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The Big Picture – Options for government on economic & policy reforms

The Big Picture – Options for government on economic & policy reforms

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Summary:

The union government has planned to bring in slew of reform measures to boost the economy, ensure ease of doing business and deliver its election promise. Among the measures on the cards are – single window clearance for multi storeyed building, the monetary policy framework, a new bankruptcy law and subsidy reforms. Now the challenge before the government is to bring about a political and public consensus on this matter.

It is widely accepted that the country now is in need of medium and long term reform measures. And such reforms need legislative work from the parliament. This is also what the investors are looking at. They have always wanted a strong backing from the parliament. But, some bills like real estate bill, GST bill are held up in the parliament due to lack of consensus. The opposition parties are demanding discussions on these bills. It is now up to the government to bring them on to the table for discussions. Other sectors like agriculture and distressed PSUs do not require parliament sanctions, as they are not politically a problem part. They just require some administrative actions.

It is also being alleged that the government is not very keen on building a public consensus. It should be noted that in a democracy it is difficult to build full consensus on economic issues. Since, the mandate given to the government is economic development it has to take tough decisions on some occasions brushing aside politically motivated oppositions. The Government has been confronted by a legislative logjam in the Lower House of Parliament and in the Upper House the BJP and its allies do not have a majority. However, some administrative actions could help in easing the environment, at least in the short run. The government will also have to move on major issues such as land acquisition, investment in human capital, the lack of regulatory consistency across states, improve manufacturing and agricultural productivity and, above all, plug India’s infrastructure deficit. Time and cost overruns have been a major bane for infrastructure projects.

The ‘Make in India’ campaign is as much an invitation to domestic and foreign companies as a promise to rectify everything that has kept the country almost at the bottom — ranking 130 on the World Bank’s ‘ease of doing business’ index. It may just be the time to be more courageous and to press the foot on the growth accelerator. While the latest measures are welcome, it is about time India found itself a way of decoupling reforms and policy-making from the electoral calendar.