Arun Jaitley with Narendra Modi
Prime Minister Narendra Modi with Arun Jaitley. Contradictory data on the economy that institutions under the finance ministry released became a weapon for the opposition to embarrass Prime Minister Modi during the run-up to the election.REUTERS/Anindito Mukherjee

The government's mass 'firing' of 12 allegedly tainted senior Income Tax Department officials sends a clear message of zero tolerance to corruption in Modi 2.0. But, more importantly, observers feel the 'surgical strike' of Nirmala Sitharaman, who was Defence Minister in the previous Cabinet, could have significance beyond then message after succeeding Arun Jaitley as Finance Minister.

Though Prime Minister Narendra Modi romped home with an overwhelming majority for his Bharatiya Janata Party (BJP) in the Lok Sabha elections, he faced major headaches in meeting opposition criticism using government data on the economy. Much of the statistics were provided by departments under the Finance Ministry of Jaitely, often considered number two in the Cabinet. Jaitley was away for medical treatment during some of the most crucial days for the previous government and was not available to defend the government. This may not have gone down well with any ruling party in the thick of the electoral battle.

After the election, Jaitley eventually cited ill-health and made himself unavailable to head the finance ministry, though some quarters suggest that Modi may not have brought him back though he continues to be in Parliament, being a member of the Rajya Sabha or the upper house.

Corporate tax
Prime Minister Narendra Modi with Finance Minister Nirmala Sitharaman, who will present her first budget on July 5.PTI

Modi 1.0 also had trouble getting the Reserve Bank of India (RBI) to tweak the monetary policy to infuse liquidity into the economy that was fast losing steam. Earlier under Manmohan Singh -appointed Raghuram Rajan and later under Jaitley's own pick Urjit Patel, the RBI continued with a cautious approach forcing the government to go to the extreme of criticising its own pick for the post of governor. The government could relax only after installing a former bureaucrat in Shaktikanta Das as governor, who went out of the way to infuse liquidity into the economy by recapitalising public sector banks and three successive repo rate cuts. The RBI is expected to infuse another Rs 40,000 crore of liquidity into the system during this financial year. The government also got its way with the RBI's dividend transfer to the government.

Though PM Modi was set on the backfoot on several occasions during the campaign period, the surgical strike that Indian Air Force carried out on Jaish-e-Mohammed training camps in Balakot after the Pulwama terror attack helped him turn the tide. Even earlier, Sitharaman as defence minister delivered results by defending the government on the Rafale deal to buy multirole fighter jets from France. It is believed that Sitharaman's performance in defending the Modi government landed her the job finance minister.

The action against the top-level Indian Revenue Service (IRS) officials also broadcasts the government's zero tolerance to corruption and professional misconduct. The speed with which Sitharaman has acted with the complete confidence of Prime Minister Modi in his second stint will have a salutary effect across all government departments. It sends the message that Modi 2.0 will not be Modi 1.0 all over again, but an evolution into something more efficient and effective.

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Urjit Patel (left) speaks with Arun Jaitley at a seminar in Mumbai on October 13, 2016. Jaitley turned critical of his pick for head the Reserve Bank of India over monetary policy. Reuters file

Layoffs of this scale have not happened in the past, according to observers, though it is common for a new government in power to shuffle around top officials. That is more common after a change of government. In this case, PM Modi has returned to power with a thumping majority but seems to think some sections of the previous government did not deliver as expected. The change income tax department is amid reports that the Prime Minister's Office will largely remain without a change.

A cross section of the officials that got the sack shows the government does not intend to be lenient to corruption, malpractices, professional misconduct and ambivalence towards procedures and propriety. The list is apparently topped by an official of the joint commissioner rank against whom there are serious complaints of corruption and extortion from businessmen accused of helping self-styled godman Chandraswami, according to a media report. Another official targeted was at the level of commissioner facing serious charges of sexual harassment of two IRS officers of commissioner rank, the report in the Economic Times website says. Yet another Indian Revenue Service (IRS) official get the marching orders for allegedly amassing of unaccounted wealth in the form of movable and immovable assets worth more than Rs 3.27 crore, the report says.