PM Narendra Modi is completing a year in power, and in the last
365 days he has been able to achieve a fair amount.
His
global ‘Make in India’ campaign has set the tone for transforming India
into a global manufacturing hub; his ‘Jan Dhan Yojana’ has taken
financial inclusion to the heart of rural India; his ‘Swachh Bharat Abhiyan’
has put cleanliness on the top of the nation’s agenda; and his ‘Digital India’ initiative has laid the
groundwork for a digital empowered society and knowledge economy.
Importantly, PM Modi has arrested the policy paralysis that
had hit the nation and
brought in a new dynamism in the corridors of power in the past 12 months.
The
government has demonstrated its commitment to convert intent into action
through various measures aimed at opening up the insurance sector, lifting
controls on diesel pricing, bringing transparency
into the allocation process for natural resources such as coal, and addressing the menace of black money, successful auction of telecom spectrum and progress on tax,
land and labour reforms.
The
Government initiatives in the first year have revived the global investors’
confidence in ‘India growth story’. Data from ‘Centre for Strategic
& International Studies’ shows that during last one year (Jan 2014
-2015) U.S.-India bilateral trade rose over 4%, FDI jumped over 40% and FII
inflows soared 400%.
The
positive change in investor sentiment is also an outcome of PM Modi’s efforts
to take the resurgent India story to the global stage. From Washington, D.C. to
Paris and from Tokyo to Sydney, the Prime Minister has travelled extensively to
convince foreign businesses about the immense opportunity of this
billion-strong market. Today, Brand India is shining again.
Tax and Land Reforms
In
order to improve business sentiment and spur investments by domestic as well as
overseas players the government has been trying to bring in key legislation
aimed at tax and land reforms.
The
introduction of the Goods & Services Tax (GST) can be a game-changer. By replacing a plethora of federal and
state taxes, the GST will remove tax distortions and facilitate business,
potentially adding at least 1-2% to GDP.
Similarly,
the Modi government's land bill aims to make the acquisition of land for
infrastructure projects easier by moderating some of the restrictive provisions
in the previous land acquisition law of 2013. This will, in turn, boost
manufacturing and job creation in the country.
Through
the new land bill the government has actually taken an approach that balances
the interests of farmers and the ease of land availability for development
projects. The proposed law increases the likelihood that landowners will be
compensated fairly, not only in terms of their land but also in terms of their
jobs and livelihood. It seeks to not only ensure compulsory employment to one
member of the family affected by the land acquisition but also proposes a
hassle-free grievance redressal mechanism for them.
However,
political partisanship has resulted in these two key pieces of legislation –
the Land acquisition bill and the GST bill - getting stuck in Parliament.
An Inclusive
Agenda
On financial inclusion, especially in rural
areas, the Modi government has made rapid strides with over 125
million accounts having been opened under the
Prime Minister ‘Jan Dhan Yojana’, aggregating deposits of Rs 106
billion. This initiative is not only helping
bring a large swathe of Indians into the financial mainstream but will also
allow the government to directly transfer welfare payments to the intended
beneficiaries.
Not only that, the Narendra Modi government has
in a relatively short period of time launched schemes aimed at providing life
insurance, accident insurance and pension to those outside the social security
net. Here, the ‘Jan Dhan Yojana’ will facilitate collection of monthly
charges and premium for these schemes.
What is unique about these social inclusion
schemes of the Modi government is that they have been carefully engineered to
introduce a greater sense of stakeholder ownership among beneficiaries while
reducing any undue burden on the exchequer.
There are some other small, yet significant steps that the
government has taken towards the goal of ensuring stronger, more inclusive
growth: ‘Adarsh Gram Yojana’ that tasks parliamentarians with
establishing model villages and ‘Skill India’ campaign aimed at
providing training & skill development to 500 million youth of our country
by 2020, covering every village.
In rolling out these initiatives, the Modi government has shown it
understands the aspirations of a New India that wants a hand up, not handouts.
Many Hits, Some Misses
I
believe that while the government has walked the talk in most areas, there are
some where it could and should have done more.
The
biotech industry is worried over the government’s failure to embrace this new
technology and bring in transformative change. Despite assurances from the
government, the meetings of the Genetic Engineering Appraisal Committee (GEAC)
haven’t been happening. These meetings are extremely important to enable field
trials of GM crops, which can raise agricultural productivity. In fact,
biotechnology presents unprecedented opportunities to ensure food security
along with the economic well-being of farmers.
Similarly, the government is yet to provide
the necessary policy push for a cohesive pharma R&D ecosystem for
innovating new drugs. By lending support to the local pharma industry’s
capital investment needs, incentivizing R&D investments and providing
significant tax exemptions for innovation, the government can enable a culture
of ‘Innovate in India.’
Also,
despite an intent within the government for an integrated healthcare system to
ensure affordable and accessible healthcare for all, the allocations to healthcare in the last two budgets have been anything
but encouraging.
Conclusion
Overall,
the Narendra Modi government has covered a fair deal of ground in a year’s
time. The pace and intensity of reforms may have disappointed sections of India
Inc., but then one must factor structural bureaucratic challenges and the
onslaught of fierce political opposition.
One
must also keep in mind that a lot of unrealistic expectations were built around
PM Modi’s ability to fix the Indian economy overnight. Which is why the NDA’s achievements in the first year are being measured
against the same yardstick that is typically reserved for governments that have
served a full term. This is unfair. This also means that the government
needs to do a better job at managing expectations.
India Inc., on its part, needs to be patient with the Modi
government’s long-term roadmap of incremental reform. I am aware of significant
behind-the-scenes activity to improve the ease of
doing business in the country. A greater engagement between the
government and the private sector will ensure that the policies that are
unveiled are truly enabling in nature.
I
am also glad that PM Modi has announced a crack team
to ensure that several big-ticket infrastructure projects can now get off the
ground, thus supporting the development agenda for the country.
I believe it is time that the Government, Opposition and Corporate
India are aligned in the national interest and pursue the development agenda
for India which will help in scripting a new economic growth story for our
country.
No comments:
Post a Comment