Modi gets high marks for managing economy, ties with US
By Frank Islam
WASHINGTON, DC: Seven months might not be long enough to pass a conclusive judgment on a first-term government. Nonetheless, one has enough samples to prepare a scorecard on its initial performances in various areas.
So, how would one rate the performance of Prime Minister Narendra Modi’s government so far?
From an Indian American perspective, I would give high marks to the government in two areas: the economy and foreign policy.
Most probably, any government in Delhi would have looked good, taking over the baton from the United Progressive Alliance government, whose last three years in power were marked by policy paralysis, poor governance and a series of corruption-related scandals.
But, the challenge for Prime Minister Modi was different. He came to power promising not just better governance, but epochal changes and a vowing to return India to its glory days.
Thus, it was imperative that he deliver from Day One. To date, he has done a good job of managing expectations, especially on the economy.
After sputtering for a number of years, there are signs that India’s economy is back on track. Foreign investors, who turned their backs on the country, are returning.
Inflation has been stopped on its track. The Sensex climbed from 22,000 in March to 28,000 last month. Goldman Sachs predicts the Indian economy will grow steadily in the next few years: 6 percent this year, 6.3 percent in 2015, 6.8 percent in 2016 and 7 percent in 2017.
The government had some good luck also in that oil prices have gone down from $110 per barrel to nearly $60, given the scale of the country’s dependence on foreign oil. Because of the cyclical nature of the economy, it was due for a positive break at some point.
But good leaders always make their own luck, and Prime Minister Modi seems to have done that. One reason foreign investors are willing to give India a second chance is Modi’s track record in Gujarat as a pro-business chief minister and the excellent job that he did in promoting those accomplishments during his campaign.
Now, the challenge for the government is to continue on the reform path. As the developments in the past week suggest without a majority in Rajya Sabha, that might not be easy.
Two important pieces of legislation related to opening up of the insurance and energy sectors stalled in the upper house. Modi’s skills as a coalition-builder will be tested in the coming days around these sensitive issues..
From the reform standpoint, Finance Minister Arun Jaitley’s second budget, which is due in a few months, will be crucial. Last month, I had the privilege to meet the finance minister while in Delhi as part of a Brookings Institution study tour delegation, led by its president Strobe Talbott.
Jailey, who has not made a wrong step since becoming the steward of the Indian economy in May, made a strong impression on me. I left the meeting thinking that the Indian economy is in the right hands. I hope Jaitley’s next budget will speed up the reform process.
The second area where the Modi government has done very well is in foreign policy, especially in mending its relations with the United States. The Devyani Khobgrade episode and a failure to address U.S. – India differences on trade and intellectual property rights issues in a meaningful had created a lot of mistrust between Washington and New Delhi.
Both nations seem to have put those differences behind them for the present Modi’s highly successful visit to the United States, where he received rock star treatment, and President Obama’s upcoming trip to Delhi as the chief guest at Republic Day celebrations are proof that ties with the United States are back on track.
As with the economy, Modi has done admirably well in managing India’s relations with the United States. His administration has started off well charting a course in a new direction. Time will tell whether this course change will endure and produce its expected results in the long term.