The Narendra Modi government has now been in power for close to seven years. It is known to be proud of being decisive and acting speedily in implementing its decisions for the welfare of the people. This is often sought to be contrasted to the allegedly lackadaisical and corrupt ways of the previous governments.
While the ability to make decisions speedily is a virtue, at the time of taking the decision it is essential that, to the extent possible, the consequences, including adverse fall out, should be foreseen and catered for. We will evaluate how certain critical decisions, taken by the previous and present government, measure up to this criterion of good and effective decision making.
Decisions of consequence are arrived at after going through a consultative process. For instance, when a proposal is mooted by a central ministry for initiating a particular course of action pertaining to an issue within its remit, but requires inputs from other ministries too, the nodal ministry circulates a consultative paper to the ministries concerned and then taking note of the views, if any, expressed by them finalises the proposal to be placed before the cabinet. However, there are rare occasions, when, if the situation so warrants, it is given short shrift at the will of the prime minister. This, of course, depends on the aura and personality of the prime minister.
One may recall the imposition of Emergency in 1975 by Prime Minister Indira Gandhi, when the approval of the President was obtained and the promulgation of Emergency done without the cabinet being taken into confidence. The formal approval of the Cabinet was shown as having been obtained ex post facto. This was an instance of a chief executive, with a dominant personality, taking a momentous decision, ostensibly in the ‘national interest’, while running roughshod over laid down practice and procedures.
In this backdrop, we may briefly recount some other decisions, of great import, taken with or without strictly following prescribed procedures.
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Nehru’s UN appeal on Kashmir
Shortly after Independence, India had to grapple with the problem of raiders from across the borders in Pakistan. It would be recalled that the crisis resulted in forcing the formal accession of Jammu and Kashmir to India and sending our military forces to drive out the Pakistanis. While this military operation was continuing and major part of the territory recaptured, under international pressure, India referred the matter to the United Nations (UN) for adjudication. The UN ordered a ceasefire pending resolution of the dispute through holding a plebiscite under UN supervision.
This decision of referring the dispute to the UN has been grist for the mill for critics of Nehru for having unnecessarily internationalised the dispute. This outlook may not be fair since the decision was clearly not of Nehru alone but of the Cabinet, which had a number of luminaries, including Sardar Vallabhbhai Patel.
At the time, perhaps, world opinion would have turned against India if the military operation had not been halted by us despite international pressure.
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Nationalisation and Bangladesh war
I may refer to two other decisions of a seminal nature, when Indira Gandhi was Prime Minister, that have had lasting impact and perhaps changed the course of history. The first was the nationalisation of critical segments of the economy — banks and insurance, coal mines and sick textile mills. This decision was a part of the leftward tilt of the Economy, orchestrated under the stewardship of Indira Gandhi. The second was that of military action in support of the freedom fighters of Bangladesh that led to the dismemberment of Pakistan and the emergence of an independent country.
The benefits of the first one are questionable for, generally speaking, the nationalised banks, with one or two exceptions, have not performed well. The jury is still out on the question of whether the economy derived any benefit as a result of nationalisation of the private banks. The decision to go to war with Pakistan was, however, a seminal success. Our pesky neighbour was cut to size and a new nation, friendly to India, was born.
Whether or not, these decisions were taken following the due process, they surely bore the stamp of an authoritative leader who would not allow any impediments or niceties to stand in the way of whatever she had determined was the best course of action to be pursued.
In this backdrop, we may now consider and analyse certain decisions — having far-reaching consequences — that have been taken in recent times by the Narendra Modi government.
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The demonetisation call
The first of these is the demonetisation of high-value currency notes, announced all of a sudden on national television on 8 November 2016 by the Prime Minister. The professed objective of this step was to curb black money, check the circulation of fake currency and promote e-payments and financial inclusion. With the withdrawal of all Rs 500 and Rs 1000 notes, around 86 per cent of the total currency in circulation stood demonetised.
But this sudden withdrawal of most of the currency notes with the people caused great hardship for many, since the replacement currency was not readily available for the people depositing the defunct notes from next day onwards, and long queues were seen at the branches of banks all over the country. There were reports of elderly people put to great hardship while queuing up for hours at the banks. Some of them even died. This chaotic situation continued for several months till adequate currency notes had been put into circulation.
Besides the great hardship caused to the people, the principal objective in taking this step of removing black money in circulation was really not achieved since 99.3 per cent of the demonetised banknotes worth Rs 15.30 lakh crore of the Rs 15.41 lakh crore that had been demonetised, were deposited back in the banking system.
The long-lasting adverse impact of demonetisation was that the country’s industrial production declined and so did its GDP growth rate. The Small and Medium Enterprises (SME) were very badly hit, resulting in contraction of employment. This impact is being felt even now, since the growth rate has not picked up to the pre-demonetisation levels.
With the benefit of hindsight, it can be said that the demonetisation decision was counterproductive. Besides hardship caused to the people in its immediate aftermath, it had a long-lasting adverse impact on the economy.
The decision was evidently taken without examining the issues in depth and not going through the appropriate consultative process. The consequences were evidently not foreseen and catered for. The Reserve Bank of India (RBI) , which is the repository of expertise in such matters, had no opportunity to examine the mater in depth since its clearance was obtained, at a hastily convened meeting of the Board of Directors, at 5:30 pm, the same evening the decision was announced by PM Modi on national television at 08:30 pm.
It is now generally accepted by experts that the demonetisation decision was flawed and proved counterproductive. Its adverse consequences could have, at least, been mitigated somewhat if, while maintaining its confidentiality, the RBI had been enabled to keep adequate replacement currency notes ready for being put into circulation for the currency notes to be withdrawn.
Evidently, this was a hastily conceived and implemented decision, taken by PM Modi and his close advisers, without proper examination of the issue involved, impact and consequences. A typical instance of a decision taken in haste to be repented at leisure, though of course, the government remains in denial about its deleterious consequences.
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The lockdown
Another decision that was announced suddenly on national television by the Prime Minister was the imposition of the lockdown on 23 March 2020. The lockdown has been described as the most rigorous in the world. It was done with the objective of containing the spread of the Covid-19 pandemic. One immediate fallout was that the daily-wage workers in the unorganised sector were rendered jobless at one stroke. This number is huge since, according to the Economic survey of 2018-19, 93 per cent of the total workforce in India is from the unorganised sector. The total workforce is estimated at around 45 crore — the number in the unorganised sector being 93 per cent would be of the order of 43 crore.
Losing their jobs, many of them panicked. Since they lacked the means to sustain themselves in the urban settings they worked in, they were out on the streets in massive numbers to go back to their homes.
Apart from the misery caused, the purpose of the lockdown was greatly negated because of the uncontrolled movement of huge number of people. The purpose of imposing the lockdown was defeated on the first day itself. Subsequently, this also perhaps caused the spread of infection to various parts of the country, particularly from the urban centres to the rural hinterland. If the lockdown had been imposed with proper warning, the pandemic would possibly have been better contained and overcome earlier. Arrangements could have been put in place to prevent the sudden exodus of the migrants.
The decision to impose the lockdown suddenly was again apparently taken without adequate consultations and obtaining of inputs from important stakeholders. The impact on migrant workers was clearly not anticipated as it should have been and mitigative measures taken to ameliorate the misery that suddenly befell them and also obviate the spread of Covid19, because of the uncontrolled exodus of these people.
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And the three farm laws
Finally, we may consider the developments that led to the ongoing farmers’ protest. The three laws, that the farmers are opposing so strenuously and persistently, were initially promulgated through an Ordinance. The framers of the Constitution had envisaged that the expedient of issuing an Ordinance for promulgating a law would be rarely resorted to and when it was considered imperative to bring in a law to meet an exigency that had suddenly arisen and a special law was urgently needed to deal with it. Clearly, no such situation had arisen since farming had been continuing on an even keel for long, without any emergent need to have a new set of laws to handle a crisis in the sector. The manner in which these laws were thereafter adopted, in both Houses of Parliament, has been subject of criticism. It can be said that they were adopted without consulting the major stakeholders the farmers. Demands by Opposition parties to refer the Bills to a Select Committee were overruled. The way they were passed in Rajya Sabha was really questionable with a voice vote, rejecting requests for a division.
The government failed to foresee that the farming community would react so strongly to laws they believed were detrimental to their interests. It is true that productivity of agriculture in India is below par. Reforms are necessary to clear the path for achieving higher productivity. Had the laws been evolved after arriving at a consensus regarding the provisions, through consultations and detailed discussions with the stakeholders, the current impasse would not have arisen and the farming community would not have felt that laws that were against their interests had been thrust upon them.
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The consequences of hasty decision making
These instances show how decisions taken without due consideration of the implications and giving short shrift to the consultative process, can defeat the purpose for which the step was taken.
The lesson to be learnt is that, except in a real emergency, such as facing external aggression, decisions having far-reaching import should be taken following due process lest they prove counterproductive. It is to be hoped that lessons have been learnt and the Modi government, which has a substantial period of its term still left, would have learnt from the experience gained of taking decisions in haste and act in a more circumspect manner so that the people do not have to suffer because of whims of the ruling party. In this context, the phrase “those who cannot remember the past are condemned to repeat it” rings very true.
The writer is a former Secretary (Revenue) in GOI and Executive Director, Asian Development Bank. Views are personal.