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Has the Modi dispensation left people disgruntled? - Outside View by PersonalFN
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Has the Modi dispensation left people disgruntled?
Mar 31, 2016

What happens when political parties have a widening disparity between their political agenda and the country's economic agenda? The prevalent discomfort of the ever-growing Indian middle class answers this question.

At the 2014 Lok Sabha Elections, masses voted in the hope that the NDA Government's rule would lead to acche din. But now citizens are perturbed and possibly even repenting; the popularity of the Modi-led NDA Government is waning.

Aamm Admi's views about the Modi-led NDA Government

A story published in the DNA dated March 23, 2016, highlighted that Prime Minister Modi's popularity has been negatively affected by the rising education and healthcare costs. The reaction of one the persons interviewed was quite telling:

"Spending on my son's education and medicine for the family has gone up sharply. The government also cut fuel subsidies and tried to impose taxes on our pension savings. This is not acceptable.", said Sambuddha Banerjee, a 47-year-old IT professional working for the local Government in Kolkata.

So, the magic wand that was perceived to change the fate of the nation is not doing the trick.

Ahead of the elections and wooing voters, the BJP rightly highlighted the problems people faced and promised quick solutions if it came to power. BJP along with its allies had pledged to recover the black money stashed in vaults of foreign banks within the first 100 days, if they were elected to power. It even promised to rein in inflation. While it has mellowed, at the ground level people are feeling discomfited.

During the erstwhile dispensation, the largest opposition in the Parliament at the time, the BJP took this opportunity to criticise the mismanagement and the policy paralysis of the then UPA Government, which was well-known. They went a step ahead and released a booklet in October 2012 called "Mehangai Booklet," presenting an account of the gross mismanagement of the UPA Government.

Here are some of the excerpts there...

  • "The rise in prices of essential commodities is increasing day by day and spiraling prices have made the life of common man a curse. They find difficult to meet both ends need. The Congress-led UPA at Center raised petroleum prices 20 times during its 8-year tenure. Food prices are directly tied to fuel prices."

The booklet also made foolish comparisons (without making any reference to national budgets and energy policies of other countries). Have a look,

  • If one compares the percentage change during NDA tenure and UPA tenure, the result will be astonishing. While there was just 48% rise in petrol prices during the NDA regime, UPA has earned the distinction of increasing petrol prices by about 120% since its inception. Petrol in Delhi is priced at around Rs 70 a litre, while the same in USA is priced at Rs 42.82 per litre. The price in India is more than any of its neighbours - Pakistan (Rs 41.81 a litre), Sri Lanka (Rs 50.30 per litre), Bangladesh (Rs 44.80 a litre) and Nepal (Rs 63.24 per litre).

While speaking about the UPA Government's promises, this is what BJP stated in the booklet:

  • "It (UPA) now banks on somehow befooling people at the time of elections through tokenism and hollow promises while acting contrary to people"s expectations while coming to the power. The only mantra that guides it is the mantra of power. Somehow coming to the power and then using to serve vested interests of different cartels, profiteers, hoarders and black marketers is the sole goal of the Congress party. That's why its promise to rein in prices within 100 days of coming to power has come to a cropper. It could not uphold its promises to the masses because promises made to its patrons constituted of various cartels, profiteers, hoarders and black marketers outweighed its commitments to the people."

Let's recall what Mr. Arun Jaitley (Minister of Finance) had promised in pre-budget times...

  • "Direct Tax should be reduced. If the Income Tax limit is raised from Rs. 2 lakhs to Rs. 5 lakhs, 3 crore people will save Rs. 24 crore which will lead to a small impact of 1 to 1.5 percent of the National Tax Fund."

When you read this now, with the NDA Government very close to completing its two years in office, you may probably agree with the respondent who seemed furious about rising prices.

Where is the middle class feeling the pinch?

  • RBI has achieved its target of curbing the retail inflation below 6.0% by January 2016. As measured by the movement of Consumer Price Index (CPI), inflation in housing, healthcare, and education has averaged at 4.82%, 5.36%, and 6.41% respectively over last one year. But at ground level electorates, the middle class are feeling the tightest pinch while spending on education, healthcare, and housing. CPI has about 28% representation of these and similar services put together.
  • The Government might be launching new national level health insurance schemes and adding hundreds of drugs in the list of drugs under price control, but for the common man it hasn't made any difference as yet.
  • Hiking duties on petroleum products may have helped the nation achieve the 3.9% target set for the fiscal deficit, but it denied citizens cheaper fuel that curbed the fall in food inflation. Furthermore, this also exposed the double standards of the ruling party. The BJP had criticised the Congress for the same issue.
  • The 7th pay commission also poses a risk to inflation, while there isn't much relief to the common man vide an upward revision in tax slabs.
  • Recently, the Government slashed the interest rates on Small Savings Schemes (SSS) on the condition of revising them every quarter. This too hasn't gone down well with the middle-class, small savers, and senior citizens who largely depend on such deposit schemes. The RBI has been speaking about the monetary policy transmission, and Banks have been holding lending rates unchanged citing higher deposit rates. Given this argument, higher interest rates on SSS act were acting as a barrier to raising deposits at cheaper rates. Now, if banks reduce rates further (as an effect of reduction in policy rates by RBI), deposit rates too are likely to be lowered - which will be another blow for small savers.
  • The parliament may have successfully cleared the Real Estate Bill recently, and the Government may be planning to build more cities providing affordable housing; but what about the prices already jacked up? Black money may still infiltrate the real state sector, providing no respite to the common man.

The Modi-led NDA Government is attracting severe criticism for adopting the similar policies employed by the erstwhile dispensation. It had promised this country something better.

The angered middle-class person knows that primary needs - roti (food), kapda (clothing) and makaan (house to live in) -- are becoming unaffordable ...as well as education and healthcare. Somehow (for valid reasons and growing aspirations) the most citizens are unsatisfied with the quality of education at Government aided schools and are refraining from visiting Government set-up dispensaries.

Decades of minimal investment in the fields of healthcare, education, and the unregulated housing sector has dashed the aspirations of the middle class. Who will take up the onus to repair the damaged system is the question in every citizen's mind.

While all this happens, Prime Minister Mr Narendra Modi, remains the second most popular person on Facebook, as reported by the Times of India, dated January 18, 2016. Well, it remains to be seen how long this goes on. We are wise enough to know how quickly popularity can fade and that the authenticity of a Government's promises diminishes just as fast. It's high time the ruling party explains what they mean by acche din and fulfil the expectations of the aam aadmi.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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3 Responses to "Has the Modi dispensation left people disgruntled?"

debu

Apr 18, 2016

You cannot satisfy every body. But, as a first choice, one should try to guard vulnerable section
of population, like 60 plus, below 15 children, widow and girls. If some steps were taken in right direction, people were not disgruntled. What about mid-term and long-term planning of farmers, who due to water shortage commit suicide ? All these are now unclear. While making schemes Modi govt. should not entirely depend on bureaucrats. The schemes will fail.

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Jai

Apr 9, 2016

The first step to Achhe Din is ultra-nationalism and pride in the Leader. Mr Modi always demands from every international NRI meet. "Have I not made you proud to be Indian" (implying that Indians were ashamed to be be so before Modi arrived.)

As we have seen lately the drumbeat of nationalism has begun to beat harder and louder under the new regime. A new test of patriotism is being defined. On demand by regime supporters we must be prepared to shour "Bharat Mata Ki Jai". Overt Nationalism is being confused for Unspoken Patriotism.

In the state of Goa the BJP has asked members of the public to show their support by flying the BJP party flag outside their homes.

There is a high risk of polarizing Indian society "Either you are with us, the BJP, or you are an anti-national"

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Vasant Shukla

Apr 1, 2016

I think the biggest mistake that we make is expecting a better governance from anyone. India is a vast country with its vast problems. Assuming that any one government can solve this is wrong. We as people should be able to differentiate and acknowledge that it is impossible to solve all the problems at once. No one person can solve our problems. We will have to solve our problems. Whether its Congress BJP or anyone else they just want to be in power so they come out with all these fancy election sloganeering which we fall for once in a while. Let this continue and hope that some of these political parties start recognizing what is good for the country and what is not and collectively work towards that. The case in point could be the GST Bill. While UPA was in power NDA didn't let it work and when NDA is in power the UPA is not letting it pass. I am not sure if this will help but one thing is for sure we are destined to be governed by Mediocre people and that will not change forever. The Indian society by and large promotes mediocrity so we should not feel bad about it.

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