In its first two years, the big achievement of the NDA government led by Prime Minister Narendra Modi can be said to be the change in the narrative about India which was earlier seen as an economy paralysed due to policy inaction and large-scale corruption. The new government launched a large number of programmes and schemes, many of which were the UPA’s brainchild but never quite pursued with conviction by the UPA government.
1. Bottlenecks in the infrastructure sector were removed, for example, coal and telecom spectrum auctions were made transparent and the persistent backlog in environment clearances done away with.
2. The government took a leap forward in fiscal federalism by accepting the Finance Commission’s recommendations to part with a larger (42 per cent) share of taxes with states and lend them flexibility in spending based on their priorities and unique needs.
3. Simultaneously, the Central government embarked on a big public expenditure programme in key infrastructure sectors such as roads, highways and railways. These have an enormous multiplier effect.
1. A consumption-led demand boost may aid growth. Consumption accounts for 55 per cent of the economy, and will continue to be the mainstay given the country’s demographics.
2. FDI inflows have been good, but for the recovery to be meaningful and sustainable, it is imperative that private investment picks up pace.
3. It is time for the government to introspect on why all the “ease of doing business” and Make in India programmes such as MUDRA, Start-Up India action plan and Stand-Up India schemes are not resulting in a critical mass of activity for the economy.