As we usher into a new year, all eyes are fixed on the government regarding policies for India’s development. The government had a successful track record over the last few months since Modi ji assumed office in May 2019. The next few months are extremely crucial for India’s development and needless to say, policies by the government will play an important role in crafting India’s growth story. I have summarized below the key policy expectations that one has from the government this year:
Give a boost to the infrastructure sector
Infrastructure sector is in need of a fillip so that Modi ji’s dream of making India a USD 5 trillion economy can be realized by 2024. It is heartening to note that the government has already taken some steps in this regard. A few days back, Finance Minister Nirmala Sitharaman ji announced the national infrastructure pipeline coordination mechanism which is set to provide an investment corpus of INR 102 lakh crore over the next four years. Out of the proposed investment, 39 percent each will be contributed by the Central and state governments. The private sector will provide the balance 22 percent funding. This seems to be a step in the right direction and I am confident that the policy initiative will be successful.
Bring in reforms in the aviation sector
One of the much need policy reforms is for the aviation industry. This sector has been struggling for a while with the closure of one of the major private carriers last year. One hopes that disinvestment policy measures will be taken to disinvest Air India by March 2020. Air India is currently supported by the federal budget. The scheduled disinvestment is of critical importance if the government wishes to meet its divestment target of INR 1 trillion for the present fiscal year.
No further slashes in corporate tax rates
I think it is imperative for the government to start paying attention to boosting demand in the industry and doing away with further tax cuts. The current corporate tax rate is pegged at 22%. Overall reforms in the economy will help to bring back the demand and get the investors to start pumping in money. In fact, Nobel Laureate Abhijit Banerjee also noted that the investors are currently not investing due to a lack of demand. I would once again reiterate that the focus of the government should be on increasing access to capital, building a skilled workforce and the capacity to conduct cutting edge R&D. These are important to boosting economic growth, creating more jobs, and contributing towards a better business environment. The government must demonstrate its commitment to improving the conditions of doing business in India so that it can create an environment that attracts the investors and creates more job opportunities.
A comprehensive policy for the renewable sector
Strengthening clean energy initiatives is the need of the hour as there are significant concerns surrounding climate change. India has a lot of potential when it comes to renewable energy sources. It would be important for the government to legislate a stable and predictable policy regime for the solar industry in particular in order to boost participation from the key players. There is also an impending need to attract foreign investment to the solar energy sector to amplify the level of investments. As I have stated above, creating a conducive environment in the economy that eases doing business in India is at the heart of the matter. Once the policy and regulatory regime are improved, the investments will take place far more easily.
Create more opportunities for the youth
Increasing the income of the citizens is another key area that needs attention. This means that there should be more job opportunities in the market to curb unemployment. In order to undertake a holistic development of the country, the ease of living of the people of India should be increased by implementing the correct policy measures for employment, education, and health.
Final thoughts
The time has come to tide over the ups and downs faced in the past few years. I am confident that adequate policy measures will be put in place to deal with a myriad of issues such as the fiscal deficit, GST rates, and personal taxation policies. I hope that the forthcoming budget will take note of the pressing concerns and provide solutions accordingly. Modi ji and his entire team have done a fantastic job so far and I know that they will continue doing the same.
