Cover Story: Politics

AXIS OF POWER 2014

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The three men who rule India
In the beginning, it was bonding over dinner. It was the 90s, and Narendra Modi was a regular visitor to Arun Jaitley’s Naraina home in New Delhi. Jaitley was then a full-time lawyer, and Modi, a BJP secretary and a name with little national resonance. Those were the days when the next-in-line stars of the BJP pantheon, after Atal Bihari Vajpayee and LK Advani, were the late Pramod Mahajan and KN Govindacharya.

They stayed friends when Jaitley joined the Vajpayee’s council of ministers and later when, by a stroke of good luck and perseverance, Modi was chosen the Chief Minister of Gujarat in late 2001. Their friendship endured in the tumultuous years that followed, when Modi was denounced over his alleged complicity in the state’s riots of 2002 and even ostracised by a section of the English-language media.

Jaitley, by then a full-time politician, knew that his friend needed help. He offered Modi help with legal matters as the Gujarat politician grappled with numerous cases. Over the years, they developed a close rapport. In 2007, Modi was re-elected the Chief Minister of Gujarat, reinforcing his image as a charismatic leader of the BJP. He continued to fight cases that sought to link him to the riots, as also various other allegations levelled against him. In 2012, Modi was re-elected yet again. As Gujarat’s Chief Minister for the third time, he had unquestionably arrived; his popularity within the party was on the rise and his appeal among Hindu voters soaring. Jaitley was perhaps the first to realise it was time to pitch Modi as the party’s potential Prime Minister.

Amit Shah and Modi met more than three decades ago. When they met in 1982, Shah, then 17, was an RSS activist and Modi a pracharak in charge of youth activities in Ahmedabad’s Mahanagar area. Modi and Shah took an instant liking to each other. Despite his seniority, Modi confided in young Shah the news of RSS chief Balasaheb Deoras asking him to join the BJP. Their relationship grew thicker in the mid-1990s when Modi fought the powerful Congress in the state inch by inch, starting with control of cooperatives and sports bodies and finally in the electoral arena for leadership of the state. Shah was elected to the state legislative assembly before Modi was, in a 1996 by-election. He has been re-elected many times since. When Modi became Chief Minister, Shah became a minister, and at one point, he held 10 crucial portfolios in the Modi cabinet in Gujarat.

Like Modi, Shah too faced denunciation for his alleged role in ordering the encounter deaths of terrorists who had reportedly plotted to kill Modi. And there were more cases. Though he was then Gujarat’s home minister, the judiciary in 2010 disallowed him from entering the state. For that period, Shah was forced to reside in Delhi, where he became a regular at Jaitley’s East of Kailash home. Jaitley became Shah’s closest ally in his political and legal travails.

About four years later, in September 2014, Jaitley was back in hospital within weeks of his gastric bypass surgery. He had developed a stomach infection and was being treated in a special wing of Delhi’s All India Institute of Medical Services (AIIMS). His friends—Modi, now Prime Minister of India, and Shah, President of the BJP—were there to help.

It was Modi who had suggested that Jaitley listen to the medical recommendation that he have gastric bypass surgery in early September. The Prime Minister took personal interest in his health and spoke to Jaitley’s family to persuade him to go in for an immediate surgery. Even when he was away in the US, the Prime Minister was in constant touch with ministers like Piyush Goyal who had interacted closely with Jaitley’s doctors. After his Madison Square Garden speech, Modi’s first calls were to enquire about Jaitley’s well being. Shah, for his part, kept Jaitley abreast of the goings-on in the party, including his plans to snap ties with the Shiv Sena in Maharashtra.

At the high tea that Modi hosted for members of the NDA at his Race Course Road residence recently, it was Jaitley who the Prime Minister requested to give a speech about various reform initiatives being taken in the coal and oil sectors, apart from finance. “The PM gives a lot of importance to Jaitleyji at such meetings. It is clear to everyone in the cabinet who his favourite is in the Government,” says a BJP minister, adding that Modi takes Jaitley’s words “very seriously”.

The trio still gels well. And with the personalised style of Modi’s election campaign extending to the functioning of the Government, officials suggest that it is a trinity— Modi and his facilitators Jaitley and Shah—that is in power at the Centre. “Modi is the supreme leader. Then you have Amit Shah and Arun Jaitley as lieutenants. There are a few ministers and bureaucrats surrounding each of them. The rest don’t matter at all,” says a senior government official.

Former Finance Secretary Arvind Mayaram has a penchant for pedagogy. A favourite of former Finance Minister P Chidambaram of the UPA, he perhaps thought it courteous to offer tips to young ministers in the BJP- led coalition that came to power in May this year; but it was rather unmindful of him to forget the zero tolerance that the new dispensation had of babus who put on airs and graces, especially those who were UPA darlings. Those who had expected a Modi-led Government keen on reforms to retain a specialist like Mayaram were in for a surprise when he was transferred out of the Ministry, though it was part of a mid-October reshuffle of top bureaucrats that saw some 20 of them assigned new roles. In his place, the NDA brought in Rajiv Mehershi, the former Rajasthan secretary who had steered several dramatic reform initiatives in the state.

While Mayaram paid the price for his presumptuous behaviour, another senior bureaucrat was shunted out in September from a crucial post for his ostentatious displays of personal wealth—his fate was sealed the day he went to meet a senior minister flaunting a Rolex watch, a Montblanc pen and other luxury accessories. Immediately, enquiries were made about how he ran the affairs of his department. It emerged that he was known for a lavish lifestyle, and lived beyond the means of what babus could afford on their pay. This bureaucrat was also found to be quite unpopular among his department colleagues.

“The whole idea of such exercises was to [impart] the Government with hygiene. Any new Government would want to do that, especially when it comes to power after a big electoral victory. And Modi definitely wants to leave a personal touch on governance by cleaning up the system,” says a senior bureaucrat. “Of course, while doing so, it is very possible that favourites of the previous regime fall as the first victims of any such reshuffle,” he adds.

“Modi tends to run a presidential-style government in a parliamentary democracy. He has been at it successfully, thanks to the massive influence he wields in his party and the Government,” confides a senior minister.

In earlier regimes led by the BJP, back when AB Vajpayee was Prime Minister (1998-1999 and 1999-2004), party veteran LK Advani’s authority had rivalled the Prime Minister’s in many fields of goverance. First a formidable home minister, Advani was in 2002 elevated to the rank of India’s Deputy Prime Minister and he held on to that post until the NDA was unseated in 2004.

Now all that seems like a long time ago. This is Modi’s government all the way, and his absolute power has made anti-BJP parties and several of his rivals within the party wary of him. But he has his admirers. After all, it was a highly Modi-centric campaign earlier this year that brought his party to power with such a stunning majority. Written off as an also-ran, the BJP revived its fortunes singularly on the slogan of strong leadership, which was offered as a complete contrast to the ‘weakness’ of a Congress government headed by Manmohan Singh, who had to get his party president Sonia Gandhi’s nod on every crucial policy issue.

Once in power, Modi was seen by people across classes and sectors as a quick decision maker. “What India needs now, more than ever, is centralised decision-making in setting fiscal, monetary, and regulatory policies, but [also] decentralised decision making with regard to creating new businesses and getting the economy going,” says Vijay Govindarajan, Coxe Distinguished Professor at Tuck, Dartmouth.

CENTRALISED LEADERSHIP

What India needs more than anything else at this moment is a centralised leadership that makes the Government a cohesive, well-oiled machine. Modi has the final word on all policy matters and has delegated power to various senior bureaucrats. Nripendra Misra, principal secretary to the Prime Minister, is in charge of looking at infrastructure projects, welfare schemes and project implementation. PK Mishra, Modi’s additional principal secretary, manages government appointments. AK Sharma, joint secretary, coordinates activity between ministries and various government departments. BVR Subramanyam, joint secretary in the PMO, helps steer reformist policies.

“But then, all power lies in one person: that is Modi. Nothing happens without his knowledge,” says a senior government official, emphasising that to a large extent, Modi micromanages various functions of the PMO and various other arms of the Government.

In stark contrast to the Manmohan Singh set-up, where a Sonia Gandhi-led National Advisory Council (NAC) posed an impediment to Singh’s favoured reforms, Modi is the ultimate authority in the NDA. This in itself gives him the power needed to fast-track reforms. Though Modi is still constrained by his party’s lack of a majority in the Upper House of Parliament—which is a pre- requisite for pushing ahead with crucial reform bills— he has started off well, argue economists such as Professor Kunal Sen of Manchester University.

Professor Sen says that the labour reforms initiated recently by Prime Minister Modi were long overdue, and would help revitalise smaller companies. Among others, he has lauded Modi for his move to rid small companies of a so-called ‘License Raj’. “Inspections of these smaller firms had to be taken away from the hands of labour and factory inspectors, and rationalised in such a way that it’s not arbitrary and highly discretionary, as it has been all this while,” says the professor.

Though a few critics have described Modi’s efforts at labour reforms as ‘targeting low-hanging fruit’, the Government’s online interface for labour-regulation compliance and move to randomise inspections is expected to eliminate harassment of small employers at the hands of unscrupulous inspectors who swoop down on factory premises to extract bribes.

Besides, the Centre has also announced the full-fledged deregulation of diesel prices, which means that local prices will move in line with global oil prices. This would slash the Government’s subsidy burden and ease pressure on the fiscal deficit, which could in turn boost the economy. The decision was taken at a time when crude oil prices were falling in international markets, when Reserve Bank of India Governor Raghuram Rajan had appealed to the Government to seize the moment and decontrol diesel prices. Economists such as Arvind Panagariya and Jagdish Bhagwati have long argued that India has to crunch subsidies to maximise its growth potential.

The Modi Government, meanwhile, has also announ- ced policies that would allow private companies to mine and sell coal. The Centre is also preparing to sell a 5 per cent stake in the state-run Oil India Ltd. Some pundits say it is thanks to his stature as his party’s paramount leader that Modi has been able to undertake these policy initiatives. India has long needed laws less cumbersome for business. And the granting of more space to the private sector in India’s economy is sure to raise confidence among investors both in India and overseas.

The BJP has argued that radical reforms need the support of both Houses of Parliament, and with the party winning power in a couple of more states this October, it is only a matter of time that Modi’s party will enjoy a majority in the Rajya Sabha, a good chunk of whose members are set to retire next year.

Be it gradualism or not, Modi has set his sights on some major goals, especially on enhancing the contribution of manufacturing to the country’s economic output. This sector accounted for only 13 per cent of the country’s GDP in 2013, according to GDP data—the corresponding figures are much higher in neighbouring countries such as Pakistan and Bangladesh.

Policy wonks want the Government to take even more steps in the right direction, especially towards resolving pressing labour issues and instituting a countrywide goods and services tax to get rid of the labyrinthine levies imposed on businesses in various states.

FACILITATOR

Arun Jaitley is the Prime Minister’s ‘go-to’ person on all matters of economic importance. It was Modi and Jaitley who interviewed 10 people for the coveted position of Chief Economic Advisor (CEA). The list of those under consideration named Rakesh Mohan, former deputy governor of the RBI, who declined the position, and Columbia University Professor Arvind Panagariya, among several others. It was Arvind Subramanian who was appointed at the end of the exercise. “Modiji values Jaitleyji’s opinion a lot in all such decisions. Any one of them could have been chosen, but finally Modiji gives a lot of weightage to the opinion of his finance minister,” says another BJP leader.

Jaitley also engages closely with the BJP’s point person for economic affairs, Dr Bajranglal Gupta, who endorsed his choice of CEA. Deutsche Bank’s Sanjeev Sanyal, who was also interviewed for the post, didn’t make it because of his age. “However, he is now being groomed for something big. Some of our ministers are good at handpicking talent,” says a Finance Ministry official, referring to Jaitley, who holds two crucial portfolios at the Centre, Finance and Defence.

As opposed to his predecessor AK Antony, who was indecisive and wary of taking decisions to modernise India’s military forces—struggling to make do with Soviet-era weaponry, which puts the lives of soldiers in constant danger—Jaitley has in a short time cleared defence projects worth more than Rs 80,000 crore. The Government has decided to indigenously build six submarines and buy more than 8,000 Israeli anti-tank guided missiles and 12 upgraded Dornier surveillance aircraft. The decisions were taken after a recent meeting of the Defence Acquisition Council that was chaired by Defence Minister Jaitley. The Indian Navy was given preferential treatment in the light of its dire need of capability enhancement.

With hostilities between India and Pakistan now re- surfacing following exchanges of fire across the Line of Control in Kashmir, New Delhi is in a hurry to equip itself to prepare for any escalation.

Despite the tardy economic recovery under UPA’s rule stretching itself into the NDA period, Jaitley has been instrumental in taking some bold moves to undo the damage done by the earlier regime’s misgovernance, insists a senior official. The most notable of these is the Centre’s decision to sack the heads of six public sector banks, following a report by a high-level panel that noted irregularities in the selection process of the chairmen and managing directors of these banks. RBI Governor Raghuram Rajan had not endorsed their candidacies. People close to the matter say it was “loan- pushers” (those who allotted a lot of loans for companies and projects without proper verification) who ended up being made chiefs of these banks. Syndicate Bank chief SK Jain was arrested in August for allegedly accepting a bribe of Rs 50 lakh to enhance the credit limits of a company. Reacting to charges that ‘loan pushers’ were lording over PSU banks, Jaitley had said, “The time has come to be strict with PSU banks. I have urged the Cabinet Secretary and the RBI Governor to examine recent appointments in public sector banks.”

The Government will now devise a new process for the selection of chairmen and managing directors of state- owned banks whenever vacancies arise. Jaitley, meanwhile, is bracing for a full Union budget early next year. This one is expected to have dramatic announcements on further liberalising the economy.

Jaitley, who joined politics as a student leader, mentors young ministers like Dharmendra Pradhan, Nirmala Sitharaman and Goyal. Pradhan, who is from Odisha, was general secretary of the party and previously its poll in-charge for Bihar. As Petroleum Minister, he has an unblemished record so far. He is seen as incorruptible and a workaholic who carries out party activities with gusto also enjoys good ties with BJP President Amit Shah, who sent him recently to Pune to oversee poll preparations ahead of the state elections in Maharashtra.

Meanwhile, Environment Minister Prakash Javadekar has earned a good name thanks to his promptness in clearing projects. “He has brought in some sanity to the ministry,” says a government official. Several corporates have complained that under the UPA regime, this Ministry had become a thorn in their flesh. Many big- ticket projects were denied green clearances by ministers like Jairam Ramesh and Jayanthi Natarajan, sometimes without any reason being cited.

Under the new dispensation, a minister was recently asked to work on her etiquette by seniors after the minister kept the CEO of PepsiCo, Indra Nooyi, waiting. The minister was ticked off for not rising to the occasion in extending courtesies to a highly successful business leader of Indian origin.

While such reprimands are par for the course for junior ministers, some senior ministers like Sushma Swaraj have ended up with smaller turf than they had hoped for. With Modi micromanaging foreign-policy decisions from the PMO, she doesn’t seem to have much leeway. Several positions adopted by the External Affairs Minister, including a stubborn insistence that the proposed BRICS Bank be headquartered in New Delhi, have been rejected by the Prime Minister. Modi has been clear that pragmatism demands that such a bank be based in Shanghai, as China wants, with an Indian as its first chief.

With the Prime Minister hopping from country to country, making the most of such tours, the External Affairs Ministry, like under the UPA, has long lost its stature. Swaraj’s stiff opposition to Modi being the BJP’s candidate for Prime Minister, and later to the party’s choice of Amit Shah as party-in charge of polls in Uttar Pradesh ahead of the General Election, has not helped her endear herself to the power triad. Her strained ties with Jaitley are also well- known. Swaraj recently had to grin and bear it when her choice of Chief Minister, a central leader who didn’t contest the elections for Haryana, was shot down in favour of Manoharlal Khattar. Amit Shah was clear in his choice: the new Chief Minister of a state the BJP had won so emphatically would be of a non-Jat caste, but a unifier of all castes in the state. Khattar, of Punjabi origin, fit the bill.

Union Home Minister Rajnath Singh, too, has many reasons to be upset. The overarching presence of Modi, coupled with that of National Security Advisor Ajit Doval, has made his role in running the internal affairs of the country rather less exciting. Singh, who is seemingly unhappy with Modi’s hands-on style of functioning and because he is not always kept in the loop, pitched hard but unsuccessfully for Captain Abhimanyu to be made Haryana’s Chief Minister. Surprisingly, one of the ministries where the Congress, still smarting under electoral reverses, has some influence is the Home Ministry. Which is why, BJP leaders contend, a senior bureaucrat may be shunted out. This senior official is known to be close to a Congress leader from India’s Northeast who was part of the Narasimha Rao cabinet.

“[Rajnath Singh] seems to have lost much power ever since stepping down as BJP President,” says a person close to the matter. The plight of former BJP President Nitin Gadkari, a union minister from Maharashtra, where the RSS is based, is no different. Gadkari, who is in charge of Rural Development, was not part of the deliberations of the Central Government on the changes planned for the Land Acquisition bill. After the BJP victory in Maharashtra, his supporters had pitched his name for the Chief Minister’s post, but was told by party leaders to back off. Which he did—in next to no time.

THE CONSCIENCE KEEPER

Amit Shah, who replaced Singh, is clearly Modi’s closest ally for troubleshooting within the party and steering elections. No important decision is taken by the Government, either, without his knowledge. For the Prime Minister, Shah plays a role equivalent in the party to what Jaitley does in the Government.

Quite unlike the operational set-up of the UPA, where the PMO was enslaved by the NAC, this time round with the NDA ruling the Centre, the PMO has consolidated power and enlisted the backing of the BJP President and ministers like Jaitley who hold crucial portfolios and mentor younger ministers who preside over key ministries.

Shah, who has picked up the ways of Delhi politics in a miraculously short period, is a 24x7 politician who keeps tabs on what the national capital’s high and mighty do. Jaitley once joked that despite the long years he spent in Delhi as a lawyer-politician, it was Shah, a relative newcomer to Delhi’s urbane style of politics, who actually knows more about what Delhi’s swish class does.

CULTURE AND POWER SHIFT

Business is no longer a dirty word, and Modi sees himself as a chief facilitator of entrepreneurship, small and big alike. But decisions are no longer dictated by corporates. Modi is upfront about his business with businesses. While he has not made any concession for Reliance Industries over the state-set price of gas, he flew down to Mumbai to be part of a philanthropic effort of the Mukesh Ambani family.

Besides, Shah and Modi have brought in a lot of discipline and dread into both the Government and the party. This means politicians have vanished from Page 3 events, especially in Delhi where many BJP politicians were regulars on the party circuit. “They may still be partying hard, but must be partying elsewhere. There is a cultural shift in the party, thanks to these two prominent leaders, Modi and Shah, being vegetarians and teetotallers. The Page 3 types know it only too well that photographs of them partying appearing in newspapers would not be appreciated by these two leaders,” says a Delhi-based BJP activist.

There’s more. Alcoholic beverages are no longer served aboard Air India One, the Prime Minister’s Special Aircraft. Nobody can smoke on the aircraft either. It was Vajpayee’s NSA and chain-smoker Brajesh Mishra who had okayed smoking on the PM’s plane.

Then there are fewer feasts compared with any government in the past. And the feasts are vegetarian. Even the visiting Chinese Xi Jinping and his entourage were served a vegetarian Gujarati dinner. Diwali celebrations by ministers and BJP leaders were a subdued affair this year, as widely noticed.

Meanwhile, people close to the matter say that the Government is looking to introduce an electronic auction of coalmines to rid the country of cronyism. Even the auctions of radio waves (for FM channels and so on) would be held online to eliminate chances of corruption. The UPA regime had come under a cloud over allocation of airwaves as well as coal-mining licences for favouring companies close to Government. UPA deals saw corporates walking away with undue gains. The distribution of coal-mining rights was a howler of a case. The Comptroller and Auditor General (CAG), which reviews government transactions, pegged the loss due to irregularities in the allocation of 2G spectrum to the public at Rs 1.76 trillion and that of coal licences at Rs 1.86 trillion.

The trio of Modi, Jaitley and Shah bring an unlikely mix of quality to the table. Modi and Shah are unforgiving by nature. Jaitley, on the other hand, is urbane, suave and flexible and has friends across the political spectrum.

This is a mutually rewarding brotherhood.

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