Tracking The Modi-meter

Fixing its balance sheet was the BJP-led government’s biggest hit, and the inability to get faster GDP growth its biggest miss

- Samar Srivastava

Sacrifice the short term, focus on the medium to long term and things will work out fine. This government mantra has meant that it hasn’t shied away from taking difficult (some may argue flawed) decisions with the firm belief that it put the country’s economic future on the right path.

At times this has meant longer wait times—for instance, for resolving bank bad loans the government chose to enact the Insolvency and Bankruptcy Code and is patiently waiting for the courts to evolve the first set of jurisprudence around it. In other cases it has also waited for the pain that restructuring of how markets work entails—as evident in the implementation of the Real Estate Regulation and Development Act. Votaries argue that this has sacrificed short-term growth for a long-term future that is no doubt bright.

“An error that people make when assessing this government is that they think it has been a redux of the first NDA government. It has been anything but that,” says Venugopal Garre, director at Bernstein, a brokerage. He points out that 1999 to 2004 was all about big-ticket reforms, from the opening up of telecom to the reform of state electricity boards and the implementation of public private partnerships. There was a view that the NDA government then was too urban-focussed.

In contrast, the Narendra Modi led government approach has been to patiently implementing a set of measures that can best be defined as incremental with no reforms of factor markets like land and labour. At the same time the government hasn’t ignored rural India. The Employment Guarantee Scheme is intact and new programmes have made electricity and cooking gas cylinders available. “There will probably be one big bang announcement to take care of the distress in agriculture,” says Garre.

As the government gears up to present its last budget,