With some help from the predecessor

In assessing Narendra Modi's success with many schemes, Manmohan Singh's fundamental work should not be ignored

In about three months, Narendra Modi will enter the 10th year of his prime ministership. At the end of May 2024, his tenure as prime minister would become just about as long as that of Manmohan Singh, who headed the United Progressive Alliance (UPA) government for 10 years — from 2004 to 2014. Comparisons are bound to be made between the two prime ministers on the way they handled the Indian economy and the nature of outcomes they secured for the country.

Indeed, comparisons between the pace of India’s economic growth and other economic parameters during the 10-year tenures of the two prime ministers are already being made. But there is another way to compare their regimes by evaluating how effectively their policies impacted the common man. That is possible through an assessment of the correlation between such policy instruments used or introduced by the two prime ministers during their respective tenures.

Let us begin with Mr Modi’s tenure. If we exclude the misadventure of demonetisation, there are at least four major initiatives for which the Modi government would be remembered. The massive spread and penetration of banking among the masses has significantly improved financial access for the poor under the Modi regime. Union Finance Minister Nirmala Sitharaman announced in her latest Budget that 478 million bank accounts had so far been opened under the PM Jan Dhan Yojana, which was launched in August 2014 and helped unbanked Indians open a zero-balance account in a bank.

A bigger initiative of the Modi government was in the area of financial technology. In August 2016, the Unified Payments Interface, or UPI, made its debut, which powered multiple bank accounts into a single mobile application, merged several banking features in this device, and facilitated seamless fund routing and merchant payments under one umbrella. The UPI network processed 74 billion transactions valued at Rs 126 trillion during 2021-22 and in the current year so far it is 68 billion, valued at Rs 113 trillion. Not surprisingly, India’s fintech adoption rate is now estimated at 87 per cent, compared to the global average of 64 per cent.

The Ujjwala Yojana, launched by Mr Modi in May 2016, to provide free cooking gas connection to economically underprivileged families across the country, is yet another initiative that made a huge impact on the common man. By 2021, the coverage of the relatively clean cooking fuel for people increased from 62 per cent in 2016 to over 99 per cent. Almost 90 million families have been covered under this scheme so far.

Within weeks of the outbreak of Covid-19, the Modi government launched a free food ration scheme for over 800 million people. That was Mr Modi’s fourth big initiative. The implementation of this scheme was a huge relief for the poor people, who benefited from the supply of wheat, rice, and pulses to meet their basic needs at a time when the pandemic and the economic lockdown had dealt a big blow to their livelihood. The PM Garib Kalyan Anna Yojana ran from April 2020 to December 2022. Similarly, the Modi government used the Mahatma Gandhi National Rural Employment Guarantee (MGNREG) Act to pay minimum wages to a large number of poor people by creating jobs in villages during the pandemic.

There are many other initiatives of the Modi government like the housing scheme, which has directly improved the living standards of millions of people across the country. But there was also demonetisation or the annulment of 86 per cent of the currency in circulation, which made a hugely adverse impact on the lives of the people. The disruption caused by demonetisation was so big that now nobody in the Modi government even talks about the so-called benefits that were claimed when it was announced in November 2016. The launch of goods and services tax (GST) held out great promise for the ease of doing business or even for paying taxes. While GST collection is growing, a lot more reforms in the new tax system are needed to make it the promised good and simple tax.

What schemes did Dr Singh launch during his regime to positively touch the lives of poor people? Launching the biometrics-based identity scheme through an Aadhaar card was certainly Dr Singh’s biggest initiative. The scheme was launched in 2009 and the first Aadhaar card was issued in 2010. By 2014, over 650 million identity cards were issued by the government. The Modi government gave the scheme a big push and provided legal backing to Aadhaar. The number of Aadhaar cards issued so far has risen to over 1.3 billion.

The second big policy instrument announced by Dr Singh was the launch of the MGNREG scheme in 2005 to provide social security to people without job in villages. The scheme was criticised by many economists and policy planners. But the Singh government persisted with the scheme and provided it funds in each of its Budgets till 2014. There were doubts if the Modi government would continue with it, but, surprising all, it went ahead with its implementation along with adequate allocations of funds in its Budgets. And after the Covid-19 outbreak, this scheme became one of the key instruments of the Modi government to address rural joblessness after the pandemic.

Illustration: Binay Sinha

There was yet another major scheme that Dr Singh had introduced, and this was the National Food Security Act (NFSA) of 2013, just a year before his government was voted out in the general elections of 2014. This piece of legislation entitled up to 75 per cent of India’s rural population and 50 per cent of the urban population to receive subsidised food grain under the public distribution system. An estimated 800 million Indians were covered under this scheme.

It is quite remarkable that the policy instruments that were introduced by Dr Singh laid the foundations for Mr Modi to roll out his schemes. Without the basic platform and technology for rolling out the Aadhaar scheme, the Modi government could not have made much progress with most of its schemes for the common man, including the fintech revolution using the UPI payments system. If the MGNREGA was not in place by the time the Covid-19 pandemic threatened the livelihood of poor people, Mr Modi’s scheme to help the common man would not have made the impact that it eventually did. Even the scheme for providing food grain during the pandemic was helped by the NFSA, a creation of the Singh government.

In assessing the governments of Mr Modi and Dr Singh, it would be useful to remember that both believed in crafting schemes to help the common man and the former used quite effectively the instruments introduced by the latter.