Weaker Centre, stronger country

Feudal to Federal

Today’s piece marks two years since I began writing this column. Permit me some indulgence in looking back.

On December 25, 2022, this column opposed the reversion to the old pension scheme as being unjust to the taxpayers, fiscally harmful and not even an electoral weapon, as wrongly portrayed. The country has finally and thankfully sealed the nail on the coffin of OPS with the launch of Unified Pension Scheme (UPS) last week by the Narendra Modi government.

On October 1, 2023, this column argued in favour of the caste census and highlighted how it is the first and necessary step for a new social justice framework. Last week, the Modi government showed initial signs of acceptance to conduct the caste census, after pressure from its own allies.

On March 18, 2024, this column proposed the idea of a ‘Right To Apprenticeship’ (RTAP) as one of many solutions to tackle the unemployment problem. In Budget 2024, the government announced a new internship programme for youth along similar lines to RTAP.

On June 30, 2024, this column was titled ‘PLI to ELI -- an idea for Nirmala Sitharaman’. Almost on cue, three weeks later, the finance minister announced a new ELI scheme in the budget.

On August 4, 2024, this column implored the government to reverse the budget announcement of cancellation of indexation for taxation purposes. Two days later, the government announced the rollback of indexation announcement.

This is not about clairvoyance of this column. It is not even to remotely suggest that this column was the main driver of government actions. It is gratifying to know that many ideas and suggestions, albeit coming from the Opposition, have translated into tangible policies and regulations. This is about an emerging political climate of the importance of the Opposition and cognizance of it by the Modi government, which are healthy developments for the country.

Of course, there have been other suggestions in this column such as not wasting taxpayer money on semiconductor factories, the need for greater fiscal powers for state governments, and so on, that the Modi government has not acted upon. And some ideas such as the opposition to OPS go against my own party’s stand. It is a testament to India’s democratic ideals that policy ideas and suggestions for better governance can be adopted from all sides of the political circle. Democratic politics is the ultimate marketplace for peaceful resolution of social and administrative conflicts in a society.

Obviously, this phenomenon is an outcome of the new ‘240 BJP’, the ruling BJP without an absolute majority in parliament. But contrary to the narrative, a weaker Centre often results in a stronger nation. Contrast these with the unilateral but excruciatingly painful policy decisions of the same Modi government with the same cabinet during the times of a strong majority:

1: Sudden overnight demonetisation in 2016 that destroyed India’s supply chains from which the country has yet not recovered. Consequently, exports, which is the main job driver in the country, grew at 18% (dollar terms) during Manmohan Singh’s time but collapsed to just 4% under Modi.

2: Haphazard and hurried GST rollout in 2017 that did not yield the expected boost in tax revenues or GDP growth as was expected. India’s overall tax-to-GDP ratio has remained unchanged since 2014.

3: Thoughtless and abrupt corporate tax cuts in 2019 done through an announcement outside the budget has led to middle-class individuals contributing more in taxes to the government than corporates for the first time in India’s history. And neither have corporates invested more due to these tax cuts -- private investment as a share of GDP has only fallen vis-à-vis the previous decade.

4: Abrupt and knee-jerk Covid lockdown in 2020 disrupted people’s lives, livelihoods, and did not even prevent Covid deaths. India had among the highest number of Covid deaths in the world and the economy has still not recovered from that sudden shock.

5: Non-consultative and unilateral foreign policy decisions for a decade have now left India in its worst position in a decade with its neighbours. Afghanistan, Pakistan, Sri Lanka, and now Bangladesh, have all turned hostile, with the ‘dragon in the room’ being China, making India very vulnerable. The relationship with America, too, has soured with Modi’s dalliance with Russia, allegations of attempts to kill American citizens on their soil, and souring record on human rights.

These are just a few examples of very important decisions taken by the Modi government over the last decade that were autocratic, with no debate, consultation, thought or discussion in public. The nation will take a long time to recover from the disasters of these decisions.

The point here is not one upmanship or ‘tu tu mein mein’. It is about the larger climate of decision-making. A consultative decision-making process almost always leads to better decisions than unilateral, ‘know it all’ style of decision-making. India is too large and complex a nation for one party or leader to have all the answers. A weaker Centre forces the federal government to consult, deliberate and take other political parties along in its decisions, which results in a stronger country eventually.

While the Opposition has tried to shame the Modi 3.0 government over its many ‘U-turns’ recently, it may be a blessing in disguise for the nation. India is no longer a nation that can or should be governed by a single-party majority. Its states are now too diverse and different to be managed single-handedly by one party from Delhi. Going forward, an umbrella coalition of parties from all over the country is the ideal path for the nation, contrary to what the corporate sector or the ‘efficiency hunters’ may preach. India needs an “I.N.D.I.A.” alliance.