Vijay Kumar Gaba

The campaign against the incumbent government was so effective that it swayed the big industrialists and SMEs which directly benefited from the government’s developmental efforts; the poor who benefited tremendously from the transformative social initiatives; and the middle classes who were protected from any potential collateral damage from the global financial crisis and events in its aftermath, against the government.

In their disappointment with the then incumbent government, few consider allowing the government any concession for-

(i)      The global financial crisis (GFC) of 2008-09 threatened to push the global economy into the worst condition since the great depression of the 1930s. The Indian economy still managed to grow over 7% during the five-year (FY10-FY14) period post-GFC, notwithstanding the challenging global conditions.

(ii)     A high base effect. The Indian economy had its best phase during 2004-2011; growing over 8% CAGR. Despite such a high base effect and global slowdown, the Indian economy was still growing by over 7% in 2014.

(iii)   The several major policy decisions taken by the UPA government, having a transformative impact on India’s socio-economic milieu. For example—

·         Employment Guarantee (MNREGA) through enactment of Mahatma Gandhi National Rural Employment Guarantee Act, 2005.

·         Food Security for 81 crore poor people through National Food Security Act, (NFSA) 2013

·         Right to Education for all children between the age of 6-14 through The Right of Children to Free and Compulsory Education Act, 2009. (It is pertinent to note that through the 86^th amendment to the Constitution of India in 2002, Article 21A was inserted in the Indian constitution to make Education a fundamental Right.).

·         Right to Information through enactment of the Right to Information Act 2005.

·         Financial Inclusion- provision of banking facilities to all 73,000 habitations having a population of over 2,000 by FY12, using appropriate technologies.

·         Unique Identity for all citizens (Aadhar) through the implementation of Aadhaar and Other Laws (Amendment) Act 2009. Unique Identification Authority of India (UIDAI), has been officially acknowledged as a legislative authority, since July 12, 2016, in accordance with the Aadhaar Act 2016.

·         Digitization of payments through incorporation of National Payments Corporation of India (NPCI) was incorporated in 2008 as an umbrella organization for operating retail payments and settlement systems in India. NPCI facilitates transformative payment solutions like UPI, Bharat Bill Pay, FasTag, and Direct Benefit Transfers (DBT).

·         FDI in retail trade.

·         Civil Nuclear Deal with the US allowing India entry into elite clubs as a key strategic partner.

·         Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 to facilitate faster execution of infrastructure projects and minimize litigation in the acquisition of land.

·         Deregulation of transportation fuel prices and eliminating kerosene subsidies that had adversely impacted the fiscal balance of the central government for decades.

·         Including reforms in tax sharing formula between states and center in scope of 14^th Finance Commission (set up in 2013 and recommendation accepted in February 2015) to improve state and center relationships and allow states more autonomy.

·         UPA government also proposed a uniform Goods and Service Tax (GST) in 2007 and a Direct Tax Code later. However, these could not be implemented due to different views of the opposition ruled states.

Instead, some unsubstantiated allegations of mega corruption dominated the narrative and overwhelmed the voters’ sentiment.

It is pertinent to note that some hypothetical charges of corruption in the allocation of 2G spectrum and coal mines raised in CAG reports were blown out of proportion and eventually led to the cancellation of 122 telecom licenses in 2012 and 204 coal blocks in 2014 by the Supreme Court. Notably, in 2017 a special CBI court acquitted everyone accused in the 2G spectrum case stating that the prosecution had failed to prove any charge against any of the accused, made in its well-choreographed charge sheet. Nonetheless, the cancellation of licenses and coal blocks led to the bankruptcies of some entities, causing massive losses to their lenders.

In my view, therefore, it is particularly important to evaluate the performance of the incumbent government in relation to “policymaking”; because good policies have the potential to catapult the economy into a higher growth orbit. Execution of policies and programs indubitably helps in sustaining the momentum, but innovative policies are key to growth acceleration and socio-economic transformation.

...to continue tomorrow

The incumbent BJP is projecting that the Indian National Congress, which has been at the helm for a substantial part of these 75years, is primarily responsible for slower, unequal and misdirected growth and development of the country. It is also assuring the country that the incumbent government is not only undoing the mistakes of commission and omissions committed by the earlier governments and taking impactful corrective action; but also laying the foundation for a stronger, faster, equitable and well directed growth & development of the country.

The party in opposition, Indian National Congress (INC), on the other hand is refuting these claims. INC is insisting that it was their leadership that built a strong institutional framework that laid the foundation for a stronger, egalitarian and harmonious India.

I am sure both the parties would have strong arguments to support their respective contentions and this game of political grandstanding may continue forever. Nonetheless, I find it pertinent to take note of the present strengths of Indian economy and society that could really lead the transformation of Indian economy into a middle class economy over the course of next couple of decades; and also the weaknesses that could thwart the process of process of faster and sustainable growth and development of the country.

In particular, I would like to highlight the following five factors that now form the core of India’s strategy to achieve the ambitious growth and development goals.

Digital identity for all the citizens (Aadhar enabled by UIDAI)

UIDAI (Aadhar) is widely acknowledged as one of the most sophisticated and pervasive digital identification programs in the world. The program provided a digital identity to more than 1.31 billion citizens of India. This identity now forms the core of the financial inclusion and social security system in India, eliminating the leakages, middlemen and inefficiencies of the system. Aadhar also forms the core of the financial services, telecom and social sector services like health  and education.

The UIDAI model has also been adopted to provide digital identity to all corporate entities, corporate directors, taxable properties, to facilitate faster identification & transactions; and minimize the probability of frauds.

The services like DigiLocker - a free digital storage space for documents available to all citizens – are also primarily based on Aadhar authentication services.

UIDAI was conceived and set up in 2009 by the then UPA government under the ages of the Planning Commission. It was given a statutory status by the incumbent NDA government in 2016.

Digital payment ecosystem (UPI enabled by NPCI)

The RBI founded the National Payments Corporation of India (as a not for profit company) in 2008 to operate retail payments and settlement systems in India. The NPCI developed a Unified Payments Interface (UPI) to facilitate instant digital settlement of interbank peer to peer (P2P) and Person to Merchant (P2M) payments. UPI is an Aadhar enabled mobile based interface, available for free to all the citizens and merchants in India. NPCI also developed the BHIM mobile App and Bharat Bill payment system.

This makes the Indian digital payment infrastructure, one of the best in the world. Millions of small and marginal merchants make billions of UPI transactions, to transform the Indian economy from a cash driven economy to a digital banking society.

NPCI established the National Automated Clearing House (NACH) to integrate all regional electronic clearing services into one national payment system.

NPCI has also enabled a national electronic toll collection through FASTag; National Financial Switch (Network of shared ATMs); RuPay Card, IMPS and Bharat QR etc.,

NPCI was conceived and established in 2008 during the UPA government. However it has taken a lot of new initiatives under the incumbent NDA government.

Expansion and modernization of highways

The Congress government led by P. V. Narasimha Rao, operationalized National Highways Authority of India (NHAI) as an autonomous agency in 1995 to build and manage the network of national highways in India.

The NDA-1 government led by A. B. Vajpayee assigned the task of implementing the National Highways Development Project (NHDP) to NHAI in 2000. NHAI has undertaken and executed several key projects to remarkably improve the interstate surface transport ecosystem in the country. Golden Quadrilateral (20012012), an ambitious project of NHAI under NHDP has become the backbone of national trade & commerce. Besides, NHAI has commissioned North South and East West corridor projects to connect major Indian cities.

NHAI model has inspired most state governments to undertake major highway and express projects in public and private sector to improve road infrastructure and intra state and interstate connectivity.

Best standards in defense and space technology

Indian Space Research Organization (ISRO, established 1969) and Defense Research and Development Organization (DRDO, established 1958) have been two core institutions to make India a major player in the global space and defense technology arena.

ISRO has placed India in the top 5 countries in terms of space capabilities. The commercial satellite launch capabilities of ISRO are now recognized world over. The indigenous GPS tracking system GAGAN, developed by ISRO, has put India in the global elite club.

DRDO has developed a potent nuclear deterrent to safeguard geopolitical interests of India, which is surrounded by rather hostile neighbors. DRDO is a key functionary in the plan to make India self-reliant in defense production and technology. DRDO has also done remarkable development work in the field of chemical engineering and medical science.

BrahMos, developed jointly by DRDO and Mashinostroyeniya of Russia, is the fastest supersonic cruise missile in the world. A hypersonic version of the missile is also under development.

BrahMos Aerospace, the JV between DRDO and Mashinostroyeniya, was formed in 1998. It tested an Air-launched variant of BrahMos in 2012; which was inducted in service in 2019. In 2016 India became a member of the Missile Technology Control Regime(MTCR), enabling India to develop missiles jointly with other members.

We may see India becoming a notable exporter of missiles and missile technology in future.

Democratization of digital commerce (ONDC)

The Department for Promotion of Industry and Internal Trade (DPIIT), of Government of India has recently formed a Not for Profit company named Open Network for Digital Commerce (ONDC).

ONDC shall be developing an open network for e-commerce in India. It is expected to be an UPI equivalent for digital commerce. The idea is to end the monopoly and manipulative practices of some large ecommerce players and democratize the ecommerce market by providing an equal access to all the participants. Like what UPI did with the payments, ONDC could revolutionize the digital commerce market in India, providing huge impetus to growth.

ONDC shall lead to democratization, decentralization, digitalization and standardization of the entire digital commerce value chain, increasing the efficiency and access manifold.

MNREGA (started in 2009) also deserves special mention in this context. The rural employment scheme has provided one of the best templates for implementing social security and uniform basic income (UBI) in the country. It is widely recognized that this program has saved millions of families in distress, especially during the periods of crisis such as drought, pandemic, cyclone etc. In the past one decade, the program has been admirably used to build rural assets like roads, water bodies, schools, health centers, etc.

About the constraints, I shall discuss in a later post.