Reform has become the trope of our times. After nearly a quarter century of hop, side-step and crawl, the Indian economy remained shackled to shibboleths till 2014, when India languished, to offer only one example, at a pathetic 142 in the ease of doing business index. Prime Minister Narendra Modi’s intense effort for change is delivering outcomes: an unprecedented leap has taken India to step 100 on this ladder. The PM’s next destination is the top 50. It will happen.
But reform is only part of Narendra Modi story. He has set himself a far more daunting challenge: to liberate 100 million households, or nearly half a billion Indians, from the whiplash of poverty, into a world of aspiration, empowerment and gender equality. This mission too has a deadline: 2022.
This will not happen by reform alone. It needs a radical transformation in resource mobilisation and a shift in the focus of public investment across class lines to turn the impoverished into masters of their own economic emancipation. The existing broadband of unjust hierarchies is not easy to alter, however; nor will any deep establishment accept change without a fight for preservation of its entitlements.
India’s poor were trapped under at least three glass ceilings. The first was exclusion from banking. This, crucially, denied them credit facilities and made bank loans the preserve of a small demographic pyramid where, as it tapered to the peak, loans became fatter and cosier. This was not crony capitalism; this was crony corruption in capital letters. Exclusion from banking also made the poor vulnerable to middlemen within transfer institutions. Cash attracts sticky fingers.
Prime Minister Modi designed the architecture of change through a series of logical, inter-connected decisions. Many observers and all partisans could not conceive the second or third step when he ventured on the first.
It began with Jan Dhan Yojna, the largest banking inclusion project in history. Within a startling three months, over 300 million new accounts were opened for those who had never crossed the threshold of a bank before. Critics packed the airwaves with jeers, laughing at the fact that these were accounts without money. They missed the point completely. For the first time, banks were opening doors for those without money, rather than for those with cash. The multi-dimensional results are in. Among them is an uncomfortable fact for the old critics: those 30.24 crore “zero” accounts now have Rs 66,466 crore as deposits. The poor, particularly in the villages, have secure savings.
Mudra, a scheme correctly described as “funding the unfunded”, brought down the second glass ceiling: it offered business loans to the poor, without collateral. Mudra could not have happened without Jan Dhan. Mudra is rescuing small-scale vendors from usurious moneylenders, even as it seeds new self-employment options for those who need base capital between Rs 50,000 to Rs 10 lakh. Its categories tell the story: from value addition to small shops or street vendors to domestic productivity through sewing machines, poultry, dairy, bee-keeping, et al.
The revolutionary element within Mudra is gender. Women, with their characteristic resolve and silence, are responding in extraordinary numbers. Since Mudra became operational on 8 April 2015, 9.13 crore loans have been taken. Of these 6.89 crore, or 76%, were taken by women. Impressively, 55% of the loans went to people from Scheduled Castes, Scheduled Tribes and Other Backward Classes, while 13% went to minorities.
The third ceiling was arguably the most difficult, for the glass in this ceiling was mixed with a granite called black money, and the underground economy is protected by the most powerful of vested interests. The policy target was to neutralise black money, expand tax-compliance, and use hidden cash to recapitalise a banking system infected by NPAs.
Aspirin does not cure cancer. Black money needed chemotherapy. Demonetisation led the assault against a pernicious, life-threatening disease rife through the economy. In but 12 months since 8 November 2016, as objective commentators have noted, the banking sector has been rejuvenated by demonetisation. Five months before demonetisation, gross NPAs were around Rs 6 lakh crore; today, banks can afford to lower interest rates. There has also been a massive crackdown on shell companies which are carriers of the black money virus; some 2,00,000 have been deregistered for not filing returns.
The positive impact of transformation on the lives of the poor cannot be fully captured by mere figures, but the number of direct beneficiaries within the last three years has risen astronomically, from 10.71 crore to 35.7 crore this year. The amount of money they have received has gone up from Rs 7,367.7 crore to Rs 74,607.55 crore – by 10 times. Middlemen are licking their wounds and probably mobilising against the government. The number of DBT schemes has shot up from just 28 in 2013-14 to 314 in this current financial year. Over 40 crore people are getting benefits directly into their bank accounts. It is also estimated that the exchequer has saved Rs 57,029 crore in the process: change, as we know, tends to pay for itself.
What happens when glass ceilings are shattered? There is some debris on the floor, and there is some noise in the air. But those who think that election results are shaped by debris rather than substance, and political argument by noise rather than debate, have no clue about what influences an electorate’s mind.
He has one life, said Prime Minister Modi recently, and one mission: to reform, perform and transform. India, tired of stagnation, is eager for a New India.