Policy Paralysis vs Policy Haste
In 2014, NDA led by BJP's prime ministerial candidate Shri
Narendra Modi won a huge majority in the Lok Sabha. "Policy
Paralysis" of the extant UPA government led by Dr. Manmohan Singh was one
of the primary planks on which NDA election campaign was built.
A large majority of people, especially businessmen and capital
market participants, had then celebrated the victory of NDA with great fervor.
Assuming that the India's economic model based on Nehruvian Socialism (a
distorted version of classical Keynesian model) will pave the way for the so
called "Gujarat Model". Though not many people had clarity about what
the much talked about Gujarat Model of growth is all about, and whether that
template of socio-economic development could also be applied to the rest of
India.
Most people had expected that the new regime will at least
provide a proactive, clean, responsive, accountable and business/investment
friendly administration that will ensure higher economic growth.
By the end of 2018, the general criticism of the PM Modi led NDA
government was that—
(i) "Policy
Paralysis" of Dr. Manmohan Singh government has been replaced with
"Policy Haste". A number of policy decisions having deeper and wider
repercussions (especially GST and Demonetization) have been taken without
adequate preparation and consultation. This "Policy Haste" has led to
the "Execution Paralysis" as the status quo has been disturbed
materially without evolving the alternative mechanism;
(ii) NDA government has
continued with the extant Nehruvian Socialism model rather than experimenting
with the so called "Gujarat Model" at national level;
(iii) Frequent material
changes have made the policy direction totally unpredictable, negatively impacting
the business and consumer sentiments;
(iv) The key programs of
the government are misconceived and poorly defined. Hence the outcome has been
poor.
(v) Bureaucracy has been
empowered too much without assigning corresponding matching accountability.
Notwithstanding the economic concerns and doubts about the
sustainability of the NDA economic policies, the same NDA government returned
to power with even bigger majority in May 2019. NDA swept metros like Delhi and
Mumbai, industrial states like Maharashtra, Gujarat, Karnataka, and most
populace states like UP, Bihar, MP, Maharashtra, and Jharkhand.
Less than 3months into the latest term, the government is again
subject to the same criticism as before. It seems that people of Delhi and
Mumbai, where BJP made a clean Sweep in 2019 general elections 3 months ago,
were under the influence of a magic spell for few months. The spell has
suddenly broken and they are finding their portfolio values diminished,
property prices down and falling, businesses suffering losses, jobs vanishing,
petty crime rising due to rising unemployment, and mood in general stressful.
Under the present circumstances, three points need detailed
elaboration, viz.—
1. Whether the
"Policy Haste" of the government is leading to "Execution Paralysis"
at the operational level?
2. What proportion of the
domestic growth slowdown is contributed by (i) policy action (or inaction);
(ii) domestic cyclical slowdown; and (iii) global cyclical economic slowdown?
3. Are our economy and
markets ready for the "Reset" that is becoming increasingly imminent?
