Modi@8: Laying the foundation for new India through sound economic policies

 Past eight years have been truly momentous for the future of the Indian economy. India has achieved the highest rate of economic growth among all economies except China. This is despite the COVID-19 crisis, which dealt a catastrophic blow to the economy, and the ongoing Ukraine crisis, which has seen a very sharp rise in global commodity prices and a slowdown in global trade. The Indian economy, which was included among the ‘fragile five’ economies of the world in 2013, has shrugged off its external account weaknesses with foreign exchange reserves of nearly $600 billion that provide strong protection against any external shocks. Admittedly, there has been an uptick in inflationary pressures. With the RBI taking the necessary monetary policy measures and the government acting in concert with its own fiscal policy measures of reducing the excise duty on petroleum products, India has demonstrated its commitment to maintaining macroeconomic stability while nurturing growth at the same time. This positive economic performance has been a cumulative result of a number of reforms undertaken over the past eight years. The significant number of structural reforms, which have been implemented over the past eight years will usher in an era of rapid, employment-generating, sustainable and climate-friendly economic growth in the coming years. This will see India emerge as the world’s fourth-largest economy by 2027. The scope of reforms undertaken during the past eight years has truly been phenomenal. They range from making India free from open defecation to linking rivers to accelerating the transition to green energy; promoting a start-up culture and encouraging innovation, etc. The focus of these structural reforms undertaken over the last eight years has been fourfold. First, to make Indian firms globally competitive. Second, to make India an attractive destination for global investors. Third, to ensure that India adheres to its ambitious targets for achieving net-zero by 2070. And fourth, enhancing the ease of living of the common people by qualitatively improving the delivery of public services such that actual beneficiaries were better targeted and better served. The successful implementation of the GST has created a huge unified national domestic market for firms. This has allowed them to plan for ramping up their capacities to global scales and rationalise their procurement, logistics and marketing operations. There is simply no denying that GST has transformative potential.

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Under the Production Linked Incentive Scheme (PLIS) for 13 sectors, the government has agreed to cumulatively pay as much as Rs 2 trillion ($27 billion) in cash incentives to firms which attain global competitiveness and globally comparable scales of operation. This will infuse massive dynamism in the manufacturing sector and help to raise its share global manufacturing which has been stagnating at around 3 per cent for decades. Small and medium-sized enterprises which will form part of the supply chain will also directly benefit from the introduction of PLIS. The third measure taken has been to address the infrastructure and connectivity deficit perpetually faced by Indian companies and which prevented them from becoming globally competitive. There has been a staggering expansion of the highway network over the last eight years with more than 1.40 lakh km of highway construction completed over the last eight years. The pace of highway construction has increased more than three times from 12 km per day to 37 km per day. Modern, relatively high-speed trains have been introduced and modernisation of stations has started under the PPP framework. Greater competition in air services has been ensured with the privatisation of the national carrier and re-starting of the once bankrupt airline. Most importantly, multi-modal transit with seamless connectivity is being ensured under the Gatishakti programme. The expansion of digital connectivity under Bharatnet and by accelerating the shift to 5G has also given Indian firms the much-needed support to expand their footprint in global markets. This is amply demonstrated by the acceleration in exports which crossed $400 billion for the first time in 2021-22. [caption id=“attachment_10713381” align=“alignnone” width=“640”]  Prime Minister Narendra Modi. ANI[/caption] Improving India’s ranking in the World Bank’s Ease of Doing Business was the principal measure taken to make India an attractive destination for foreign investors. India jumped more than 70 ranks in five years in these rankings, showing the government’s commitment to business-friendly policies. The investment environment will further improve greatly with the reduction in regulatory and compliance burden that has been set in motion with the prime minister’s directions. More than 10,000 compliances have already been removed and more than 1,270 redundant and archaic laws taken off the statute books. Moreover, nearly all the sectors, including defence production have been now opened for foreign direct investment. The highest ever inflows of FDI in 2021-22 of $83.57 billion testify to the success of these measures. India, unlike all other countries, has the onerous goal of completing its economic transition to a middle-income economy while also ensuring that we promote green growth and protect the environment. Consequently, our renewable energy generation targets have been ramped up to an ambitious 450 GW by 2030. We have undertaken to not expand thermal power capacity and increase the share of both nuclear and hydro generation. The strong policy support for electric mobility and further green hydrogen are steps in the same spirit. But in my view the most important measure for environmental protection is the prime minister’s call for practising ‘natural farming’ which is completely free of all chemicals. This has the amazing potential to increase the organic carbon content in the soil thereby becoming the largest and most effective carbon sequestration programme in the world. Already nearly three million Indian farmers are practising natural farming. The policy support being designed can ensure that India leads the way for all other countries in practising agroecology. The prime minister’s laser-like focus on improving the ease of living for the common Indians, especially those at the bottom of the period has been evident since the first year of this government. The design and effective implementation of nationwide schemes like Swacch Bharat, Ujjwala, PM Awas Yojna, Saubhagya, and Jal Jeevan Mission have ensured that the lives of millions of poor people have been radically transformed. Their ease of living has improved beyond their expectations. Added to these are schemes like Ayushman Bharat which has guaranteed quality medical care to the poorest 500 million Indians with a health insurance coverage of Rs 5 lakh per family annually. The JAM trinity (Jan Dhan, Aadhaar and Mobile phones) has ensured that benefits from more than 400 government schemes are now transferred directly to the beneficiaries’ accounts without any intermediaries and concomitant leakages. All these structural reforms have laid the strongest foundations for India to achieve sustained high rates of economic growth in the coming decades. These will also ensure that this growth is achieved in an environmentally-sustainable manner and that its benefits will accrue also to those who are last in the queue. The people’s confidence in the government has been restored over the last eight years. We have to build on these substantial achievements to ensure that the exploding aspirations of India’s young population are adequately fulfilled. The author is an economist and former Vice Chairman of NITI Aayog. The views expressed are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. 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