the new government to proclaim its firm commitment to four key building blocks of economic policies:
First, the new government must restore the confidence of people in systems of policy-making and governance. It must revitalise administrative, institutional and fiscal governance. India requires stability, both domestic and external. Domestic stability manifests in inflation control and more effective management of the exchange rate. And for this purpose, calibrated reduction in fiscal deficit is of utmost urgency.
Second, effective fiscal management must go much beyond just quantitative reduction in fiscal deficit to GDP ratio. All elements of public sector wastage must be dealt with rigorously. It is time to work out a strategy for privatisation. The business of the government is to govern and not to be in business, which can be more efficiently and effectively managed by the private sector. Admittedly, we have to strengthen and expand the autonomous regulatory institutions so that there is no place for ‘crony capitalism’ in the process of India’s inclusive development model.
Third, India needs to improve its status in the ease of doing business in the global context. There are various legislative, institutional and fiscal changes that are called for. The legal system has to be rationalised and simplified and business contracts have to be honoured and settled in a time-bound manner. Various pending policy changes have to be implemented be it GST, Direct Tax Code, cancellation of retrospective changes in tax structure and policies that are against the interest of the existing tax assessee or business contracts.
Fourth, there is so much to be done to involve the youth of the country in the nation building activities. These young aspirants have apparently voted aggressively for the change of government. We could create a huge army of skilled and professional manpower, a new class of young entrepreneurs, enhance their capacity to save and invest.
I would like the government to fast track on reforms:
One, the forthcoming budget should present to the nation a blue print for restoring economic growth. The action plan should help revival of manufacturing sector as well as for implementation of projects that have already been cleared. Such a plan would also seek to give comfort to the agriculture sector that any adverse impact of looming El Nino will be taken care of. Needless to say, inflation control would be high on such an action plan.
Two, the new government should not be reversing economic policies taken by the previous government, which are in the long-term interest of the country. The Land Acquisition Policy should be reworked. It must ensure national consensus to emerge with more effective participation of states in revisiting this important piece of legislation.
Three, it should set out the plan of action for employment generation with emphasis on vocational training and development and reform programme for higher education. Skill development is crucial; for, otherwise, the demographic dividend of which we are all so proud of, will become a ticking timebomb.
Four, strengthening Center-States relationship needs to be of topmost importance. In a federal structure you cannot have the two at loggerheads with each other. This alone can lead to a more inclusive development going forward.
Last, new government should promise more autonomy to various regulatory institutions. In particular, the financial sector requires to be strengthened and for which I expect there would be no interference in the monetary and banking policy of the RBI. So also, SEBI would be strengthened to deal with improvement in capital markets.
I expect investment climate would respond positively to the initial firm and clear direction of economic reforms. All stakeholders have been yearning for the prospects of a stable government and that is now guaranteed. What is now required is a firm and decisive leadership.