Government should take care of employable industries
Government should take care of employable industries. India gained political independence in 1947. Despite this, crores of Indians are still waiting for economic upliftment. In such a situation, the slogan ‘Sabka Saath, Sabka Vikas’ reflects the broad vision of Prime Minister Narendra Modi. All their programs like Jan Dhan-Aadhar-mobile, toilets, free LPG and electricity connections, housing for all, Kisan Samman, Mudra, Ayushman Bharat, social security cover and pension etc. are aimed at getting people out of poverty. I have had the privilege of attending some meetings related to these schemes. Once in the corridors of South Block, there was an opportunity to interact with the Prime Minister. He keeps thinking about ending poverty.
Economic freedom cannot be ensured in India without strong political will. Political will is concerned with the strength and commitment of the ruling party and its leader. India’s economic rise was at the heart of Modi’s election campaign in 2014 and 2019. Voters also voted for an absolute majority and a strong leader. Prime Minister Modi has set a target of taking the Indian economy to the level of five trillion dollars in five years. Many economists, commentators and opposition leaders are ridiculing this goal. The number of seats he has targeted in the election and the attainment of more than that shows that by 2024 his resolution can also be fulfilled. The growth of the economy depends on various aspects. Both domestic and foreign factors play a role. Their role is completely different from the factors that give political success. The first principle of management is to set a goal. They have set the target. The domestic economy is currently facing some challenges on both domestic and international fronts. Some structural and cyclical aspects are also causing trouble in its path. Adding the economy to a period of high growth is a complex task in such an environment. In this, the government will have to show the same determination as it showed in abolishing triple talaq and removing Article 370.
The government will have to take some bold decisions to overcome sluggish demand and stagnation in investment. For this, some immediate steps have to be taken along with structural reforms. Infrastructural reforms will require land and labor reforms as well as some untouched aspects such as disinvestment of state-run banks to increase the qualitative impact of investment. Increasing productivity should be at the core of all structural reforms. Productivity leads to higher GDP growth. This is effective despite relatively weak investment. Clarity and continuity will also have to be ensured on every policy front including taxation. Government should take care of employable industries. They always have a sense of instability. By strengthening this link, the trust of institutional and foreign investors can be gained.
To deal with the current economic slowdown, the government’s entire thrust should be centered around reviving industries that generate large-scale employment or have the potential to influence other industries. These include agriculture, building construction, infrastructure, food processing, health care, tourism, gems and jewelery and vehicles. All these sectors are currently in the grip of recession. There is no single treatment for all of them. Effective measures have to be taken to help each sector to get out of the clutches of recession. Increase in these areas will create lakhs of employment opportunities. This will increase the overall demand massively. It will also benefit sectors related to cement, steel and other materials. While the Ministry of Finance can play the role of coordinator in this exercise, only the sector-specific ministry will have to handle the entire task of rejuvenation.
The bureaucratic and judicial processes of our country have created serious obstacles in the way of productivity. Due to the economic reforms in the 1990s, the winds of liberalization and privatization served to change the situation. This led to an important and continuous process of capital and investment in the Indian economy. The basis of two important pillars, such as capital and investment, rests on the effective implementation of decisions. Investors can make adjustments on the risks they assess while making an investment, but do not allow the contract to materialize and uncertainty in projects. It takes a few years and even decades to realize any policy on the ground. This challenge gets bigger in India. This increases costs, reduces profits and increases economic burden.
If nominal GDP growth is eight percent, then projected revenue receipts cannot be expected based on nominal growth of 15 percent. So there is an urgent need to redeem the assets. Juggling on the sale or ownership front in pieces will not work. The path of strategic disinvestment has to be adopted. The government will have to open its coffers to invest in the infrastructure sector. This is necessary so that the impact of this investment is felt immediately and the recession can be controlled. If necessary, some leeway can be taken in terms of fiscal discipline, but only on the condition of investment in the infrastructure sector. As it is, the region is resiliently awaiting reforms and has enormous potential to benefit the economy in a big way. The government should invest in building roads before encouraging the purchase of cars.
The Prime Minister has mastered the art of communicating. They will have to use this skill to encourage entrepreneurs and investors from all walks of life on every front. He has to make the dream of ‘modern India’ popular among this section. On 15 August this year, PM Modi told the ramparts of the Red Fort that those who create wealth have to be respected. The Prime Minister has to assure that genuine mistakes and losses will be acceptable and earning in a legal manner is welcome. The country trusts Modi. He will certainly live up to these expectations.