Road map for a $5-trn self-reliant economy

The Narendra Modi government has completed the first year of its second term. The 2019 mandate was historic. It is a source of confidence but also throws up challenges. In the first five years, the focus was on structural changes, creating a transparent business ecosystem and a level playing field. Mr Modi made transformative changes in the ecosystem, taking challenges head on.

The first year of the second term was no different. The government has been using technology to build State capacity. It identifies the problem, creating technical solutions, integrating stakeholders into the ecosystem and creating a performance matrix for evaluation.

The Covid-19 crisis has brought into sharp focus the aspect of state capacity. Use of Big Data and Artificial Intelligence (AI) for good governance, policies and welfare programmers is bringing massive improvement in state capacity. India’s earlier digital foray based on Aadhaar is very difference from that of other countries, and has set an example for the world. Indian talent in these areas is being nurtured and leveraged.

It was year when ideology took precedence over other things. Home Minister Amit Shah rightly said that the BJP had not been re-elected to merely govern, but to address India’s long – standing issues. The country was bogged down by certain historical problems. Articles 370, which our founding fathers had envisioned as a temporary measure, had become permanent. We asserted that Jammu and Kashmir was an integral part of India, but on the ground it seemed otherwise. The wavering leadership of earlier times had neither the courage nor the vision to unshielded historical wrongs. The Modi government removed it in one go. Enacting the citizenship Amendment Act, dealing with Rahingya Register or the National Population Register and the National Citizenship Register indicate that India’s national interest is supreme.  

The second budget was a landmark in laying down a road map for a $1 5 trillion economy. The government provided for the entire important sector, such as technological textile, power and renewable energy, and connectivity (airports, seaports and railways). The budget focuses on wealth creation, Pro-business policies and minimal government intervention. It desisted from increasing direct and indirect taxes for resources generation. Announcement of a texspares charter is an important step in bringing accountability in the tax administration. Provision for a statutory texspare’s charter exists only in three other countries worldwide.

The reduction in corporate tax to 25%, continuous decriminalization of the the companies act 2013, protection of of domestic industries buy or not joining the regional comprehensive economic partnership against aur pressure re negotiating free trade agreements with Asian association association of southeast Asian nations countries and increasing import duties in other segments where all to protect industries from the onslaught of unfair global competition.

Covid-19 is a a nonlinear and an uncertain event. The governments intervention are are commensurate with the severity of the global recession. Demand in the economy is is diminishing due to economic uncertainty job loss and financial problems. Therefore the government's focus is on reviving demand. the growth potential is primary primary activities like agriculture and the rural economy can revive the boarder economy.

The deglobalisation Trend which started after the global financial crisis and gained strength after the 2016 us elections, is expected to accelerate. India is also focusing on being self reliant in critical products and areas. The Nirmal Bharat initiatives focusing on reform in all all the factors of production will make our domestic industries competitive rebuilding and catalysing growth in an unpredicted manner. There are challenges for the manufacturing sector such as lowering the interest rate reduction logistic quotes labour reforms ease of compliance contract enforcement and foreign direct investment policy. But meeting them with collective revolver will yield a we saved recovery for India.

Government effect in areas such as the insolvency and bankruptcy code have resulted in reducing this risk premium on interest cost, and successive reductions in the repo rate and reverse repo rate have brought down the prime lending rate. These will help in private capital formation.

The logistics sector’s contributions to gross domestic product is currently 14 15% in India whereas in developed countries it is 9 to 10% meaning that transportation cost for our manufacturing sector are about 14% higher the government has announced a national logistics policy aiming to bring them down by 2022.

Easing compliance requires technological innovations. The government has announced assessment for income tax most compliance required by the reserve Bank of India register of companies and the secretaries and exchange board of India have been computed indirect tax pairs can be made online through the goods and service tax network.

The government had set up a robust startup ecosystem comprising the atal innovation Mission. Atal incubation centers and drinking labs emerging areas like AI and data analysis have massive scope in India. The five pillars of Atma Nirmal Bharat - economy infrastructure technology demography and demand - will create greater opportunity in future. Demand is being revived through in infrastructure spending and a direct stripless through the Pradhan mantri Garib Kalyan Yojana but since we rupees 20 trillion economy package has a la stepped portion further direct infusion of liquidity will have to be looked at by the government.

The first year of the Modi government’s second term has laid the roadmap for the future and we will remark on it with gusto.