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Jakarta Post

Why Modi, Jokowi will need more than 100 days to bring change

Curtis S. Chin and Meera Kumar
New Delhi   ●   Thu, September 11, 2014

Although Indonesia president-elect Joko Widodo'€™s inauguration is still some two months away, he may well want to take a lesson from what is happening to the north, in India as a dynamic new leader there faces incredible expectations.

How fitting for the world'€™s largest and perhaps most free-wheeling democracy that is India that with only 100 days having passed since Narendra Modi was sworn into office as prime minister, critics and supporters alike are already vocally weighing in on his performance.  Jokowi, as the president-elect is better known, get ready.

Hope remains high that Modi will bring change to his own traditions-bound nation, but as Russell Green, a former US Treasury attaché to India and Clayton Fellow at Rice University'€™s Baker Institute, puts it, '€œ[Modi] has yet to explain his big economic reform vision in enough detail to revive corporate investment and pull the public onboard.'€

It is of course too early to meaningfully judge Modi'€™s long-term impact. Here though are several key benchmarks by which global investors and India'€™s own citizens should measure the country'€™s new leadership. Indonesia, also take note of these four critical areas: job creation, corruption, infrastructure and socioeconomic divide.

With 50 percent of India'€™s population under the age of 30, job creation must be foremost in the minds of the nation'€™s leaders. Nothing, after all, is more dangerous than educated, unemployed youth roving the streets, their frustrations rising and, sooner or later, finding expression in public disharmony.

It is estimated that a million job aspirants enter the labor market each month.  Economic growth will have to keep pace with this reality, and Modi will be wise to focus on agricultural and education reforms, vocational, technical and professional training, and a continued opening of the economy to help drive job creation and growth.

According to India'€™s Labor Bureau'€™s '€œThird Annual Employment & Unemployment Survey 2012-2013,'€ the nation'€™s unemployment rate among '€œeducated youth'€ was 19.4 percent in 2011-2012 and increased to 32 percent during 2012-2013.

For the past five years, and particularly from 2012-2014, the Congress Party has allowed growth to slip and investment plummeted. The new prime minister must remember that growth is not India'€™s birthright; not something that will automatically happen unless nurtured. Investor confidence must be restored and capital inflows
improved.

Concurrent with the emphasis on growth is the need for macro-economic stability. The past government'€™s breathless attempts to win the population'€™s goodwill through subsidies and by creating welfare programs have had a serious impact on the coffers.

Subsidies have absorbed such a large proportion of the government'€™s budget that capital expenditures by the government have fallen to 6 percent of GDP. Such populist programs are unsustainable and open the window to increased corruption. It is time for India'€™s leaders to come to terms with economic fundamentals and budget deficits, and restore macroeconomic stability.

India has adopted the institutional structure of a modern democratic state; now it is important to ensure these institutions function in an honest and credible manner. In the recent past, governance has weakened, and institutions have been hollowed out by corruption and rendered dysfunctional.

If the public cannot trust the judiciary, or have faith that the police force works in their interest, they will resort to unfair means to achieve its goals.

If business, domestic and foreign, are to invest in the India described so eloquently on India'€™s independence day at the Red Fort, Modi must address head-on a plethora of issues that relate to the high level of corruption and poor governance, which keep the nation low on the ranks of the World Bank'€™s annual Doing Business survey. (India dropped from 131 to 134 in the latest World Bank ranking of 189 economies.)

Such ills have eaten into the very core of Indian society, with tales of the unpunished and hubris among the ruling class now legion.

After all, if no one gets punished for wrongs when evidence is clear, documented and apparent, it can only lead to a disregard for the very institutions without which a modern democratic state cannot survive. Such was the hubris among the elite and powerful that they could subvert any law or regulation merely by calling on those who had the power to protect them.

From our perspectives based on our time at the Asian Development Bank, insufficient change has come to India'€™s core infrastructure despite hundreds of millions of dollars from numerous development agencies and banks.

In the India of today, much like the India of yesterday, even in urban areas access to water and to reliable electricity cannot be counted on. Grandiose promises already have been made by the prime minister, which would require an investment of US$2 trillion, but details are sparse, and no one has articulated where the capital would come from.

Toilets on a per capita basis are deplorably low; many rivers are little more than sewers and school children cannot do their homework because there is no power in the evenings. Health and morbidity directly affect productivity; human dignity is the basis for building a cohesive society that thinks for the nation, not just for itself.

An urgent task awaiting the new government is the need to build cohesion out of diversity. The Muslim population of India is close to 15 percent and this community is a vibrant part of India.

Yet, on every economic and social measure, this segment of the population ranks low. While the reasons for this are complex, the reality of their weaker economic and political power has rendered many disgruntled and with a sense of being marginalized.

The new government must focus on this community'€™s grievances and demonstrate an approach that is inclusive and credible to the Muslim population.

One can always believe in one'€™s virtue; what counts is that others believe in you. Governments are often defined by their failures, and given what was seen by many as anti-Muslim rhetoric during the Modi campaign, real progress in addressing this community'€™s specific needs, as part of an '€œall India'€ economic drive can help prove naysayers wrong.

In India, democracy defines itself by its ability to '€œget the government'€. The Modi government should continue to bear that in mind as it moves forward to manage, if not meet, the incredible expectations that its election has engendered among not just foreign business leaders but its own people. All that will take well more than 100 days.  

And there too is a message for Indonesia and its new leaders as the countdown continues to inauguration day.

____________________

Curtis S. Chin, a former US ambassador to the Asian Development Bank, is senior fellow, Asia, at the Milken Institute and a managing director of advisory firm RiverPeak Group, LLC. Meera Kumar, a former staff member of the ADB, is a New York-based freelance writer and communications consultant.