Buoyed by the landslide mandate to power at the Centre for the second consecutive term, the National Democratic Alliance (NDA) Government is now gearing up with renewed vigour to put the Indian economy on the trajectory of higher growth to meet the twin objectives of generating employment and improving the standards of living of the people at large.
Prime Minister NarendraModi has made it abundantly clear that his government is determined to undertake reforms in wide range of economic activities to boost growth momentum. At an interactive meeting with a group of economists and experts organized by the NITIAayog, he highlighted the need to make Indian economy competitive to woo Foreign Direct Investment (FDI).
This interactive meeting with experts drawn from areas such as labour and employment, farm sector, health and education assumes significance as it has been held in run up to the presentation of the first full Budget of the new government slated for July 5.
Significantly, attendees were split into five groups to suggest breakthrough and innovative ideas on employment, agriculture and water resources, exports, education and health. The prime objective behind this exercise is to work out an effective road map for sustaining high growth momentum and employment generation.
Incidentally the Modi government during its first term faced the gigantic task of boosting the economic growth. It had to toil hard and introduced series of measures to accelerate the pace of growth and earned the distinction of enabling the Indian economy to emerge as the fastest growing economy of the world.
Now, once again as the NDA government begins its second term, it faces the immediate challenge of putting the economy on a sustainable growth path, which holds key to the problems of unemployment and revival of demand cycle.
There is now an overwhelming expectation that to spur the growth, the forthcoming Budget will unveil the government’s plan to step up consumption and investment in growth-boosting sectors such as infrastructure.
The health of banks will be a key focus area for the government, which in its previous stint had taken a number of steps, including enactment of the Insolvency and Bankruptcy Code (IBC) to nurse them back to health. Already the results are encouraging and the new Finance Minister is expected to build on the success and strengthen the process to get the wheels of lending roaring again.
While the country’s economy is projected to grow around 7% and maintain its pole position as the world’s fastest-growing major economy, the Indian government is expected to unleash steps to revive growth in the major sectors facing a slowdown.
Experts suggest that the government will have to go ahead aggressively with second generation economic reforms. It will have to pursue the ongoing PSU Disinvestment, further simplify GST, ease credit flow to industries, reduce import tariffs and leverage export opportunities thrown up by the US-China trade war.
It is being felt that that if the government sincerely wants to leave its imprint on the ongoing exercise to put the Indian economy among the top five slots of the global economy.It will have to unveil innovative big bang reforms. India’s economic reforms in 1991 focused on enhancing competition in the market for products by opening it up to the private sector.
The next stage of reforms needs to play out in the market for factors of production such as land, labour and capital. Government is now increasingly realizing unless these areas see reforms, Indian manufacturing and services are unlikely to be globally competitive.
Experts point out that unless the land market is unlocked, Indian manufacturers will be unable to scale up to global levels. This must be complemented by imparting flexibility in the labour market, which will pave the way for more labour intensive manufacturing and jobs. Agriculture is another area crying out for a market-oriented policy.
Aggressive pursuit of big bang reforms in wide spectrum of economy will boost not only growth, it will also open up innumerable opportunities for job creation.
Script: Aditya Raj Das, Senior Economic Journalist