Modi's food security test

Indian Express, 14th June 2013

Is the BJP ready for a new economic philosophy? Can Modi give it?

With his appointment as the BJP's poll panel chief, Narendra Modi is being decisively propelled into national politics. Whether as prime minister or as the leader of opposition in Parliament, Modi will no doubt move from Gujarat politics to national politics. But regardless of which role the BJP plays after the elections, of ruling party or of opposition, it will need a clear and well-articulated economic philosophy.

In the two terms of UPA rule, India has seen more entitlement programmes and a bigger shift towards a welfare state than ever before. Although when the NDA was in government the BJP focused on public goods such as building highways, when in opposition, it failed to oppose policies that were against its politics. Indeed, it opposed some of the very initiatives that it had taken when in government, simply because it was now an opposition party. The GST, which the NDA had proposed as a reform that would give India a single market, was opposed by the BJP. It also failed to support the pension reforms bill that it had proposed to give India a defined contribution scheme, replacing the defined benefits scheme of the Congress era.

Not only did the BJP fail to support the reforms it had proposed when in power, it also failed to oppose largescale entitlement schemes like the NREGA when they were introduced by the UPA. While the role of the NAC as an extra-constitutional body was attacked by BJP leaders in their speeches, when it came to its stance in Parliament, the party seemed to lack any economic philosophy. Not just that, when it has discussed the NREGA in Parliament or state assemblies, it has supported the policies, demanding better implementation. For example, the BJP's concern has been that the full amount of money allocated under NREGA has not been spent.

Was the party going along with the Congress's entitlement programmes because it actually believed in them? Was it not opposing them believing that opposing such entitlements would make it lose popular support? In other words, was silence a populist strategy to avoid a negative impact? Or did the BJP believe that supporting them would somehow translate into votes for its governments in states which implemented them well? In this way, the Centre would spend the money, and the BJP government at the state level would benefit.

The food security bill is the latest entitlement programme proposed by the Congress. Even though it is seen as a vote-fetching flagship programme of the Congress for the 2014 general election, the BJP agreed to support the bill, though it has disagreements on small issues in it. This lack of opposition to legislations promising entitlements has characterised both terms of the BJP as an opposition party. Modi's recent speeches suggest that he believes in small government and does not support such entitlements. With Modi as leader, will the BJP's policies change?

It is likely that the BJP will still shy away from articulating its economic philosophy. It may take the easier way out by fighting the 2014 election on the plank of Modi's governance in Gujarat. However, once Modi moves to the Centre, the 2020 election cannot be fought on the Gujarat governance platform. Even a mid-term election will be hard to fight on the basis of a chief minister's performance in the past. The policies of the Congress have given us a crash in GDP growth. If Modi believes in growth, he will inevitably have to question these policies and not just their implementation.

So if Modi is playing for the long run, seeing his appointment as poll chief of the BJP as his entry into national politics, he may take the option of defining an economic philosophy that distinguishes the BJP from what he calls the "crumb throwing" Congress. He may choose to offer an economic vision different from the muddled philosophy the BJP displayed as an opposition party in the last two Lok Sabha terms. His leadership of the poll strategy offers him his first opportunity to do so. The first impact of such a decision should be seen on the BJP's position on the food security bill, which appears likely to be introduced in the monsoon session.

While Modi may or may not become PM, there can be no doubt that he will, from now on, play a role in national politics. If the NDA does not win the election, the BJP could again become the opposition party, and Modi the leader of opposition in Parliament. Some element of the support Modi receives from corporate India is based on the belief that he will be able to offer India what he has been able to offer Gujarat, a focus on infrastructure and a functioning government that provides investment opportunities. At the same time, an element of the disillusionment of industry with the Advani-led BJP stems from its its failure to play the role of a responsible opposition party. The disenchantment of industry with the Congress is ultimately about bad delivery on GDP growth. Whether as ruling party or as opposition, the BJP will need to shift gears to think more carefully about being a part of the Indian growth story, and not just mindlessly block legislation or the functioning of Parliament. If the BJP continues to misbehave, then industry will also get disenchanted with it.

If Modi fails to lead his party to victory in 2014, and becomes leader of the opposition in Parliament, he will get the opportunity to play the role of a responsible opposition and change the image of the BJP as a disruptive party. His time in Parliament will also offer Modi a chance to distinguish the BJP's ideology from the entitlement-based ideology of the Congress.

The crucial question is whether this is the right time. Is the BJP ready for a new economic philosophy? Governance issues and easier issues like FDI in retail, where the BJP already opposes the Congress, may be much discussed in debates on the BJP's manifesto. But the first test of Modinomics will be the BJP's position on the food security bill. That would be the beginning of the end of the BJP's muddled era.