Look back with satisfaction

As the Modi government completes one year in office, it can be commended for having astutely addressed most impending economic concerns, and for being successful in enhancing India’s economic stature in the international arena.

Following the mantra of “Minimum Government, Maximum Governance”, the policy agenda of the government has drawn extensively from Prime Minister Modi’s experience as Gujarat’s chief minister. Goal setting, detailed planning and working on issues ex-ante rather than ex-post have been the hallmark of this government’s policy execution.

The year gone by has seen an amalgamation of short-term and long-term policy setting. The challenging economic environment warranted an immediate restoration of key deteriorating macros.

To restore economic health, the new government has not only undertaken high-impact micro measures, but has also seized the opportunity to lay the foundation of long-term growth.

It has given shape to programmes such as Make in India, Skill India, and Digital India, while reinforcing the federal spirit of the Indian polity.

A year later, the most significant and quantifiable success of the government has been its ability to rein in price pressures.

While the RBI’s tight monetary policy and a cyclical turnaround in global commodity prices especially crude oil, were critical enabling factors, government’s rationalisation of minimum support price adjustments, changes in the APMC Act, and open market sales of food grain facilitated a slowdown in structural component of inflation.

Further, incremental measures to ease business regulations, such as the e-Biz portal, transparent allocation of natural resources especially coal, rationalisation and simplification of tax regime, and the initiation of labour reforms have created the right facilitators for reviving investor sentiment and thereby growth.

The government’s short-term priority of economic revival has been located within the broader agenda traversing governance, administration, foreign policy and diplomacy.

The e-Kranti National Governance Plan and Pragati are two platforms that aim to deliver timely government services electronically; ceding empowerment, equity and efficiency to people. In similar vein, the government has pursued a proactive international engagement based on enlightened national interest, combining India’s economic strength with pragmatism.

In this spirit, the pledged investment inflows from countries such as Japan, China, Germany into India, to actualise the ‘Make in India’ vision is a validation of India’s ability to transform itself into a globally competitive manufacturing hub.

In its long-term vision of the country, the government envisages a Shreshtha Bharat, with full involvement of all the 1.2 billion people of the country.

Tremendous focus has been accorded towards enhancing India’s growth potential by harnessing all the factors of production — land, labour, capital and entrepreneurship.

The Make in India programme forms one of the critical policy hubs around which a plethora of supporting spokes like export competitiveness, skill upgradation, higher capital absorptive capacity, and ease of doing business are gradually getting incubated.

The road towards actualisation of the long-term vision will involve strengthening India’s institutional architecture. Towards this a beginning has already been made with NITI Aayog — which will involve participatory role from states.

With the FY16 Union Budget incorporating most of the recommendations of the Fourteenth Finance Commission, cooperative fiscal federalism will help shape the economic contours of states in the coming years.

Regulatory approvals are slowly going digital , shrinking the existing space for discretionary activism and at the same time making progress on the policy goal of digitising India.

A significant overhaul in India’s tax architecture is already underway with the likely introduction of the Goods and Services Tax Bill from April 2016.

With the formation of the Monetary Policy Committee, an unprecedented step for India, the government will formalise monetary policy decision making under flexible inflation targeting, improving the credibility and accountability of the central bank.

Going forward, continuing on the path of key structural reforms would require government to engage in a stronger consultative process.

The government may have to deploy all the political levers at its command to get critical bills passed in Parliament given its minority status in the Rajya Sabha.

While the government’s devolution of fiscal powers to States is encouraging, its ability to implement crucial policies in the areas of land, food distribution, health, agriculture, etc. will be dependent upon the execution capability of States.

The writer is MD & CEO, YES Bank and president, Assocham