Aatamnirbhar Bharat - Opportunities within India "Never waste a Crisis"
Modi government is finishing first year of its 2nd
term. The 2019 mandate was historic. It was after thirty-five years that any
government had been voted back to power with this thumping majority. The
unprecedented mandate gives certain confidence and also poses some challenges.
The five years of our previous governance had given a hope that
the process of structural changes creating a business ecosystem of transparent
and level playing field would bear long-term fruits of equal opportunities for
all. Concentration of wealth, large-scale corruption, and leakages in social
delivery mechanism and gaps in tax collection had become part of history. Modi
Ji never came to manage economy; he made transformative changes in the
ecosystem. Challenges always seemed to be an opportunity and he took the
problems head-on.
The first year of the second term is no less different. The
focus of the Government is more on ‘ease of living’, formalization of economy
and equal opportunities for all.
Building State Capacity: The
Government has always been extensively using technologies to build State
capacity. It identifies the problem, creating technical solutions around,
integrating stakeholders into the ecosystem and creates a performance matrix
for evaluation.
The COVID-19 crisis has brought in sharp focus the aspect of
state capacity. Use of Big Data and Artificial Intelligence (AI) for good
governance, policies and welfare programmes are bringing massive improvement in
state capacity. India’s earlier digital story based on Aadhar is very different
from other countries and has set an example for the world. Indian talent in
these areas is being nurtured and leveraged.
Ideological Precedence: It
was a year when ideology took precedence over other things. Shri Amit Shah
rightly said that we have not been elected for the second term to merely govern
but to address India’s long-standing issues. India was bogged down by certain
historical problems. Article 370, which our constitutional forefathers had
envisioned as a temporary measure, was permanently intriguing us day and night.
We were harping on Jammu and Kashmir being an integral part of India but on the
ground it seemed otherwise. Wavering leadership of earlier times neither had
the courage or the vision to unshackle the historical wrongs. The Modi government
removed it in one go. People wondered, what were we waiting for all these
years? Bringing Citizenship Amendment Act (CAA), dealing with Rohingya infiltrators, or National Population Register and National Citizenship Register are pointing
that India’s national interests are supreme.
The second budget: It was a
landmark in laying a roadmap for five trillion dollar economy. Under the theme
of Economic Development in the 2nd Budget, government provided for all the
important sectors like technological textile centres, power and renewable
energy, connectivity like airports, seaports, and railways. Finance minister
worked out a mechanism for the ambitious plan of investment of Rs 103 lakh
crore under National Infrastructure Pipeline (NIP), identifying 6500 projects
for financing through Center, State and foreign direct investments (FDI).
Government has also opened up its bond markets, in rupee denomination, for investment
from foreign sovereign debt funds, securing against exchange fluctuations. The financial market’s long-pending demand for abolition of dividend distribution
tax (DDT) has been accepted.
The budget focused on wealth creation, pro-business policies, and
minimal government intervention. For resource generation, it has desisted from
increasing direct or indirect taxes. Announcement of Taxpayer’s Rights Charter
within the statute is an important step of bringing accountability in the tax
administration. Provision for statutory taxpayers’ rights exists only in three
other countries worldwide.
RCEP, FTA and Import Duties: Government’s efforts of reduction in corporate taxes to 25
percent, decriminalisation of Company Act 2013, protection of domestic
industries by refusing to sign Regional Comprehensive Economic Partnership
(RCEP) against all domestic and regional pressure, renegotiating and reworking
on Free Trade Agreement (FTA) with ASEAN countries and increasing import duties
in eight segments were all in the direction of protecting industries from
onslaught of unfair global competition.
The Corona Challenge: COVID-19
is a nonlinear and uncertain event. The Government interventions are
commensurate with the severity of the global recession. Demand in the economy
will diminish due to economic uncertainty, job losses and financial problems.
Therefore, the Government’s focus is on reviving demand.
Aatma Nirbhar Bharat: The
trend of deglobalisation, 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. Looking
into this, the economic reforms of Aatma Nirbhar Bharat, focusing on all the
factors of production, will make our domestic industries competitive, rebuild
and catalyze growth in an unprecedented manner. There are certain challenges
for the manufacturing sector in India; like lowering of interest rate,
reduction in logistical cost, labour reforms, ease of compliance, contract enforcement, and FDI policy.
Detailed reforms in these area as follows;
Private Capital formation: Government’s efforts in the areas like Insolvency and
Bankruptcy Code has resulted in reducing risk premium on interest cost and
successive reduction in Repo rate and Reverse Repo rate have brought down prime
lending rate.
National Logistics Policy:
Presently, the logistical sector's contribution to GDP is 14-15 percent in India, whereas
in developed countries, this is about 9-10 percent. Meaning thereby that the transportation
cost for our manufacturing sector is about 40 percent. Government has announced the National Logistics Policy, aiming to bring it down by 2022.
Labour Law Reforms: Understanding
the need of labour reforms, Government has worked on consolidating the existing
multiple labour laws into four Labour Codes, easing compliances and
streamlining welfare. Initiatives like Shram Suvidha, Universal account number,
for real estate industry labour is also helping labour.
Compliance Mechanism: Easing
compliance requires technological innovation. Government has announced, virtual
E-assessment for Income Tax Act. Most of the compliances of RBI, ROC and SEBI
etc. have been computerized. Indirect taxes have been made online through GST
Network. Government has brought manufacturing policy in which entrepreneur has
to fill the Entrepreneur Memorandum (EM) doing away with permission and licensing
in all segments except for four sectors: tobacco, defence, alcohol and
hazardous chemicals.
FDI Policy:
The Central
Government has allowed Foreign Direct Investment (FDI) through the automatic
route in most of the sectors of the Indian economy, with sectoral caps in only
some of them. Current account convertibility is in place; restrictions under
the FEMA and repatriation rules have been relaxed, helping further foreign
direct investment in the domestic manufacturing sector.
Emerging Segments:
The government had set up robust Start-up ecosystem like Atal Innovation Mission,
Atal Incubation Centres and Tinkering Labs. Emerging areas like Artificial
Intelligence (AI), Big Data, and analytics have large scope in the future for
India and government focus on five pillars of Aatma Nirbhar Bharat, including
economy, infrastructure, technology, will create greater opportunities for the
future.
The first year of 2nd term of Modi Government has laid the
roadmap for the future and we will embark on it with full gusto. Watching over
India’s interest and nationalism is at the core of all the policies of our
government and the nation should rest assure that we are in safe hands.
(The writer is National spokesperson of BJP on economic affairs)
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