How Modi is accelerating India’s growth

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India Prime Minister Shri Narendra Modi chairing the ICT-based, multi-modal platform for Pro-Active Governance and Timely Implementation, in New Delhi on July 12, 2017.

By Caroline Grimont

(Sponsor Content)

The Narendra Modi government has made enormous strides in transforming project execution in India, enhancing the momentum of country’s growth.

Modi’s success is largely premised on his principle of “Minimum Government, Maximum Governance,” which has been the Prime Minister’s mantra for transforming project execution in India.[i]

Shortly after assuming power, Modi announced that India’s government systems suffered from two weaknesses: “They are complex. And they are slow.” He noted that this had to be changed and that government systems must be sharp, effective, fast and flexible.[ii]

Government has no business being in business

To do this, India needed a policy-driven state, with simplified processes in which the government needed to focus upon the things that are required of the state, which must in turn deliver on the things it sets out to do. He emphasized that government “has no business to be in business” and must instead focus on policy formulation and execution.” [iii]

Modi also noted that in 20 years of liberalization the government has not changed “its command-and-control mindset,”[iv] which is exactly what he set out to do in transforming project execution in India.

An earlier McKinsey report identified what Modi referred to. It stated: “Inefficiencies in implementing infrastructure projects in India occur at all stages. This includes awarding projects as per plan targets, securing financial closure, and executing projects within cost and time.”[v]

Cutting through red tape

In accelerating project execution Modi has personally taken on India’s notorious red tape to clear tens of billions of dollars in stalled public projects, hoping that his hands-on intervention can bend a vast, dysfunctional bureaucracy.

He has focused on improving governance and introducing changes to legislations, rules and procedures wherever necessary to make processes more efficient; and cut down on multiple clearances those choke investment.

To keep track of project execution Modi holds a meeting with top state and central bureaucrats once a month, to check why projects have not got off the ground: leading to the revival of tens of billion dollars in value of central government and state projects in a wide range of areas.[vi]

Central and state bureaucrats are linked by video to Modi’s office for the meeting, usually held on the fourth Wednesday of each month. They are typically from the finance, law, land, environment, transport and energy ministries whose clearances are needed for many projects. [vii]

The agenda is set the previous week and usually has about a dozen stalled projects, public grievances and other governance issues.

By empowering government officials to execute on project implementation and managing the process on a monthly basis, Modi has effectively been able to remove the policy paralysis that has plagued India for decades.

“Modi has won plaudits for the initiative that has chipped away at a $150 billion backlog of planned roads, ports, railways, power stations and other projects.”[viii]

He has also taken major steps to eliminate corruption and transparency that have in the past paralyzed project execution.

Bringing transparency to big business

In an interview with Bloomberg, Mr. Anand Mahindra, CEO of the Mahindra Group was quoted thus: “What I give him (Modi) 100% marks for: He’s bringing in transparency in big businesses. For companies like me (mine), this is an unbelievable time to do business because companies like us, who do business the right way, are finally seeing enormous transparency and no transaction costs.”

Evidently, making project execution more efficient and transparent bodes well for India’s growth which is already the fastest growing in the world.

[i] Prime Minister Narenda Modi’s Address to Economic Times Global Business Summit, January 2015

[ii] ibid

[iii] ibid

[iv] ibid

[v] Building India: Accelerating Infrastructure Projects, McKinsey & Company, August 2009

[vi] http://in.reuters.com/article/india-government-modi-idINKCN0SN2UI20151030

[vii] ibid

[viii] Ibid

Caroline Grimont is the SVP, Sales and Marketing at Excel Funds Management Inc. She has more than 23 years of domestic and international experience in marketing, sales and business development. Prior to joining Excel Funds, she was Head of Business Development with OANDA Corporation, one of the world’s leading foreign exchange trading platforms. She holds a Master’s degree from the National University of Singapore in International Economics and a Bachelor of Finance (first class honors), University College Dublin.Twitter: @c_grimont

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