2015 will be a make-or-break year for Narendra Modi

Modi has, for example, announced some bold policy initiatives (Make in India, Swachh Bharat Abhiyan, et al), and pushed through some modest legislation through parliament (the judges appointments bill, some minor labour law changes, and the small factories bill). Regulations (environment, etc) that can be changed by executive fiat are, however, being changed quickly, and their impact will be considerable in the years to come.

However, operative words in the previous paragraph are “announced” and “modest”. His announcements speak of high vision, but the actual achievements – especially in terms of path-breaking legislation – have been small and far between.

2015 is when Modi will have to decide whether he is willing to risk his party’s political fortunes for something that is even more vital – the revival of India’s economy and the sidelining of the fringe elements of the Sangh who are sure to derail his “development messiah” image.

The problem, as always, is the end of a government’s proverbial “honeymoon” period. Six months is what governments usually get, and Modi probably got that. He might have got an extension, but with the Sangh’s fringe creeping out of the woodwork this month, he will no longer be given the benefit of doubt by his critics – and some friends as well

The last budget by Arun Jaitley was lacklustre, but the next one needs to be truly path-breaking. The next budget is key to reviving animal spirits in the economy, but budgets cannot ensure legislation beyond money bills.

Four or five pieces of legislation have simply got to get passed if the economy is to move beyond the UPA terminal years of 4-5 percent. These includes changes in the growth-retarding Land Acquisition Act, the Insurance Bill, the Goods and Services tax, the Companies Act, among others. If these are not passed in the budget session, they will be permanently held hostage to politics.

Given the government’s weak position in the Rajya Sabha, can Modi really get this done? I believe it can happen if Modi deploys all the levers at his command – sops to state parties, threats to others, some skullduggery – to get them to pass his bills. This may have to include a willingness to go on bended knees to the Congress for help. No price is too much if the cost of failure is the country’s future.

It also means that Modi has to gag and mothball the Sangh’s wild elements till all his legislation is passed, or else they will never happen.

It is a mistake to believe that BJP-ruled states will be over-eager to implement Modi’s policies for the simple reason that each state has its own priorities, and Modi’s rise threatens state-level BJP leaders too. The Sangh will be giving them the muscle to resist Modi.

The only logical way out for Modi is to accept the reality that he can impact only the areas that the centre can directly control – which means the budget, foreign affairs, defence, and the macroeconomy.

This means, even policies like Make in India or Swachh Bharat can work only if the states buy in, and the best Modi can do is offer them money and the centre’s expertise in these areas to enable states to do better. He could start competitions between them, help them share best practices, etc. He can’t do it all himself.

If Modi is really looking for a long-term legacy that will outlive his tenure, whether one term or two, he has to adopt federalism as his main mantra – not just good governance. In fact, he can use the offer of more power to states to get states to sign on to GST and other laws.

The deal could be this: the centre will shift more economic powers and reduce the list of subjects in the concurrent list so that states can legislate on them without Delhi’s interference. All central funds for schemes will be fully grant based, and states will have flexibility to use them where they think it is important.

2015 is make or break for Modi, but he also has to set limits on what he himself attempts to do. He can’t do what only states are equipped to deliver. He has to define success as equipping states to succeed.