As Prime Minister Narendra Modi struggles to keep pace with an economy in free-fall—India’s GDP shrank by a whopping 23.9 per cent in the April-June quarter— what he needs is not more of finance minister Nirmala Sitharaman’s mishandling. Modi must emerge from the quicksand she has created and make lateral entry his mantra for economic rescue. Like he brought S. Jaishankar for external affairs ministry and Parameswaran Iyer for Swachh Bharat Abhiyan, the PM now needs some out-of-the-box thinking on economy — a domain expert he can pull in from outside his political setup as his finance minister.
Narendra Modi and Amit Shah know their politics well. But, they do not know economics. When the captain and vice-captain of the team don’t have a particular skill set, it becomes even more imperative for them to have a teammate who does it for them and the government. They have to, because the promise of economic growth and national security are central to Modi’s politics. Today, both lie in tatters. With China threatening India at the Line of Actual Control (LAC), Modi now needs to double down on the economic health of the nation.
And this is precisely where bringing in outside talent becomes crucial.
The contraction of India’s GDP can be blamed on the much-hated virus, but it is hard to ignore that the economy was in slowdown mode for as many as eight quarters even before the pandemic and ensuing lockdown engulfed us.
To say the Bharatiya Janata Party-led government’s bench strength is abysmal would be a euphemism. Nirmala Sitharaman’s reign as finance minister has proved to be disastrous, due to a mix of unfortunate circumstances and her lack of political and administrative acumen. But, for Modi and his voters, the complete lack of talent in his government is glaring and disconcerting, with no real candidates in his cabinet, or party, who can be thought of as possible replacements for Sitharaman.
The experiment of drawing in former seasoned diplomat S. Jaishankar as external affairs minister was bold and unexpected, but has worked quite beautifully so far. Be it the job of spreading India’s message before the international community after the abrogation of Article 370 in Kashmir or the current LAC stand-off with China, Jaishankar has made good use of his skills as a diplomat to press for India’s case. This is precisely the kind of thinking Modi needs now—to look beyond the scope of his political framework to rescue the sinking ship the Indian economy seems to have become.
Also read: Govt needs to be scared out of complacency & Q1 contraction could do that, Raghuram Rajan says
A sinking economy and no rescuer
Nirmala Sitharaman’s stint as finance minister since last May has seen a series of economic disasters. An MA in economics, who had worked in the ministry earlier as a junior minister, Sitharaman was not an odd choice. But it was perhaps the lack of a breadth of administrative and political experience that came in her way, besides having inherited an economy that was already on a downward slope. Unfortunately for her, even 15 months later, she doesn’t seem to have succeeded in inspiring much confidence among various segments of the economy, and become the face of the economic slump.
After the latest GDP data was released, hashtags like #ResignNirmala began trending on Twitter, indicating how all the anger is being directed at her. What makes it worse for her, is the crisis around the Modi government’s inability to pay states their GST dues, and unlike former Finance Minister Arun Jaitley, the absence of the skill to reach out to everyone and build consensus. Making statements like the “act of god” don’t help much either.
The issue, however, is that Nirmala Sitharaman isn’t the problem, she is just a manifestation of it. The Narendra Modi government suffers from such a lack of talent that it is hard to think of who can fill in to lead the finance ministry at this crucial, challenging juncture. The other cabinet minister who fits the bill in terms of area of expertise is Piyush Goyal, but he isn’t known to be the best administrator or consensus builder either, and has had several run-ins with people he works with.
What the government needs right now is a seasoned hand, someone with an iron-like grip over economic matters and the knack of taking even detractors along. And nobody, certainly not Sitharaman or Goyal, tick all these boxes.
Also read: India can grow at 10% but import substitution policy could hurt that, Arvind Panagariya says
The need to look outside
Narendra Modi has earned himself a sorry reputation that no economic talent can work with him. From former Reserve Bank of India Governors Raghuram Rajan and Urjit Patel to former chief economic adviser Arvind Subramanian, the list of those who opted out or were forced to leave the Modi government is longer than acceptable.
But with the economy in such shambles, Modi has to let go of this streak and show the vision to look outside his political comfort zone. When the PM took oath for the second time in 2019, he knew his options to fit in the top four cabinet posts were limited. With Arun Jaitley and Sushma Swaraj unwell, Modi had to think beyond the obvious, especially for a portfolio as critical as external affairs. S Jaishankar was an unexpected, but clever choice.
Also read: India’s economic growth has seen a consistent fall, Gods cannot be blamed for everything
The challenge in lateral entry
It isn’t usual in politics to bring in people from outside the party/ally parties to be part of the traditional government framework, or to lead a mission. There are egos to assuage, patronage to grant, people to be rewarded and political compulsions to be met. But there are times when all of these need to be set aside for the more pressing cause.
The Congress-led UPA government’s move to rope in Infosys co-founder Nandan Nilekani to head the ambitious Aadhaar project was a prudent one. Without Nilekani, who was given cabinet rank, the road to Aadhaar would have been difficult. It is the foundation he laid that has held the Modi government’s efforts to build and concretise the project in good stead.
Nilekani’s stint was also tumultuous due to all the politicking within the Congress party and resistance to an ‘outsider’ who had made a lateral entry. Modi, however, with his strong control over party affairs, will have no such problem. The BJP can keep blaming the global slowdown, or the pandemic or something else for the economic mess we find ourselves in, but it can’t run away from the fact that it has been able to do precious little to arrest the slide.
Modi, as much as his voters may continue to love him, needs to do something to rescue the economy if he doesn’t want this big, ugly blot on his tenure. He has to set aside his pride, prejudice and politics to rope in an outsider as his new finance minister. Who can that be? Well, suggestions are welcome.
Views are personal.
Disclosure: Nandan Nilekani is among the distinguished founder-investors in ThePrint. Please click here for details on investors.