India has just completed a historic election. The results are staggering. While many expected that the Narendra-Modi-led National Democratic Alliance (NDA) would come to power, the landslide that materialised was a surprise to many. Clearly, Modi’s emphasis on the economy, ease of doing business, infrastructure and job creation struck home. With voters handing him a decisive victory, it is now Modi’s turn to deliver. His pro-business slant and reputation as an ace administrator mean that expectations are sky-high. In the latest edition of ‘Public Affairs Round-up’, MSLGROUP identifies what is likely to be the new government’s list of priorities. Modi has his work cut out. None of the challenges before – from cutting red tape to clearing critical projects – will be easy. It will require more than numbers in Parliament; an ability to take people along will be vital.

1. P A Rublic ffairs ound-up
MSLGROUP IN INDIA
May 2014 | Vol 2 | Issue 2

2. India under Narendra Modi:
Expectations soar, challenges persist
The results
The numbers
Who said what
Contents
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3. On May 16, an electoral tidal wave swept across
India. The Narendra-Modi-led National Democratic
Alliance (NDA) won a staggering 336 of the 543
seats in India’s Lower House of Parliament, the
Lok Sabha. Modi, who is from the Bharatiya Janata
Party (BJP), won over India Inc as chief minister of
Gujarat and the expectations of his government are
sky-high.
Modi, often accused of a strong anti-Muslim
prejudice and of doing little to prevent the
communal riots in Gujarat in 2002, focused on
development and job creation as his election
planks, plugging into the disquiet over the slowing
economy and rising prices.
India under Narendra Modi:
Expectations soar, challenges persist
It was as finance minister in the early 1990s
that outgoing prime minister Manmohan Singh
kickstarted reforms, untangling red tape and
governmental roadblocks to release the potential
of India. Despite that, the economy remains far
from unfettered. The bureaucracy remain slow-
paced by international standards and resistant to
change; permits for critical projects are stalled and
– especially over the past few years – faith in the
India story has evaporated fast.
Modi’s priorities should be clear. The World Bank
has ranked India 134 out of 189 countries on its
ease of doing business index. Unless the new
prime minister can change this fast, the economy
will take a body blow.
He has his work cut out.
Economic growth was
projected to be less than 5%,
turning the heady days of 8%-
9% into a distant memory.
The Planning Commission
estimated last year that
poverty levels were at 22% –
that’s more than 240 million
people. Sub-5% growth
won’t be good enough to
lower these numbers.
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4. Remove roadblocks: Unless businesses can
achieve cost efficiency and get speedy permissions,
investment and growth will remain distant dreams.
Achieving this will be tough because of the often-
reluctant bureaucracy and strong lobbies of vested
interests. An overburdened judiciary is adding to
the problem. India has a backlog of more than 31
million cases, many of them related to business
and large infrastructure projects. More judges,
courts and arbitration systems are the need of the
hour.
Labour reforms: With more than half its
population under 35 years of age, employment
generation may well be make or break for
Modi. China successfully turned itself into the
manufacturing hub of the world. India needs to
walk down that path too. However, laws that make
it tough for manufacturers to reduce workforce
when required are a disincentive. ‘Time’ magazine
recently reported that Goldman Sachs estimated
that if India overhauled its labour laws, 110 million
new jobs could be created over 10 years, boosting
GDP growth by 1.2%.
Food inflation and agriculture: Rising prices of
essentials was cited as one of the main causes of
the United Progressive Alliance’s (UPA’s) downfall.
Retail inflation stood at 8.31% at end of the 2013-
14 financial year. Urgent measures are needed
on the supply side, including the weeding out of
intermediaries in the farm-to-plate supply chain.
A hike in procurement prices and investment in
irrigation are vital, as are better storage facilities.
The weather department has predicted a poor
monsoon this year. A fall in supplies could make
food prices soar and make the government lose
Here’s what Modi’s priority list would look like:
face. It might even lead to a loss of confidence in it,
undermining its authority in implementing fast-
track reforms.
Project clearances: The BJP has identified
massive investments in infrastructure – ports,
railways, roads – and has also promised quick
clearances of stalled projects. Modi needs to
deliver on these promises.
Fiscal discipline: Implementing all of the
above without piling up a deficit will require a
deft balancing act. The current account deficit
can be deflated through an aggressive focus on
exports. Financial sector reforms will be required,
especially to curb banks’ non-performing assets
and to introduce a uniform tax structure across
India. While in the Opposition, BJP-ruled state
governments had refused to implement the
uniform Goods and Services Tax. Now, it will
require political adroitness to ensure that non-BJP
governments accept the reforms Modi tries to
implement. Subsidies and social sector schemes
will require an overhaul, too, to reduce wastage and
to ensure against an unmanageable fiscal burden.
Modi rode to office on a wave of euphoria and
high expectations, based on the endorsements
he received as administrator of Gujarat. However,
managing a country will not be as easy. The
challenges listed above will not be as easy to tackle
– not just because of their scale but also because
of the greater intensity of the opposition.
The sobering realities of realpolitik at the national
level will require grit – no matter the number of
seats held – and statesmanship.
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5. The results
Bharatiya Janata Party 282 31
Indian National Congress 44 19.3
All India Anna Dravida Munnetra Kazhagam 37 3.3
Trinamool Congress 34 3.8
Biju Janata Dal 20 1.7
Shiv Sena 18 1.9
Telugu Desam Party 16 2.5
Others 92 36.5
Total 543 100
Vote share (%)Party Seats
Source: eciresults.nic.in
Source: eciresults.nic.in
NDA 336
UPA 60
Alliance Seats
Kenya 2013
Malaysia 2013
South Africa 2014
India 2014
Mexico 2013
US 2012
Pakistan 2013
Bangladesh 2014
% of registered voters
85.9
84.8
73
66.4
63.1
57.5
55
51.4
Voter turnout in recent national elections
Quartz | qz.com Data: Country data, IDEA
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6. The numbers
2004 Anil Basu CPM Arambagh 5.93
2014 Narendra Modi BJP Vadodara 5.70
1989 Ram Vilas Paswan JD Hajipur 5.04
2009 CM Chang NPF Nagaland 4.83
1991* S Mohan Dev INC West Tripura 4.29
Year Candidate Party Constituency Votes
(in lakhs)
Highest margins of victory
* 5.81 lakh was margin of victory for PV Narasimha Rao in the Nandyal bypoll Source: The Times of India
Number of rallies addressed by Narendra Modi
between September 15, 2013, when his campaign
started, and May 10, 2014, when it ended
Number of election-related tweets in 2014
Duration of the voting process. This was the longest
after 1952, when voting was spread across 119 days.
In 1980, the polls were shortest – a mere three
days
The money pumped in by foreign institutional
investors into Indian stock markets after the
results on May 16. This was among the highest
investments this year, taking the year’s total to $6
billion
The distance Modi covered, across 25 states,
during the campaign
Number of voters in Uttar Pradesh, the highest in
the country
Ratio of women in the overall voter turnout. In
eight states and union territories – Puducherry,
Kerala, Manipur, Mizoram, Daman and Diu,
Meghalaya, Goa and Arunachal Pradesh – women
voters outnumbered men
400+ 56 million
35 days
$600 million
300,000 KM
13.4 crore
65%
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7. Who said what
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India has won! Bharat ki vijay! Achhe din
aane wale hai. (India is victorious. Good
days lie ahead.)
Narendra Modi’s tweet proclaiming victory. It was
retweeted more than 66,000 times and favourited more
than 41,000 times – a record in India
The Congress party has done pretty
badly. There is lot for us to think about
and as the VP of the party I hold myself
responsible for what has happened.
Rahul Gandhi, after the defeat
India looks set to be the first BRIC to
rebound. Overall, the BJP victory should
set the stage for a revival of India’s
economic fortunes.
Rajiv Biswas, senior director and chief economist, APAC,
IHS Global Insight
With such a decisive mandate, the new
government is expected to undertake
some bold reforms… The need of the hour
is to bring back business confidence
through swift and decisive policy
making.
Sunil Mittal, chairman, Bharti Group
This is a vote for progress and
liberalisation and against policy
stagnation. We look forward to the
country getting back to solid growth.
Venu Srinivasan, CMD, TVS Motor and Sundaram Clayton
This is a mandate for governance. The
immediate priorities must be to resolve
issues in existing projects, clear pending
receivables to corporates, clarify tax
laws, implement Goods and Services Tax
and take steps to contain inflation.
Chanda Kochar, MD and CEO, ICICI Bank
To young Indians: Celebrate the privilege
of being citizens of a country where
you have freedom of expression and the
power to choose your rulers.
Anand Mahindra, chairman, Mahindra Group
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8. Public Affairs Round-up
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