VOLTE-FACE: MODI’S DEFAULT POLICY POSITION
Modi-BJP’s habitual u-turns dent an already flimsy credibility
The BJP-led NDA government at the Centre launched the Goods and Services Tax (GST), the “most ambitious” tax reform in India’s history, from July 1 amid much fanfare and mobilisation of the party machinery.
Behind the scenes, however, it represents yet another BJP volte-face on reform. The party, which swept into power in 2014, can best be described as overseeing a bungling and blundering policy regime. Its periodic flip-flops, both on issues it had opposed during the earlier UPA government and turnarounds on its own policy decisions, have become the norm rather than the exception.
Prime Minister Narendra Modi, during his stint as Gujarat chief minister, was one of the staunchest critics of the GST, citing infringement of the states’ freedom and strike on its coffers. His vehement opposition to the GST, ironically approved for planning by the first BJP prime minister, Atal Bihari Vajpayee, forced erstwhile finance minister Pranab Mukherjee to fly down to Ahmedabad in 2010 to seek his support. The Gujarat government opposed the UPA’s plans to implement the GST in 2011, 2012 and even October 2013. It had claimed that India lacked the infrastructure to push through the reform programme.
The first flip-flop on this issue came just before the general elections, in February 2014, when Modi was grilled by a group of industrialists while canvassing for votes. After he assumed the prime minister’s chair in May 2014, Modi, all of a sudden, began to pursue quick passage of the GST bill, claiming that the information-technology infrastructure was now in place to implement the reform. This raises a simple question — how did the country develop its infrastructure within just eight months to undertake such a big reform.
It was just the first in a series of policy u-turns that have punctuated this government’s tenure. Last year, the venerable Wall Street Journal annoyed right-wing commentators and Modi bhakts with its list of Modi’s Greatest Misses: New Delhi’s Top Policy Flip Flops.
This government has also made shifting goalposts a habit whenever things don’t go its way. The purpose of the demonetisation exercise is a case in point. When Modi announced his “landmark” decision to scrap all currency notes of Rs 500 and Rs 1,000, he said it was to weed out funding for terror outfits and curb the circulation of black money and fake currency. Eight months and more than a hundred deaths later, the Reserve Bank of India is yet to formally come up with the data showing how much black money it has retrieved from the “parallel economy”. As soon as things started going south, Modi, and his finance minister Arun Jaitley, moved to claim that the exercise was meant to promote digital transactions and e-wallets as part of the government’s Digital India programme through the Lucky Grahak Yojana and the Digi Dhan Vyapaar Yojana. That claim looks flimsy considering the negligible Internet connectivity in rural and semi-urban areas.
The shifting of goalposts is also down to Modi’s tendency to lob half-truths into the public discourse and his love for playing to the galleries when announcing policy decisions.
Modi and the BJP were swift to volte-face on several UPA-era policies such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), once referred to as the “living monument of failures” of the government. They now believe it to be the “nation’s pride”.
Modi has also backtracked on issues such as FDI, Aadhaar and the civil nuclear deal.
The government’s tenure has also been highlighted by ironies. As the prime minister talked up a cashless society, it was expected that digital transactions would benefit following demonetisation. However, the GST has taxed all bank transactions, including digital, at 18 per cent. The government has pumped a lot of money into its JAM programme (Jan Dhan for banking and Direct Benefit Transfer, Aadhaar, mobile phone). However, telecom services have been hit with an 18 per cent tax rate, compared to 15 per cent earlier.
Twitter user @AnandRM_ conducted an estimate of GST rates on some items, bringing into focus the government’s double-speak on issues they claim to support and those they actually do. Temples and prasad are tax exempted, while schoolbags and notebooks are taxed at 18 and 12 per cent, respectively. Despite a pet programme like Beti Bachao, Beti Padhao, bindi and bangles have been exempted, while sanitary napkins have been put in the 12 per cent slab.
Environment policy has also suffered because of Modi’s hurry to push through the GST. While as a signatory of the Paris Agreement, India did not agree to cap its emissions outright, it did pledge to greatly increase the use of green energy. It has pledged to get 40 per cent of its energy from renewable sources by 2030, which will include building about 100 gigawatts of solar energy by 2022. India is set to pass Japan this year to become the world’s third largest market for solar (after China and the US).
However, the GST has reduced coal tax from 12 per cent to just 5 per cent. Solar cells were initially to be taxed 18 per cent. Later, public pressure forced the government to backtrack and tax it at 5 per cent. Another Twitter user, @ramdasrocks, highlighted Modi’s u-turn in promoting clean energy. Despite the plans to go green by 2030, the government has slotted hybrid cars in the highest tax bracket (28 per cent GST + 15 per cent cess).
But the BJP’s biggest volte-face came in Jammu and Kashmir. Article 370 has always been a core issue of the party, even during its Jana Sangh days. Less than 48 hours since Modi swept into power, Udhampur MP Jitender Singh Rana boasted to the media that the time was ripe to look into Article 370.
The junior minister in the Prime Minister’s Office told a news channel: “We are speaking to the stakeholders. Article 370 has done more harm than good.”
However, all that was just noise. The BJP held no qualms in joining forces with the PDP, known for its staunch support for Article 370, when the opportunity presented itself, to become a junior partner in a coalition government in the state. In fact, the BJP’s opposition to Article 370 stems from a lack of understanding of its powers — the only party its abrogation benefits are the separatists.
It may have come as a disappointment to the followers of Shyama Prasad Mukherjee and the RSS, the benefits of Article 370 to the Centre, and by extension, the BJP, explains its u-turn on the issue.
Amid all this, India’s foreign policy offers some level of consistency, but much of it is down to external affairs minister Sushma Swaraj and the foreign office bureaucrats who tirelessly worked to secure India’s standing as a global force.
But that doesn’t paper over the cracks that Modi’s government, and the BJP, are showing when it comes to formulating policy decisions. The man with the 56” chest would do well to cut out the rhetoric and turn his attention to properly planning the policies that he wants to implement.
The views expressed in this blog are mine unless otherwise mentioned.