major policymaking ministries.

Those have been retained with the ruling Bharatiya Janata Party.

Some of them have a major rural or 'rurban' focus, such as food processing, making them useful vehicles for patronage.

Others have a closer relationship with big business -- civil aviation and steel, for example.

At least one of them -- skill development and entrepreneurship -- should certainly be a major location for policy making in the coming term.

That has been given to the Rashtriya Lok Dal's head, the Jat leader Jayant Chaudhary.

Mr Chaudhary's party as recently as two-and-a-half years ago had no elected representatives at all, whether at the Union or the state level.

Partly thanks to his ability to curb dissatisfaction among young people in the areas around the national capital, he has now risen to considerable responsibility.

It is uncertain whether him being assigned this ministry is a sign that the BJP's leadership trusts his efficiency more than it does those of its other allies, or that unfortunately skill development remains a low priority for this government.

But the fear nevertheless will be that coalition allies, protecting their turf, will play blocker for broader government-wide policy.

Suppose, for example, the ministries of finance and environment together can come to some agreement on what domestic carbon pricing would look like.

Will the minister of steel and heavy industry, H D Kumaraswamy of the Janata Dal-Secular, play along?

Or will he seek to block any changes that his bureaucrats tell him might reduce the profits and revenue of the big steel companies, both public and private?

Mr Kumaraswamy has already made headlines for questioning the scale of the subsidy that the government has set aside for semiconductor fabrication.

His criticism -- that every job created in Gujarat under the semiconductor scheme would cost Rs 3.2 crore (Rs 32 million) -- is not mistaken.

As a job creation scheme, many of the production-linked incentives to sunrise or strategic sectors are hopelessly inefficient.

Yet, as Mr Kumaraswamy was himself forced to acknowledge subsequently, the idea behind the scheme is not job creation per se, but a very expensive attempt to move some production of a critical component in supply chains onshore.

His criticism is, however, a taste of how coalition governments can and should operate.

How many years has it been since we heard a minister criticise, with sound reasons, government policy?

More discussion of government initiatives in the open will not be a bad thing.

If anything, the past decade has been something of a disappointment when it comes to such initiatives.

If you think back to 2014, much of the relief surrounding Mr Modi's first election was precisely to do with the fact that India had a majority government after a quarter century.

Too much reform had been held back, so the thinking went, because of 'coalition dharma.

Every ministry had turned into a blocker, and the prime minister's office was not powerful enough to push things through.

Certainly, the mechanics of this process changed. The PMO became far more powerful under Mr Modi, and secretaries in ministries were empowered to speak directly to the centre of power.

But, in effect, the quality of legislation was neither improved nor speeded up.

Labour law, for example, still took far too long to rewrite, made too few changes -- and the four new labour codes are yet to be properly passed and implemented.

The hope that controversial reform, such as land acquisition, could be swiftly passed was dashed early on when the prime minister himself retreated on it after pressure from the Opposition.

Meanwhile, the quality of proposed Bills -- such as the new criminal codes -- suffered because there was inadequate discussion in public, across departments, and in the Cabinet of their usefulness.

There is a distinct possibility, therefore, that this new coalition age will be as productive as the last decade if not more.

The largest constituent of the NDA other than the BJP, Mr Naidu's TDP, after all has a reputation for being a forward-looking party when it comes to reform and growth.

Mr Kumar of the JD-U has built his reputation on competent administration.

Both of these may need to be given specific fiscal concessions, which make the task of fiscal consolidation harder -- but may not stand in the way of progressive change.

It is also worth noting that the BJP's numbers in this government are almost the same as those enjoyed by the Congress under P V Narasimha Rao when the reform process was kicked off in 1991.

As before, the only constraints on the prime minister's actions are internal, not external.

They come from his own assessment of the political consequences of any action.

Perhaps this closer-than-expected election will serve as a reminder that such political consequences cannot always be managed perfectly.

It is time to take some risks and reform -- the coalition will not stand in his way.

Mihir S Sharma is director, Centre for the Economy and Growth, Observer Research Foundation, New Delhi

Feature Presentation: Aslam Hunani/Rediff.com

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