Narendra Modi deserves his five years to change things

Prime Minister Narendra Modi has completed a year in office and there has been a lot of angst around the performance of his government during this period. If one were to assess the PM's performance, it should be on the lines of how one would assess the performance of a CEO who has been entrusted with the job of turning around an ailing or struggling company. If anything, some generosity should be shown given the size, constraints and complexity involved in turning around a country.

The closest and most recent case that comes to my mind is that of N. R. Narayana Murthy.  

Murthy came back to Infosys after the company had underperformed for the past five years and with its sheen as Indian IT's bellwether having been dented. There was a lot of angst around it from various stakeholders involved. For the first time, Infosys had to cut its guidance.

When he returned, Murthy focused on sales effectiveness, cost optimisation, improving quality and productivity, and bringing back a meritocratic culture to the organisation.

While all this was happening, he was probably criticised for many things that he never stood for, including nepotism. This also meant that he had to take several tough decisions, including removing some senior people from the organisation, who could be called deadwood. But then this tall leader, unfazed by all that was said and spoken, continued his focus on the task at hand and left the company in better shape and in the hands of a capable CEO.

When a far-sighted leader takes on a task, he will not tackle short-term issues first. Instead he will take up structural issues first to find a long-term solution. While Murthy was executing his plan, Infosys's topline didn't grow much - about 1.7 per cent CAGR between the first quarter of 2013/14 and the first quarter of 2014/15, compared to 3.9 per cent, 3.5 per cent and 3.9 per cent for TCS, HCL and Cognizant. But he was able to boost the morale of employees as well as the faith of customers and shareholders. This is all you can achieve as a leader in the short term but in the long term, he put it back on a strong footing.

With this in the background, let's see what the Modi government has been able to achieve.

 

• Mobilisation of bureaucracy: In the first few months he energised, pushed and demanded action from the bureaucracy for the development of the nation. I have interacted with several secretaries and can write long essays on the changed approach of the bureaucracy.
• India has no shortage of talent: You will get what you seek. He has reached out and got capable people such as Ajit Doval (National Security Advisor), defence minister Manohar Parrikar, railway minister Suresh Prabhu, power minister Piyush Goyal and many more. In less than a year, the PM has been able to bring fiscal deficit under check (equivalent of cost optimisation), which was alarmingly higher earlier. One could argue oil prices helped but the government has also resisted in spending unproductively despite huge pressure to boost growth in the short term. This to me is long-term positive, but short-term negative.
• Financial Inclusion: This is one of the most deep-rooted initiatives that this government has undertaken. This will not only properly channelize the resources required for development domestically, but will also bring in millions of poor into the financial mainstream. The pace of execution on Jan Dhan Yojana should amaze anyone. Corruption had become deep-rooted in India and had brought us shame globally. I applaud the efforts made by the government in conceptualising a policy-led framework, be it in resource allocation or in Finance Commission or anything else.
• Foreign policy: We have all read several jokes about the "Visiting PM", but I am a huge believer in what he is doing. I don't know any government that has achieved so much in one year on the foreign policy front. So many heads of states have never visited India in a year. This shows us the reputation that the Prime Minister has built internationally. His approach of fighting against poverty, terrorism, black money has shown international appeal. For the first time, Indians abroad are feeling proud about India. Whether it was the Iraq hostage situation, the Yemen evacuations or the Nepal earthquake, India stands tall due to the way the government dealt with them. Our approach to disaster management has won accolades globally. It is same system that was once considered ineffective.
• Structural projects: Conceptualising and unveiling of some far reaching structural initiatives, which are currently seen as rhetoric, are, I believe, long-term enablers for India. Swatch Bharat Abhiyan, Make in India, focus on domestic defence manufacturing, rebuilding railways, and the Clean Ganges Project will have a life-changing impact.

Some important issues could have been dealt with a bit of urgency, like the appointment of CEOs of the five large PSU Banks, as they are important and large institutions. Taxation issues, like the recent MAT controversy, could have been handled in a better way. Some of the controversies created by a few ministers and MPs were unwarranted and could have been avoided.

 

But then, no one is perfect and everyone works under certain constraints. So does our Prime Minister.

The reason why Infosys's Murthy could execute his job in an unfazed manner was that he was well-meaning without any intention of staying forever or getting his son into the business. Likewise our PM is a well-meaning leader and our best hope.

Can it be done in a year? Ask the CEOs who are trying to turn around companies for years altogether. While the PM remains unfazed in building his dream India, I have all the patience and tolerance in the world to give him his well-deserved five years to make a difference. So should others.  

The author is CEO, Edelweiss Securities