Key reforms government will aim at if it is re-elected
4 min read • Updated: January 19, 2024, 5:39 PM
The current government has brought about a series of reforms that have unlocked economic growth. However, for an economy as big and complex as India’s, there is always more to do. This means that the government will have its hands full if it is re-elected. The reform agenda going forward, though, will be continuing to iterate on current changes rather than target big bold new steps.
In the two terms of the current dispensation, several reforms have been initiated and taken forward. These include the roll-out and implementation of the Goods and Services Tax (GST), Insolvency and Bankruptcy Code, PM Jan Dhan Yojana, Swachh Bharat Abhiyan, Ayushman Bharat Yojana, National Education Policy, Production-Linked Incentive (PLI) scheme aimed at boosting the government’s Make in India policy.
In fact, in most sectors of the economy, the government has rolled out reforms aimed at streamlining policy, increasing the ease of doing business, and pushing India from the Emerging Economy status to that of an Advanced Economy.
Implementation of the Goods and Services Tax (GST) has been one of the big achievements of this government. In the next phase, the new government will have to grapple with issues like the conflicting rulings by the advanced ruling authorities of different states, the non-constitution of an appellate tribunal, and bringing petrol and diesel under its ambit.
Besides, the government has stated its intention to streamline GST rates from the current 5-tier structure of 0-5-12-18-28 to something simpler.
Ease of doing business
One of the biggest priorities when the government was first formed was the improvement in ease of doing business.
Between 2014 and 2019, India’s rank on the World Bank’s Ease of Doing Business index jumped from 142 to 63. This was thanks to digital transformation, regulatory reforms, and tax and labour reforms, improvement in real estate approvals among other steps.
And while the World Bank stopped publishing Ease of Doing Business rankings a few years ago, the government will continue to make things easier on the doing-business front.
Financial sector reforms
The government started by cleaning up the books of public sector banks that were riddled with bad loans. After re-capitalising banks and organising a mega-merger of 27 public sector banks into 12, the government wants to privatise at least a few. Besides, digitisation, UPI and fintechs will be the factors to push to attain greater financial inclusion and growth in the country.
Production-linked incentive schemes
The government’s PLI initiative has brought it mixed reviews. It is an initiative by the government aimed at boosting domestic production in certain sectors. The scheme covers 14 sectors. The aim is to increase India’s strengths in the manufacturing sector and lure global manufacturing from countries like China to India. The success of manufacturing Apple Inc’s iPhones in India is a case in point. Exports of Made in India iPhones have touched ₹ 1 lakh crore. Going forward, the new government is expected to bring more sectors into the PLI fold and provide more incentives.
Social welfare reforms
Targeted social welfare schemes like the Pradhan Mantri Jan Arogya Yojana (PMJAY) and Pradhan Mantri Mudra Yojana are helping uplift marginalised communities, and eradicate poverty. If India has to be brought up to the level of a middle-class economy, the new government will have to lend greater focus to programs such as these to drive the inclusion of marginalised communities.
And while the government has achieved significant strides in many areas, it had to abort two key reforms due to political pressures: land and agriculture reforms. In a third term, the government may be keen to figure out a way to achieve political consensus to implement the two pending reforms, both of which would help unlock value in a big way.
The current government's reforms list is long and impressive. However, to continue to achieve 7-8% GDP growth, which will allow India to rapidly move towards a developed economy status, many more reforms will be needed.
The government has shown its will to make tough decisions and using technology to drive decisions with speed and transparency. And a third term for the current dispensation may see a lot more of such decisions come to the fore.