By Salil Mathur (A consultant with IndusGuru)
As the nation moved closer to the general elections, the economists of political leanings churned out fervent essays, which were largely rhetorical and made little impression or were not even read. Through the 1990s and early 2000s the economists and planners worked strenuously to present Congress as the only credible party that could deliver welfare and the doles and loan wavers which were designed to show the ‘family” in a benevolent light.
All that changed in 2014 as Modi’s Swach Bharat, Jan Dhan Yojna, Auyushman Bharat or Awash Yojna and some more such schemes were directed towards sustainable social up-liftment. Modi’s four years in office also were largely pro-reforms marked by breakthrough tax reforms in the form of GST- a bold move to demonetise five hundred and thousand rupee notes. The move in many ways succeeded in pushing unaccounted money into formal economy. Modi had to put up with harsh criticism for creating an artificial cash crunch in the economy that may hurt demand and slow down a recovery and he withstood a sinister attempt to demonise him by so-called economists. To cut the chase and come to the point, these are the reforms that will be the reagents of the growth and expectation of Modi 2.0 government.
With a stronger mandate and an opposition with lesser teeth, Modi will be under tremendous pressure like no other government in the past, to deliver economic reform and reboot the economy with measurable results. Unlike the first term, the strategy in the second term should reignite growth with prudence as a priority. We expect a mix of rural reflationary policies, infrastructure spending, tax simplification and social investment. Here are a few expectations:
- Un-employment Issue is real and it cannot be ignored or clarified by pointing to growth in the self-employed sector. No one should make light of this issue because creation of well-paid jobs for this vast workforce is necessary for transforming India’s economy. It goes without a debate that job creation is dependent on reforms in all areas of the economy.
- Disinvestment or monetising of government assets will generate funds for public schemes. The government needs to quickly plan a big selloff programme. The main priority should be to exit all non-strategic PSUs and shut the loss-making ones. Employees of such organisations could be given voluntary retirement schemes.
- Reforms in Banking are a crying need. The idea of few big banks should materialise under the Modi 2.0 government. Small banks that are not viable should be merged with big banks.
- Insolvency and Bankruptcy Code (IBC) consolidates all laws of insolvency and bankruptcy to tackle Non-Performing Assets – a problem that has been pulling the Indian economy down for years. The law contains defaulting businesspersons from operating according to their whims and fancies. It’s also a boon to the merger and acquisition industry by making distressed assets available for sale to potential buyers. Business continuity is ensured with possibilities of expansion. However, IBC does need further fine tuning to cut down on resolution time. The laws need to be more stringent and quicker disposal by judiciary is vital or else defaulters will be at an advantage.
- GST simplification by having only two slabs and doing away with the top rate of 28%.
- Smart City needs a major push otherwise it may slip off the priority list.
- The spectrum roadmap on 5G – we believe that some planning is going on to allocate spectrum which could see the implementation of 5G. 5G will impact business growth immensely.
- Ease-of-doing-business related initiatives as most sectors of our economy are now open for FDI. More than 90 per cent approvals have been put on the automatic route. Such measures have propelled higher inflow of FDIs but a lot needs to be done in reducing bureaucratic indifference and lethargy.
- Reviving Manufacturing – without a deep focus on programmes like “Make in India”, “Startup India” and “Skill India” the manufacturing is unlikely go anywhere. However, long term strategy seems to be well in place and a success in manufacturing story will go a long way in job creation too.
- Education has always missed being in top priority zone. I believe Modi government has plans to unveil new policy in education that plans to fill five hundred thousand vacancies in Institutions of Eminence. The importance of quality faculty cannot be over emphasized. Quality research can only drive innovation in industry. A plan to add ten more Institution of Eminence should also at the same time fill in quality teachers.
- Labour Reforms: steps should be taken to implement the recommendations of the Second National Commission on Labour. Formulating four labour codes on wages; industrial relations; social security and welfare; and occupational safety, health and working conditions by amalgamating, simplifying, and rationalising the relevant provisions of the existing central labour laws are some of steps that cannot be delayed.
- Agrarian distress is an elephant in the room and needs out of the box solutions. The government is already focused on doubling farmer’s income by rural centric programs like direct income support; also, MSP hikes are surely going to ease the farmer’s distress.
- Job creation for youth
- Develop credibility of institutions
- Drive agri reforms
- Usher in social harmony
- Improve talent deficit in government
- Thrust on manufacturing and infrastructure
Above all, he now deserves a short break!
In short, the industry expectations will compel Modi 2.0 to deliver on its promises and will permit no room for dilly dalling. It will be a good thing to have a government on its toes. We use a message from an industry leader Harsh Goenka, which nicely sums the story of expectations: Modi might agree with all the suggestions except for the suggestion of a short break.
What Modi 2.0 should now do:
- Job creation for youth
- Develop credibility of institutions
- Drive agri reforms
- Usher in social harmony
- Improve talent deficit in government
- Thrust on manufacturing and infrastructure
Above all, he now deserves a short break!
#Modi2.0 #Government #IBC #jobcreation #Economy #industryexpectations
The views, thoughts, and opinions expressed in the text belong solely to the author and do not reflect the position or official policy of IndusGuru Network Partners