Dilip Kumar Bisoi
The Nation has witnessed a paradigm shift in governance in the three years of Narendra Modi Government. Policy statements laced with highly reformative decisions have changed the mood of the nation for development and growth. Prime Minister Modi has pushed through a slew of reforms to bail out the country’s economy from a state of policy paralysis.
The NDA government inherited a baggage of low growth rate, high inflation and apathetic governance. With exports moving in south directions, industrial output almost stagnated.
The Prime Minister set the tone for the development and growth by announcing programmes like Make-in-India, Start-up India, Skill Development, MUDRA, PM Jan Dhan Yojana, JAM, DBT and many more. To support these initiatives, he put in place the required policies and reforms. The decision of demonetization and amnesty scheme to flush out black money helped in cleansing the economy to some extent. The creation of NITI Ayog in place of outdated Planning Commission is in line with the new demands and aspirations of a young nation and “New India”.
The historic indirect tax reform, the boldest step since Independence, came with the introduction of GST (Goods & Services Tax) in mid-night of June 30 and July 1, 2017. The GST regime put the countrymen under “One Nation One Tax” administration. The reform is aimed at bringing in transparency in taxation with an ultimate goal of safeguarding the interest of the consumers as well as the business and industries.
The indirect tax reform decision, supported by all the states in the country including Jammu & Kashmir, was hailed by many countries world over. The signals from first month of GST implementation show a promising trend and bright economic future for the nation.
Meanwhile, the Modi government has achieved thunderous success so far as implementation of Direct Benefit Transfer (DBT) policy is concerned. Particularly, the DBT introduced for cooking gas proved to be the biggest DBT scheme in the world. Nearly 15 crore cooking gas consumers have come under the DBT known as PAHAL which has been acknowledged by Guinness Book of World Records. The DBT has saved over Rs56,000 crore government money from leakage. The NDA government is now proposing to introduce DBT for fertilizer and kerosene subsidies on pilot basis.
The UPA policy of retrospective taxation and the stagnation in further opening up of sectors, spoiled the environment for Foreign Direct Investments (FDIs) in the country. Soon after coming to power, the NDA government announced that the retrospective taxation case would be considered case by case in a bid to assuage the feelings of the foreign investors. It liberalized the FDI policy and announced a slew of decisions to attract off-shore investments in sectors like insurance, railways, defence, retail marketing.
The union finance minister, Arun Jaitley, in his budget speech, announced that FDI in insurance will be automatically allowed upward the sectoral cap of 49%. He also allowed more than 50% FDI in defense. Not only that most of the railways sector was opened for 100% FDI vide DIPP Press Note8 (2014), issued on 8/27/2014. Similarly, the DIPP Press Note 12 removed almost all restrictions on FDI in construction.
Removing restriction on foreign investment in single brand retail, the Centre allowed FDI up to 100% via the government approval route, but requires that 30% of goods sold in the first 5 years be manufactured in India. This period is tolled 3 years for ‘cutting edge’ technology. The Government also allowed more than 50% foreign investment in direct retail e-commerce with a rider that FDI is not allowed in business-to-consumer e-commerce, unless items are all being sold under a single brand and meet local-content requirements.
The NDA government has put the fuel pricing reforms on fast track. Following the deregulation of petrol prices, the diesel prices were deregulated from October 18, 2014. So also the natural gas pricing.
Realizing that the mining sector plays a key role in propelling growth, the Modi government put in place laws and policies for development of the sector. The MMDR Act was amended to bring in transparency in leasing out non-coal major minerals. It also opened the coal mining sector to private and foreign investments by a legislation Coal Mines (Special Provisions) Act, 2015 on March 20, 2015. The transparent e-auction in mining sector has fetched government a huge revenue also.
Similarly, changes were brought in the policies to conduct the telecom spectrums in a transparent way. India has now conducted multiple free and fair telecom auctions with no complaints from stake-holders.
As part of ease of doing business, the government extended the expiration date of industrial licenses. DIPP issued an order on December 20, 2014, increasing the maximum validity of an industrial license from two years to seven years. Removing sectoral investment limit, the government on April 10, 2015 removed the last 20 products from the reserved list
The government has also recently enacted bankruptcy laws to make it easy for the companies to go for liquidations.
Modi government has several reform initiatives in its agenda. Now further reforms in subsidies expenditures is the top priority of the government. Reform is a long term and continuous process. The real dividend of the reform processes that have already initiated is expected to come in the next two years.
(Dilip Kumar Bisoi is a Senior Journalist and Columnist. Views expressed in the article are author’s personal)