India Modified: Any Lessons for Sri Lanka?
Narendra Modi’s dramatic victory has given him a resounding mandate to pursue his pro-growth / pro-business agenda. He campaigned unreservedly on a strongly developmental platform. The results indicate that the majority of Indians want higher growth, lower inflation and less corruption. The Prime Minister-elect has built up a strong administrative track-record during his tenure as Chief Minister of Gujrat. This is cited to demonstrate his capacity to implement robust reforms to revive the stalling growth in the Indian economy, which has declined from 9% to 5.5%. The Congress Party played an important part in introducing reforms which gave India 15 years of 7% - 8% growth. However, in its last term the Congress Government presided over a period of ‘policy paralysis’ and was also dragged down by a series of corruption scandals, which ironically came to light largely because of the Right to Information Act that it introduced. It is reported that the ‘policy paralysis’ was triggered due to pressures mounted by minor parties in the Coalition Government mostly on ideological grounds. From an economic perspective, the election of Mr. Modi is timely for India, Sri Lanka and the region. His pro-growth/pro-business agenda is what is needed at this point to revive the Indian economy. A return to higher growth rates is important not only to meet the aspirations for greater prosperity among the Indian population, particularly the rising middle-class, but also to protect important social legislation enacted by the Congress Government. The National Rural Employment Guarantee Act (NREGA) and the Food Security Act are only affordable, if growth rates are high enough to generate sufficient Government revenue to fund them. Hence, after a period when the Congress Government introduced social protection measures, the time is now ripe to focus on restoring growth to meet the twin objectives of wealth creation and social welfare.