VIEW: Modi shifts gears — pivots from sentiment to substance

As the world stirred up the stimulus talk, he had so far focused on survival. Yesterday it was the turn to focus on revival. The 20 lakh crore package to help nurse the economy back to health has created the excitement even as Modi has left the crucial fine print to be delivered by the finance minister.

As experts try and decode the package and its likely impact on the economy, what is most important to underscore is that the Prime Minister used the address to articulate at length his economic vision for the nation. The sum and substance of the speech was the hard reset he aims to induct in the economic policy framework.

Sixth year into his government (completing first years in his second term this month-end), Modi rightly used the fifth COVID address to announce his commitment to strategic reforms. It was more of a reforms oriented address than either a lockdown or stimulus package.

Those expecting details on the package in terms of sectors to be addressed or enunciation of the humanitarian relief for migrants (crisscrossing highways across India in the quest to be home) might have reason to feel a little disappointed with the address.

Having focused excessively on the sentiment in his earlier COVID addresses, the May 12 address rightly focused on the substance. Package announcement is a relief but India needs reforms as much it needs soponomics today. The crisis offers a unique opportunity to push through crucial reforms to reboot India.

The burden of his reform piece was the push for self-reliance. Mind you he has crafted this term independent of Swadeshi, a nomenclature he didn’t use even once during his speech. PM’s pitch for self-reliance is based on five pillars — economy, infrastructure, technology-driven system, vibrant demography and demand.

The reforms push came about in his pitch for pivoting away from an incremental approach to a quantum jump in the economy. “Land, labour, liquidity and laws” — that was how the PM defined the key themes of the package.

Don’t miss the importance of these pillars stipulated to drive the economy, especially land. Right since Congress leader Rahul Gandhi put him back early on in his first tenure with the “suit-boot ki sarkar”, the NDA government has discreetly steered clear of this term in the policy parlance. Here it has made a vocal comeback.

What does this likely translate on the ground? Steps to bolster liquidity for the Micro, Small and Medium Enterprises (MSMEs), among the worst impacted sectors and most importantly a push to the process of monetisation of surplus land assets held by Ministries and Central PSUs. Also, land acquisition reforms might soon be on the menu?

Many of NDA ruled states have just initiated labor reforms. Labor, however, would be a big challenge given that the bulk of it is in a difficult transition. Laws, many in India Inc would vouch for privately, have been an impediment hence an open reference to it shows a marked change. It must though translate into purposeful change on the ground.

Is it a shift back to the rightist approach in policymaking? The self –reliance push on the face of it may sound Left oriented. But a deep dive into the PM’s address shows there is a new genre of economic policymaking that combines the best of both the worlds, drawing on India’s inherent strengths and leveraging global opportunities in the post-COVID era to create a unique blend.

“The definition of self-reliance has changed globally. From economy-based globalization, the world has now moved on to human-based globalization. India's culture and traditions speak volumes about self-reliance and the world as a whole family.” This indicates a push towards economic nationalism but not economic isolationism. Collaboration and convergence is the mantra with India setting the terms for the new paradigm.

Modi’s track record in attracting Foreign Direct Investment (FDI) has been good. India must not walk away from the path of using FDI as an equal lever for economic revival. There is a need to engage the world afresh, especially big-ticket investors, in light of the new India opportunity.

The government must spend quality time to tell the world business that India is aiming to become the factory of the universe and each and everyone is welcome. Terms and conditions apply. India has reason to be proud of several made in India brands under global collaborations and we must continue to aim for many more such partnerships.

Similarly, as India goes vocal about local, we must emphasize the need to be competitive and ensure that quality is the defining statement for products made in India. As ‘Make in India’ gets a unique opportunity to reimagine itself in PM’s call, it is extremely important that tariff is not seen as either a barrier or as an impetus for local produce.

Prime Minister said, “Who would have thought that payments would be directly received by the poor and farmers even when government offices were closed? But it happened from Jan Dhan, Aadhar and mobiles.” On the ground, the government must proactively use technology (listed as a pillar by Modi) to bring about improved last-mile transformation. There is a need to usher in JAM 2.0.

“Making the 21st century India's isn't just our dream, but our responsibility. The global situation today teaches us that self-reliant India is the only road towards this dream.”

Self-reliance must boast of India’s capability to capture global opportunities. It must remember that India has a once in a lifetime opportunity to look at transforming several local brands into global brands of each and repute.

The reforms announced should yield on the ground a new entrepreneur spirit, the industrialist mindset to build a new India to ultimately ensure manufacturing and jobs move to India. For that, the bureaucracy must play a perfect foil rather than drag down the idea itself.

-Rakesh Khar is senior editor, Special Projects, Network 18. He writes at the intersection of politics and economy.