Will the BJP's Mission 350' be downsized to Mission 250'?

Not quite, because Prime Minister Narendra Modi still has many cards to play. But he needs to play his aces fast, as the summer of 2018 as a prelude to general elections is turning hotter in the capital for the Modi government. No two elections are the same, as every election is defined by its own dynamics, and the issues that will dominate begin to surface a year in advance, depending on the prevailing socio-economic sentiments of the times that will shape opinion and electoral preferences. Mr Modi in 2014 was the challenger to corruption and the Lutyens’ legacy of privileges. But in 2019, he has answers to give. The paradox is that the more Mr Modi succeeds in saffronising India with 21 states under the NDA, the Opposition which was earlier comfortable with the consolation prizes of “moral victory” now aims at the trophy, as dissimilar regional parties come together to challenge the challenger.

There is a definitive churn in Central and state alignments, as the political axis shifts to Modi vs allies and the rest. The deeper the index of voter disenchantment with the BJP, the stronger is the index of Opposition unity. As recapturing the peak of the BJP’s 2014 performance is impossible to repeat in the Hindi heartland of Uttar Pradesh and Bihar, denting virgin territories in the South, and in West Bengal is an even tougher challenge. So will the ambitious goal of “Mission 350” be downsized to “Mission 250”? However, this is not as binary as it seems, because should the BJP attain the numbers after the elections, prodigal allies will gladly return to the BJP fold, as realignments are not about ideology, but about opportunism. The looming “no-confidence motion” against the BJP-led NDA government moved by the TDP is only consequential to the extent of determining the weightage of the anti-Modi forces gaining ground.

Editorials since past three months are replete with content like “Modi is vulnerable” theme, and “Modi a one time PM?” as allies rear their head; bank scams embarrass the government; farmer-fury mounts to crisis levels with the Kisan Morcha in Maharashtra; joblessness being a ticking bomb; and growing perceptions of majoritarianism and India’s descent into illiberalism pervade sentiments. Conjectures of a “post-Modi” India were unthinkable, even unwritable six months back when BJP president Amit Shah set the bar of “Mission 350”. The point to note here is when negative narratives gain velocity, they have a momentum of their own that masses then begin to believe and absorb as neo-truisms.

But negative sentiments are still not a fait accompli for Team Modi, as perceptions will keep changing in proportion to how fast the ruling BJP-led NDA recalibrates on economic and administrative delivery. Though the BJP has a good account to give of its flagship schemes of Jan Dhan, Swachchh Bharat, Fasal Bima Yojana, initiatives of housing for all, rural electrification, health insurance cover for the poor, et al, yet there is an absence of a vital “feel-good factor” in economic prosperity. And that is the key to determining the favourable decision of voters, as economists give a 60 per cent weightage to economic revival as crucial in determining electoral preferences.

“It’s fine to call out Nehru-Gandhis for terrible economic ideas that hurt India after 1947. But let’s not forget that Modi holds similar ideas in 2018,” goes a tweet. There’s a rebut to these kind of critiques on Government of India’s economic cleansing. And it is this: that the Modi sarkar was well intentioned to cleanse the work ethics of corporate and administrative governance inherited from the Nehru-Gandhi era, and work towards increasing tax compliance in a country where only four per cent pay taxes. Except that the reform should have been implemented in the first two years of the regime, as by fiscal 2018-2019 the economy cannot rebound.

Elections are all about effective messaging and packaging a winning economic idea filled with realistic optimism, in lieu of surreal promises of 2014. A series of confidence-building measures, beyond the expected welfarist economic sops, would be ingenious, even if it means government loosening its purse strings. As for example, the Singapore government announced a one-off “SG bonus” of up to $300 each, as the 2017 Budget came in with a surplus of almost $10 billion.

Mr Modi still has time to cover lost ground, and a swift course correction is needed before 2019 throws up nasty surprises.

First, accelerate the National Health Protection Scheme (NHPS) covering 500 million poor. It is a commendable game changer aimed at delivering quality healthcare covering 40 per cent of India’s population. But a lot depends on a time-bound roll out of pilot projects and cooperation from the states.

Second, SBI confirmed a spike in currency circulation to near pre-demonetisation levels, and attributes it to political parties hoarding cash ahead of polls. Historically cash build-up occurs ahead of elections. The BJP will just have to bite the bullet of failed demonetisation as all political parties, including the party, will need cash. Further economic cleansing, or being strict on weeding out a cash economy, can wait till the next term of hopefully BJP 3.0, and Modi 2.0. Because should the government work harder on eradicating the cash economy, the informal sector will not be able to create more jobs.

Third, rectify the banking ecosystem which is built on public trust and needs highest standards of corporate governance, tighter controls, robust risk-management structures, and strictly target NPA levels of banks do not exceed a certain percentage of lending. The perception is debt-ridden farmers are not getting help, while corporate debt that’s turned into NPAs is because of the governments laxity with the elite.

Fourth, the cumbersome implementation of the Goods and Services Tax has driven traders and business classes away from the BJP. According to the World Bank, India’s GST is one of the most complex, with the second highest tax rate in the world.

Last, the advantages of a low-tax regime far outweigh a higher tax one. The GoI must loosen its purse strings in terms of significant direct tax reforms and cuts to deliver to middle class, now 20 per cent of the population, and the BJP’s core base. The finance minister could still find a way of mid-term revision in lowering the rate of taxation to 25 per cent, as Budget 2018 excluded larger corporates who are job creators and whose turnover exceeded '250 crores. As seen in the US, recent tax cuts have had a definite trickle-down and a multiplier effect across the economy. Further, when gains involved in evading tax are minimal, taxpayers prefer to opt for compliance over circumvention.

The long-term solutions to certain chronic problems is the need to build a consensus between mainstream parties on a “common minimum continuance of policies” like farmers issues, or corporate debt, no matter who comes to power.

Team Modi is resilient enough to recalibrate in order to recapture the momentum. However, should that not happen, one thing is certain that a Modi loss will regress India into the hands of the worst personally motivated dynastic fiefs like Rahul-Mamata-Pawar-Yadav. I end on a humorous note with a satirists tweet: “I had a nightmare last night, with Mayawati as the PM, Rahul as Dy PM, Mulayam as Home Min, Pawar as the Infra Min, Mamata as the Minorities Min and Owaisi as the HRD Min. I am still shaking!”

Bindu Dalmia is an author and columnist