The new refrain from influential elements of the commenting class is that the Narendra Modi-led Bharatiya Janata Party (BJP) government has given up on economic reforms, or that the government is not doing enough.

Perhaps some of these individuals are feeling a distinct sense of buyer’s regret? It was, after all, the same folk who over-hyped Modi the reformer before his and the BJP’s epochal 2014 election victory, comparing him, variously, to iconic economic liberalizers such as Margaret Thatcher and Ronald Reagan. (Regular readers will know that I have generally been sceptical of such claims.)

The fact is that, just as the “Modi as icon of minimum government" trope was over-hyped and unrealistic, and quickly revealed itself to be just that, the “Modi as non-reforming status quo-ist" is equally at odds with the actual reality.

Part of the problem, apart from the curdling of unrealistic expectations, is an issue of terminology. By “economic reform", Anglo-American style commentators have in mind a fairly specific, and fairly narrow, set of policies, which involve drastically rolling back the government’s role in the economy, thus tilting the balance between the market and the state sharply in favour of the former.

By this metric, the first generation of reforms pursued, after 1991, by the P.V. Narasimha Rao and Atal Bihari Vajpayee governments qualify as “genuine" reform—policies such as dismantling the licence-permit-quota Raj, divestment of public sector units (PSUs), loosening controls on foreign trade and investment, and so forth.

This logic suggests that what the Modi government ought to have pursued is the so-called second generation of reforms, those left unfinished by Vajpayee at the time of the BJP’s shock defeat in 2004 and which were never even attempted by the atavistically socialist Congress-led government that ruled from 2004 to 2014.

It is often asserted that these second-generation reforms are of factor markets—land, labour and capital—along with continued divestment of PSUs, rationalization or elimination of remaining distorting subsidies, paring back of large social welfare schemes, and so forth.

As it happens, the Modi government made a valiant, and in the end unsuccessful, attempt to rewrite the land acquisition law, a poisoned chalice left by the departed Congress-led government. The Modi government also has empowered states to reform labour laws, and Rajasthan, in particular, has led the way. Plus, further reforms may be pushed by the centre in the second half of the budget session.

Apart from these, the Modi government has reformed the conduct of monetary policy, is in the process of reforming the financial sector, and has proposed sweeping and potentially game-changing new rules on bankruptcy—all of which would enable the capital markets to function much more efficiently, a crucial ingredient of structural transformation and sustained economic growth.

What Modi most emphatically has not done—and this is the principal gripe of the cheerleaders-turned-naysayers—is to dismantle India’s social welfare and redistributive schemes. Rather, his government is attempting to reduce, if not eliminate, the associated leakage and corruption, by moving towards direct benefit transfers (DBTs) as administered via the much-discussed JAM trinity of Jan Dhan-Aadhaar-Mobile.

Modi should, therefore, be described as a pragmatic modernizer of the role of government in the economy, rather than an ideologically motivated economic reformer in the conventionally defined narrow sense. And this is all of a piece with the economic policies that he pursued in Gujarat, which were chiefly about making government work better, without corruption and undue red tape, not slashing the scope and size of government, as a doctrinaire free marketeer would wish.

In other words, Modi is attempting as prime minister exactly what he did as chief minister, and this is precisely what should have been expected—and, indeed, was correctly predicted, by many perceptive Modi supporters in the social media.

What, therefore, has really got the goat of some commentators is that Modi did not, after all, do what they, in their wisdom, wished and urged him to do. Chagrined perhaps that their idol turned out to have feet of clay, even if this was based on misunderstanding him, they have now pivoted to claiming that there is almost no reform happening—and you can bet that this note will be sounded loudly and repeatedly from now until 2019.

Some of this tribe further up the ante by arguing that Modi is likely to lose the 2019 election if he fails to deliver a larger dose of reforms. Yet, they provide no data-based analysis to support the claim that economic reforms win elections—or lose elections, for that matter. They also discount the reality that Modi is a supremely successful politician, who never lost an election he contested as chief minister, and who defied all odds to lead his party to an overwhelming electoral victory in 2014.

My contrary assumption, therefore, is that Modi has calculated both the type and quantum of economic reforms that he deems politically feasible. I assume, further, he believes that voters will reward his stewardship of the economy in 2019. I am sure Modi cares not a whit if that passes someone’s litmus test of whether he is a reformer or not.

Every fortnight, In the Margins explores the intersection of economics, politics and public policy to help cast light on current affairs.

Comments are welcome at

views@livemint.com. To read Vivek Dehejia’s previous columns, go to www.livemint.com/vivekdehejia

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