Politics

Advocating Bold Reforms: The Imperative for Modi 3.0

Published On Wed, 12 Jun 2024
Devina Bhattacharya
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The National Democratic Alliance (NDA) has once again assumed power, marking the resurgence of coalition politics at the union level after a ten-year hiatus. In contrast to the pre-2014 era characterized by policy paralysis, corruption, and inflation, this new administration pledges a departure from past trends.
Before 2014, coalition governments in India were synonymous with inefficiency and scandal, particularly during the United Progressive Alliance (UPA) era (2004-2014). Notorious scandals like the 2G spectrum and coal allocation marred this period, leading to economic mismanagement and a loss of public trust. In contrast, since 2014, the NDA has showcased decisive governance, focusing on economic reforms and transparency, evident in initiatives such as Make in India, Digital India, and the Goods and Services Tax (GST).
As the Bharatiya Janata Party (BJP) spearheads this new coalition government, India must sustain its growth momentum through continued reforms, prioritizing bold initiatives and process enhancements. The government should learn from past coalition inefficiencies to chart a different course.
In terms of capital expenditure, the government must prioritize investments in infrastructure like railways, national highways, ports, and waterways. These sectors stimulate economic activity and ensure long-term developmental gains, bypassing delays associated with centrally sponsored schemes.
A clear fiscal management path is essential, necessitating an explicit counter-cyclical fiscal policy balancing expansionary and contractionary measures to maintain stability. Ensuring transparency and consistency in fiscal policies will foster confidence and predictability in the economic environment.
However, recent analysis highlights concerns about demand, particularly rural demand, necessitating private sector involvement alongside public investment. Employment growth, education, health, and skills improvements are vital for labor market attractiveness, complemented by the implementation of new labor codes. Shifting focus from deficit indicators to debt indicators provides a more comprehensive measure of fiscal health. Prioritizing debt management over deficit targets will create a stable fiscal environment, enhancing resilience and sustainability.
Tax reforms, including broadening the tax base, reducing exemptions, and improving compliance, are crucial for revenue enhancement. Streamlining expenditure, rationalizing subsidies, and focusing on central sector initiatives align fiscal policies with economic realities, ensuring efficient resource allocation. By prioritizing these areas, the new NDA government can achieve sustainable economic growth and fiscal stability, advancing India towards its economic goals.
Disclaimer: This image is taken from Reuters.
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