A mandate to revive the economy

The decisive mandate in favour of a Narendra Modi-led BJP reflects an overwhelming vote for change. Change in the way the country is administered; change in the way India does business; change in the way food is distributed; change in the way healthcare is delivered; and change in the way the government addresses the aspirations of a billion Indians.

The new government’s number one priority should be to navigate the country towards a path of sustainable and inclusive economic growth. It will be starting off with economic tailwinds: inflation is showing signs of cooling; the current account deficit has eased significantly; the rupee has stabilised; and GDP growth is expected to pick up pace in FY15 after two consecutive years of sub-5 per cent growth.

However, there is no scope for complacency as the country faces significant challenges. Projects worth over $100 billion were shelved or abandoned in FY14, the highest in the past 18 years, due to policy uncertainty and pending regulatory clearances, according to the Centre for Monitoring the Indian Economy.

Capital goods production has contracted in nine of the past 12 months, according to the latest government data. The new government will have to quickly de-bottleneck projects and revive investment sentiment. India desperately needs to be seen taking corrective actions to regain its lost glory, creating an enabling ecosystem for double-digit growth.

There are some critical steps the government needs to take to revive the economy. The need of the hour is not more, but smarter regulation.

We need to move away from over-regulation to a system of self-regulation. To make the system transparent and stakeholders accountable, we have to ensure that e-governance becomes the backbone of regulation.

A time-bound approvals system can help fast-track projects, businesses and start-ups, thus improving the business climate in the country.

The long-pending goods and services tax (GST) needs to implemented as a uniform tax on all goods and services across India. There is also a need to exempt special economic zones (SEZs) from MAT. A lack of clarity over laws regulating FDI in key sectors like multi-brand retail is preventing much-needed foreign investment from coming in.

The government also needs to allow a longer tax-free status for SEZs . to unlock the full potential of this far-reaching scheme. Establishing industrial corridors through high-end road and rail connectivity that links metros to interior towns can spread economic growth and create job opportunities more uniformly across the country.

Employment generation initiatives should focus on creating a large market for skilled jobs by building scale in high-end manufacturing. For this, the government needs to provide adequate incentives for the manufacturing sector. Incentives should also be given to encourage start-ups as they can contribute to employment generation.

The ‘Right to Health’ should be addressed through a universal healthcare programme which hinges on affordability and access. An IT enabled healthcare delivery model like that of Tamil Nadu has the potential to revolutionise various aspects of the industry. The implementation of an e-healthcare system at a national level can ensure fair and transparent delivery of affordably priced, good quality medicines.

Science and technology is of strategic importance. Innovation holds the key to value addition. India needs to step up its investment in research and innovation.

We must identify key areas to build world class scientific and technological excellence, such as, genomics, nanoscience, analytics, synthetic biology, information technology, space technology. Incentivising innovation and IP creation is important for India’s future growth prospects.

In the final analysis, the new government needs to exhibit strong political will to implement bold economic reforms, create world-class infrastructure, usher in overdue tax, labour, land and regulatory reforms, address power woes and roll back unfriendly business regulations to return the India economy to a path of high growth.

The writer is CMD, Biocon