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Narendra Modi-led govt made some radical reforms, but largely lost opportunity for dynamic change

The 18th century German writer Johann Wolfgang von Goethe noted, “Daring ideas are like chessmen moved forward. They may be beaten, but they may start a winning game.” But when is a policy idea considered to be a success? While factors such as a favourable environment and novelty play an important role, structural change heavily depends on when it is brought about, that is, the timing of policy implementation is vital. The privatisation of British Telecom in 1984, former United States President Jimmy Carter’s price controls and high Federal Reserve interest rates aimed at curbing inflation, and Deng Xiaoping’s string of reforms in 1978 in China are all success stories courtesy their well-timed implementation.

File image of Prime Minister Narendra Modi. AP

File image of Prime Minister Narendra Modi. AP

A tool for gauging the timeliness of an idea is the Overton Window, attributed to the late think tank veteran, Joseph Overton. The Overton Window depicts the realm of policy ideas in public discourse and provides a scale to judge the tolerance/acceptability of these topics. Hence, as discussions and debates ensue, ideas move along the spectrum of the Window, ranging from “acceptable” and “popular” to “radical” and “unthinkable”. The Window allows for the possibility of ideas that were once “unthinkable” to become “popular” and vice-versa. Its up/down movement reflects the degree of government intervention, that is, the greater the intervention, the lesser the freedom resulting in downward movement and vice-versa. The image below illustrates the Overton Window, giving examples from the domain of education to identify activity in the field.

The Overton Window

The Overton Window

Since India’s independence from the British Raj in 1947, the eco-political narrative of the country has moved across the Window. The country first tried to make itself self-sufficient (via emphasis on the development of the agriculture, infrastructure, and defence sectors). Then, in the 1970s, it expanded this mandate towards a more pro-business outlook (via a fillip to production/export of goods and services), which led to the game-changing liberalisation-privatisation-globalisation reforms in the early 1990s. While the Window had previously oscillated between “radical” and “popular” reforms (such as with the Bank Nationalisation Act, 1969 and with fertilizer subsidies respectively), it wasn’t until the 1991 reforms that the Window was pushed up towards more freedom, circling the “unthinkable” tier. Similarly, another watershed moment for structural change, with the Window once again moving towards the radical range, was Narendra Modi’s rise to power in 2014.

When Modi was elected Prime Minister of India, The Economist stated, “an overwhelming election victory promises to reshape Indian politics…”, and The Guardian claimed, “…Modi’s victory in the elections marks the end of a long era in which the structures of power did not differ greatly from those through which Britain ruled the subcontinent.” Voters were frustrated with a sluggish economy, rampant corruption, and a slew of false promises; the alternative came in the form of Narendra Modi and his campaign promising acche din (better days). He had the support of a majority of the country, both in terms of  citizens’ trust and seats in the Lok Sabha. The environment was ripe for reform and optimism was in the air as Modi was expected to drive much-anticipated change. Fast-forward to 2019: the buoyancy is petering out, political sentiment is fractious, and the golden window for reform seems to be closing.

Before Modi’s rise to power, due to a fragmented political environment, policy revamps could only include ideas that were “sensible” or “popular” on the Overton Window. Then, for the majority of the last five years, Modi was able to sell previously “unthinkable” ideas and establish a “new normal” while enjoying widespread popularity amongst voters. Radical (and sometimes unpopular) reforms such as the implementation of the Goods and Services Tax, institution of the insolvency code, and demonetisation of high currency notes all attest to how the Overton Window was being pushed towards extreme ends. Take the example of “minimum government, maximum governance”. This vision was “radical” and “unthinkable”, and also extremely difficult to mobilise support towards. However, he was in a unique position to make it come alive. While this path was embarked upon with deregulation of diesel pricing, opening up of railways, and making telecom auctions transparent, it seems to have been abandoned midway. Policies such as deregulating fertiliser pricing and relaxing government controls over corporate downsizing are just two that would also contribute to the vision of minimum government (CSIS scorecard).

Thus, while the government has attempted certain policies, it has largely lost out on an environment opportune for dynamic change. Moreover, Modi’s winning streak in state elections was reversed late last year, and the Overton Window started moving out of his control, settling back in the “popular” policy amendment sphere. The recent 2019 interim Union Budget is an indication of this. We hope future governments keep windows of opportunity in mind and prioritise structural reforms, such as opening doors for lateral entry into government, making significant labour market changes, and an overhaul of the legal system. After all, as English chess player Gerald Abrahams remarked, “Good positions don’t win games, good moves do.”

Kadambari Shah and Prakhar Misra are associates at IDFC Institute, a think/do tank in Mumbai, India.

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Updated Date: Mar 02, 2019 16:19:46 IST

Updated: March 2, 2019 — 11:54 am
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