2021 brings new hope to a world struck by the shock and nightmare of 2020. As millions of lives changed overnight, India stood strong amidst the tide of Covid-19. The yesteryear was tough for Modi Govt 2.0, as it was barely able to bear the storm, but this year brings newer and bigger responsibilities, primarily centered around providing equitable vaccination to all its 1.3bn citizens, but also beyond.
Also, success-driven BJP who has cemented seats in Lok Sabha, is now eyeing West Bengal these coming assembly elections and every political fanboy looks to anticipate the moves made by the Modi-Shah duo. However, there are some root-level issues that Modi Govt should delve upon as they have the potential to cause long-term damage to India, and especially its economy.
Where the Govt did not quite make it
The nation was promised Achhe Din by a party who won elections in 2014, and the Prime Ministerial seat was filled by a new candidate who later became well known for his bold and innovate moves. However, many wrong decisions have prevailed since then.
The economy went into shambles after the pandemic, even though the RBI unleashedRs 3.74 lakh crore of liquidity on the Indian Banking system with an aim to boost lending. However, the move has not served its purpose after untimely waiver to corporates and inflation of revenue projections. Many experts feel that the Govt has resorted to negligible extra budget spending instead of increasing demand.
The other major shock came after the‘Fall of Big bulls’ as the nationsawcontinuous failure of big financial institutions, be it the shadow bank IL&FS, or cooperatives such as PMC bank, Yes Bank private and others like DHFL, Lakshmi Vilas Bank.These instances have marred the image of stability and trust on Asset Management Companies (AMCs), with the Govt dumping the responsibility of their resurrection on SBI and LIC. The ghost of demonetisation still haunts GDP growth and is responsible for the cash crunch in the market. Even RBI data admits it to be a failure in the absence of a stated amount of black money held in form of cash.
Where the Govt fared well
After the thumping victory in 2019 elections, the Modi Govt has devised more decisive measures and daunting responsiveness. One area where it has focused so is thecleanup of Corporates; the Govt has recognized the revenue potential of MSMEs and promoted them wholeheartedly, while using the stick for rich owners of sick industries who were notorious for dumping bad loans on the banking system. This has meant faster filing of charge sheets, pressure of lobbying, tracing siphoned money, and stringent RBI internal investigations of not only investment institutions, but also rating agencies.
The Govt has also been instrumental in providing last mile delivery of benefits, especially to the lower section of the society, with backward districts enjoying greater benefits. TheNDA won Bihar assembly elections even though the state faced a major migrant crisis during the pandemic, proving that Modi’s governance passed the litmus test. Various schemes such as the Ujjwala Yojana (PMUY), Mudra loans, Jeevan Jyoti Beema Yojana (PM-JJBY), Ayushman Bharat, Jan Dhan, Swachh Bharat, Electronic National Agricultural Market (e-NAM), PM-Kisan, etc. have seen success.
India garnered international appreciation for its help during the pandemic raising its position in Medical Diplomacy.After UN Secretary-General’s call to world leaders for uniting during Covid-19, India especially reached out to countries of the Global South. It left no stones unturned by exporting 2.8 million Hydroxychloroquine (HCQ) tablets to 25 affected countries and paracetamol to another 87.
Post Covid, the world order has changed. Citizens are eyeing positive developments in health and well being this year, but without ignoring future developments likely to affect long term growth. Some key areas that PM Modi and his cabinet should look upon are:
Area #1: Economy
Currently, Foreign Institutional Investment (FII) rates in India are less than 6%. In order to stay in tune with emerging global markets, India must raise them to about 30%. This will also ease some pressure off failing industries. The Govt must pass the Major Port Authority Bill to ease regulations and boost exports. It must make the bold move of bringing power tariffs completely under its (Centre’s) control and thus prevent State governments from using them for political gains.
The Govt must also encourage grass root MSMEs in backward regions; they will act as multipliers of growth in these areas and accelerate development. It should bring about the long pending reforms of the Land Acquisition Rehabilitation and Resettlement Act 2013 as this Act in its current form impedes infrastructure and industries from acquiring land and has thus put many projects on hold.
Area #2: Financial Regulation
Deceleration of the economy to an 11-year low due to the pandemic amidst failing banks and lenders does not paint a good picture of the situation ahead. According to N.R. Bhanumurthy, senior economist at the National Institute of Public Finance and Policy, in order to curb the growing problem of bad loans, the Govt must first sort out the regulatory confusion over who actually supervises the banks – the RBI or the Govt. As ideas of cooperates owning banks float around and are criticized in all spheres, the Govt needs more and better supervision mechanisms to track connected lending.
Area #3: Strengthening Urban Local Bodies
Urban Local Bodies (Municipality, Municipal Cooperation, Nagar Panchayat) provide firsthand governance facilities to large populations and empower them through vesting in them management powers for facilitating equitable and sustainable urban transformation. ULBs have the caliber to tackle problems like housing shortage, slums, sanitation issues etc. which plague economic growth. Prime focus on urban planning and bringing innovative strategies into urban governance through Information and Communication Technology (ICT) and real time data collection measures can contribute to livable and safe cities/towns.
Area #4: Geopolitical Dominance
India enters the UN Security Council for the eighth time as a Non-permanent member. It is high time that this turns permanent. The Govt should use this opportunity to strengthen India’s position at UN and outsmart China’s veto move.
Area #5: Cultivating Governance Leaders
Ministers such as Nitin Gadkari and Rajnath Singh are crucial members for PM Modi when it comes to governance at the national level. Regional leaders such as Yogi Adtiyanath (UP) and Himanta Biswa Sarma (Assam) who took upon themselves to manage recent crises and build consensus even with rivals during tough times could also be assets. Governance is difficult to master, and those who master this art are crucial for every government in terms of handling pressure and bringing stability. Unfortunately, currently, there are few of such seasoned and grounded leaders hence fostering more of them should also be both, an immediate and a long-term priority of the Govt.
While the country grapples with various issues as it enters a post-Covid world, these areas are wide-encompassing and can set the ball rolling for various other reforms. It remains to be seen whether the Govt thinks so too.
The views and opinions expressed in the above article belong to the author(s) and do not necessarily represent the official opinion, policy or position of Lokmaanya.