The Dangers of Modi’s “Discipline”

The new prime minister of India, Narendra Modi, has promised to enact “unpopular” measures to revitalize a troubled economy and erase mounting deficits. Touting “discipline” and fiscal responsibility, Modi seems poised to unveil his plans to combat the deficit, plans which are certain to include cuts to central government spending and creating a more business-friendly environment. And in the spirit of “responsible” economic conservatives everywhere, he is all but certain to target India’s social welfare programs while reducing or eliminating taxes and other regulations deemed unfriendly to investors. While these policies might appeal to free-market supporters, it is unclear just how adversely they will affect the hundreds of millions of impoverished Indians who depend upon these programs. Modi, however, enjoys a mandate unseen in Indian elections in the past three decades. His BJP has an outright majority in the Lok Sabha, and the Congress Party, his principle opponents in the election have lost the majority of their seats in that body. Modi’s opponents are divided, weakened, and now, effectively, leaderless.

One rather disturbing development is the lack of an official Opposition leader in the Lok Sabha. Last week, the Speaker of the Lok Sabha formalized the decision after no minority party gained sufficient seats to field a candidate fro the position. The lower House requires a minority party to hold at least 10% (55) of the seats in order to put forward a leader of the opposition, and the once-dominate Congress Party only held 44 in their devastating loss the the BJP. Despite holding onto a plurality in the Rajya Sabha, the CP has lost most of its ability to resist BJP policies. The Rajya Sabha has no power to block financial legislation or call for a vote of no confidence in the government. Without the official Leader of the Opposition and the support of the other minority parties (two of which have risen above 30 seats), the Congress Party has almost no power to oppose Modi on tax reform, government borrowing and spending, or other financial issues as laid out in article 110 of the Indian Constitution of 1949. Put bluntly, Modi can use his majority in the Lok Sabha to fulfill his promises to “incentivize business” by lowering taxes and regulations without fear of the CP and its allies in the Rajya Sabha. Put even more bluntly, Modi could rewrite Indian tax law overnight. But given the Thatcher-esque language modi has employed in his speeches about the economy and the deficit, he is unlikely to stop at relaxing taxation.

Modi has made mention many times of his willingness to address the problems that plague India’s welfare programs. I’m not about to argue with the man that these programs need fixing; they do. Any social services that attempt to help a nation of over a billion people living under dozens of different legal codes are going to have some serious issues. The BJP’s desire to create a uniform civil code (as mentioned in Chirag’s primer) might help ease some of these problems, but that’s different kettle of fish. Besides, I highly doubt Modi plans to overhaul these programs with the intention of creating better, more reliable aid for the people. Politicians who promise to “fix” social welfare programs tend to mean “dismantle”. His message of fiscal responsibility has little room in it for the necessary increases in spending such an effective reworking would entail. Those of Modi’s economic views believe it is better to encourage outside investors and unregulated market growth than to invest in the welfare of the poor and protect the vulnerable.

I hope to write more in the coming weeks, as Modi reveals exactly what his plans for achieving financial stability are. I hope he will not abuse his party’s mandate to enact “responsible” policies like those of Reagan and Thatcher before him. A developing nation with over 800 million citizens surviving on less than two American dollars per day can ill afford cuts to its social welfare programs. I hope Modi sees that he cannot expect to drive the development of his nation by cutting off its most vulnerable citizens from support. I hope these things. I expect the worst.

Steven

http://www.bloomberg.com/news/2014-06-15/modi-warns-tough-decisions-needed-as-india-recovery-to-take-time.html 
http://thediplomat.com/2014/06/indias-parliament-will-have-no-opposition-leader/ 
http://rajyasabha.nic.in/rsnew/legislation/introduction.asp 
http://www.indiankanoon.org/doc/72095/ 

 

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