2019’s general election was special in many ways, after almost 50 years any government came back to power with such majority. In the parliamentarian democracy people voted on the pattern of presidential form of Government. Once again we have proved that in India, election and good economy has no connection. Although rural distress, unemployment, lack of infrastructure, slow growth have always been the talk of the town before and after the election. But in the elections voting outcomes always be different then it is perceived, on the basis of the economic success of previous Government. Narshingma Rao and Atal Bihari are two best examples. People of India voted out the Government who was responsible for historic 1991’s economic reforms. Similarly people also voted out Late Atal Bihari’s Government which has many credits of economic success on its name.
Perhaps this is the reason both the Government and opposition parties kept all economic worries aside. People also forgot rising rate of unemployment, muted earnings, undercapitalized NBFC’s with poor credit disbursement and covering up of real issues with dubious statistics. The country has suffered after effect of demonetization and teething effect of GST for almost 2 years but all these issues could not become the hot topics of discussion of election campaign. India voted on emotional, religious and security related issues, yet we all know the importanc of a good economic health for any country like India. Modi’s come-back reverberated with his old slogan of 2104 “sabka saath, sabka vikas” which can be translated as ‘inclusion of all, in economic progress’.
In case of India many times macroeconomic indicators do not reflect the ground reality for every state or some region or a group of people. Therefore rather than discussing the key fundamental of macroeconomics which hardly relates to a common man, we are discussing easily relatable micros. All a common man wants is a good job or a profitable business, proper infrastructure, cheap credits and safe investment avenues. No matter what the GDP numbers are saying he just want to feel secure about his own business and not about fiscal deficit of the country.
So in corollary the expectations from this Modi Government is also very basic. To provide with good earning opportunities in jobs or in business Government should start from they left, but this time with more thrust. Some extra attention is required to improve the business climate of India so it can attract investors who are looking for new avenues amidst of US, China trade war. Although India had improved a lot in ‘ease of doing business’ in Modi’s last term, India jumped to 77th rank from 131. But internal shocks of demonetization, complex GST and high interest rate averse the investors. This economic upheaval also slowed internal demand and sluggish growth which turns into job-loss and investment aversion from inside of the country. We must not belittle domestic investment as 80% of investment comes from domestic investors. As the dust of demonetization has settled now a simplified GST in pipeline and a moderate interest rate regime will do some help in coming years. Although frequent change in tax structure generally create disruption in market and its adaptation takes time. Eventually this time Government has to be extra cautious about simplification. Hopefully the new Direct Tax Code also add some more euphoria to the market and raise demand if good exemptions given under it.
A good banking system is like engine of growth for a country. Moving ahead with idea of recapitalization of banks and privatization of loss making and non strategic public sector bank can proved to be a great stimulus to economy. Easy and cheap credits can compensate the loss of growing unemployment in the country. Being it PM Modi’s own idea for which he also brought Mudra Loan scheme, he may put special emphasis on the idea this time.
Major reforms in agriculture sector is expected by all analyst as doubling farm income is priority on Modi’s agenda. Hopefully this Government will be more focused on agri-business by providing better access to technology, awareness of schemes and good Infrastructure to increase shelf life of produce. A restructuring in APMC act is also expected to make direct market more functional in agriculture. On-spot value addition to the agricultural produce can be a revolutionary idea for Indian farm business. It can empower farmer more than any other subsidy can do. There is also a urgent need of increasing per hectare productivity because increasing MSP is not a permanent solution. So cheap procurement of better seeds and better irrigation facility should be the top priority of Government.
One thing that is commonly accepted by all Indian after seeing Modi’s five year in centre that he is capable of doing what he determines to, Swachh Bharat is a live example. Although this Government will not have too much room in fiscal deficit for increasing public expenditure but there is lot of space for disinvestment in non-strategic PSUs. Modi may face some fiscal constraints but he has a good intent and also lot of support both from inside and outside of parliament. Conclusively Modi’s 2nd term can be historic for India’s progress.
Perhaps this is the reason both the Government and opposition parties kept all economic worries aside. People also forgot rising rate of unemployment, muted earnings, undercapitalized NBFC’s with poor credit disbursement and covering up of real issues with dubious statistics. The country has suffered after effect of demonetization and teething effect of GST for almost 2 years but all these issues could not become the hot topics of discussion of election campaign. India voted on emotional, religious and security related issues, yet we all know the importanc of a good economic health for any country like India. Modi’s come-back reverberated with his old slogan of 2104 “sabka saath, sabka vikas” which can be translated as ‘inclusion of all, in economic progress’.
In case of India many times macroeconomic indicators do not reflect the ground reality for every state or some region or a group of people. Therefore rather than discussing the key fundamental of macroeconomics which hardly relates to a common man, we are discussing easily relatable micros. All a common man wants is a good job or a profitable business, proper infrastructure, cheap credits and safe investment avenues. No matter what the GDP numbers are saying he just want to feel secure about his own business and not about fiscal deficit of the country.
So in corollary the expectations from this Modi Government is also very basic. To provide with good earning opportunities in jobs or in business Government should start from they left, but this time with more thrust. Some extra attention is required to improve the business climate of India so it can attract investors who are looking for new avenues amidst of US, China trade war. Although India had improved a lot in ‘ease of doing business’ in Modi’s last term, India jumped to 77th rank from 131. But internal shocks of demonetization, complex GST and high interest rate averse the investors. This economic upheaval also slowed internal demand and sluggish growth which turns into job-loss and investment aversion from inside of the country. We must not belittle domestic investment as 80% of investment comes from domestic investors. As the dust of demonetization has settled now a simplified GST in pipeline and a moderate interest rate regime will do some help in coming years. Although frequent change in tax structure generally create disruption in market and its adaptation takes time. Eventually this time Government has to be extra cautious about simplification. Hopefully the new Direct Tax Code also add some more euphoria to the market and raise demand if good exemptions given under it.
A good banking system is like engine of growth for a country. Moving ahead with idea of recapitalization of banks and privatization of loss making and non strategic public sector bank can proved to be a great stimulus to economy. Easy and cheap credits can compensate the loss of growing unemployment in the country. Being it PM Modi’s own idea for which he also brought Mudra Loan scheme, he may put special emphasis on the idea this time.
Major reforms in agriculture sector is expected by all analyst as doubling farm income is priority on Modi’s agenda. Hopefully this Government will be more focused on agri-business by providing better access to technology, awareness of schemes and good Infrastructure to increase shelf life of produce. A restructuring in APMC act is also expected to make direct market more functional in agriculture. On-spot value addition to the agricultural produce can be a revolutionary idea for Indian farm business. It can empower farmer more than any other subsidy can do. There is also a urgent need of increasing per hectare productivity because increasing MSP is not a permanent solution. So cheap procurement of better seeds and better irrigation facility should be the top priority of Government.
One thing that is commonly accepted by all Indian after seeing Modi’s five year in centre that he is capable of doing what he determines to, Swachh Bharat is a live example. Although this Government will not have too much room in fiscal deficit for increasing public expenditure but there is lot of space for disinvestment in non-strategic PSUs. Modi may face some fiscal constraints but he has a good intent and also lot of support both from inside and outside of parliament. Conclusively Modi’s 2nd term can be historic for India’s progress.
