Modi Govt - 1st Year Opinion card - Part 2
Defence:
The response of the new
government to Pakistan I think clearly showed the focus and strategy. Talks would
be on mutually acceptable terms, not driven by Pakistan’s habit of running with
the hare and chasing with the hound. There are no major egoistic or deal
breaking pre-conditions but a simple condition – Pakistan must deal with India.
Period. They cannot deal with Indians supporting Pakistan as a parallel track.
Also talks and hand of
friendship are not linked to our reaction on the border. If someone fires at us
the Indian army will fire back. The earlier government and many arm chair
intellectuals kept talking of the danger of skirmishes escalating into war,
even a nuclear war. Logically these fears are unfounded since Pakistan
economically is in no position to indulge in such adventurism nor is their
reputation with global powers be it USA or China such that they can expect them
to come help. USA is paying protection money to keep the terrorists engaged in
Pakistan’s backyard and China treating the terrorists with a ruthless
hand. So all that Pakistan was doing
was sabre rattling to probe and see if the new government was idealistic,
romantic and pusillanimous and its business as usual or if the rules had
changed. Reality – rules had changed.
As Shobha De points out in her
blog, the frustration of the men in uniform was palpable.
The non performance of Saint
Anthony was legendary. He was truly a Saint. He blacklisted many previous
suppliers so that existing equipment became unusable, he cancelled every tender
the moment someone asked a question and even the one life saving decision that
the UPA government took for fighter planes was left hanging. It was left to the
new government to find an out of the box solution to end the impasse. But was
the solution really something of a genius? No. Any right minded person
interested in ensuring Indian security would have taken recourse to this
decision. After all did not the UPA government buy transport planes in a
similar manner? That Modi took personal
control over the situation, negotiated a deal and took tough decisions speaks volumes
on how this government has handled defence policy.
Anyone who reads the state of
affairs in the armed forces is horrified at the lack of preparation and
woefully not future ready. Some retired officers with clear political leanings
try to give a spin to the state of unpreparedness but they don’t dispute the
basic fact that the armed forces are unprepared. This is a rot that has already
eaten away at the country’s defence foundation and if left unattended can
result in a collapse. It will take time and need money to address this rot and
bring back the strength. The country doesn’t have both in abundance but this government
is making the best of the situation and results would take maybe 10 years or
more to show but a beginning has been made.
Manohar Parikkar is known to
be astute and humble enough to respect the men in uniform and yet earn their
respect to help them get decisions with his own efforts. He is another poster
boy in the cabinet.
Defence gets 7 out of 10
mainly because the effort right now seems to be more towards identifying the
problems than finding solutions.
Economy:
It is a well known fact that
this government inherited a poisoned well economy. However much one would like
to sympathise with them the government has definitely flattered to deceive in
this ministry.
The biggest blunder done by
this ministry is retaining the retro tax. A tax that was criticised by everyone
including the BJP as the single most important reason to derail Indian investment
has not only been retained but defended and in one case even invoked by this
government. To my mind this is a
Himalayan blunder which can entangle this government in litigation and create a
trust deficit.
While it is nobody’s case that
the IT department is within its rights to demand tax and find ways to increase
the tax base the way this is being handled is more counterproductive. When the
economy is doing well, jobs being created and growth is assured even some
misadventure of IT will be taken in our stride. But when each of these is being
kick started, adventurism from IT only kicks the process.
It is sometimes felt that the
department is a law unto themselves and not in tune with the government policy.
Every government since the last 2 decades has worked hard to simplify tax
filing, make it friendly, generate trust and just when the Finance
Minister is in the sky on his way abroad
the department talks of wanting travel details, expenses etc which in today’s
globalised world ridiculous to say the least. That the idea was hare brained
can also be seen from the fact that with PAN numbers/Passport details/ credit
and debit cards being known and linked the government could always research
every traveller’s details and approach wherever they see suspicion. That the FM
had to fire fight this issue from foreign shores shows a certain lack of
control of the ministry over the department.
Tax issues like those of
Vodaphone and Nokia have been lingering and during the honeymoon period this
government could well have gone for the jugular and found a win win solution.
Criticism from opposition however strident would have been blunted since issues
would have been solved. But now even if
they resolve it, opposition will term it as surrender and with the entire
opposition making industry as the bad boys of Indian economy with media
publishing it, any victory will be sour. As it is this government is already
getting spooked about allegations of helping industry. Rather surprisingly media has not spoken
widely about how the closure of Nokia has resulted in a domino effect and many
big industries have shut down and thousands have lost jobs in southern India.
A key component of the economy
is the internet and its force multiplier effect on improving lives of people.
However this government while waxing eloquent on the freedom of the internet
and net neutrality continues to get hijacked by the mobile phone companies and
even TRAI. It appears that the government/ministry doesn’t seem to be in
control over policy and unless tough action is taken and decisions announced
with courage this industry will continue to remain adrift.
The events in the telecom
industry also gives credence to the opinion that business is often hand in
glove with government and such short sighted business men can only damage their
fraternity if they don’t show restraint.
The government touts the coal
and spectrum auctions as success but in reality those were no brainer issues.
With a SC order in place any government had no choice but to get these auctions
done. The government definitely deserves credit for the way it managed it but
the action was thrust by the SC and not a policy directive of this government.
While every person or entity
globally would like to avoid paying tax, the issue here is how it is done and
handled. Even the MAT issues have been handled such that it has given a handle
to people to blame government and it has been defensive on the issue.
The economy coupled with
technology has been changing so fast globally that it is almost impossible for
any government to keep pace with it and tweak tax policies suitably. Also it is
impossible that everyone is made to feel happy and treated fairly. However the
government can and could have planned in far better way the implementation of
these actions.
Governments love making
committees. Why cannot the government appoint a think tank committee under the
chairmanship of a senior leader like say Yashwant Sinha or Jay Panda with a
bunch of IAS/IRS/ IA&AS/ IFS youngsters drawn from the different branches
of the government, external finance, taxation and technology experts which
would meet every 3 months to evaluate the changes happening
globally/economically/technologically and propose FUTURE tax challenges. The
government can then plan and initiate taxes with prospective effect in each
budget rather than be reactive and retroactive.
The announcement of the Make in
India program was urgently required and an excellent initiative by the
government. However a few paras will not do justice to the same and will need a
separate piece on it. But this is a long term plan which can see success only
if Modi government gets a second term and undertakes 2nd generation
reforms.
Raghuram Rajan has been quite
successful in controlling inflation and international oil prices have helped
but the feeling that the governor of the RBI and the finance
minister/government are not exactly on the same page lingers. There is a
perception of a slightly adversarial relationship and in politics perception is
often fact. The dissent however couched
in financial diplomacy does not bode well for the government and in the short
run can prove counterproductive.
Retaining Aadhar, loosening up
the defence and insurance sectors is work in progress that has been completed.
The government deserves credit for not adapting an egoistic stand and for showing
broadmindedness in supporting many UPA programs.
Part of the frustration of the
people is that the government is dithering on what they can do, blundering on
what they want to do and allowing the narrative to be hijacked by a strident
opposition and conveying a sense of drift and to many even a replay of UPA
economics.
While Arun Jaitley deserves
accolades just as he did as an opposition leader the government on this front
doesn’t deserve anything more than 4 out of 10 here.
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