Reforms and consultations with stakeholders needed for Viksit Bharat

Union Finance Minister Nirmala Sitharaman seems confident both about the economy and her own government. This stems from assertion that the government will continue to pursue its reforms agenda in its ‘third term’. Evidently, she and others, including Prime Minister Narendra Modi, have few, if any, doubts about the third term. Speaking recently at an event, she laid emphasis on a predictable and stable economic environment and taxation structure and indicated that the policy framework is robust and growth-friendly, while asserting that Atmanirbhar Bharat “is not a regressive step, but a considered, calibrated one.” The higher tariff policy in some sectors was not a permanent stance of the government and that calibrations are being made to the policy, she contended. It was reassuring to find she believes that “artificial protection creating inefficiencies cannot be supported. The tariff protection is for only some time”. That sounds good but we must also remember the pearls of wisdom of the legendary economist Milton Friedman “Nothing is so permanent as a temporary government programme.” The Finance Minister must beware of this danger.

Railways Minister Ashwini Vaishnaw went a step further with “Under Modi’s Viksit Bharat vision, we will see an ecosystem that makes for India and the world.” The problem is not with the vision but with the extant ecosystem. Apparently aware of this fact, Vaishnaw spoke about the preferred ecosystem in the future tense. We can get what we want in the foreseeable future by constantly and continuously enhancing the ease of doing business (EoDB) and removing obstacles that impede growth in different sectors. The Indian economy certainly has the potential to grow at a fast pace. Speaking at another event, IMF’s Krishnamurthy Venkata Subramanian highlighted this fact “So, the basic idea is that with the kind of growth that India has registered in the last 10 years, if we can redouble the good policies that we have implemented and accelerate the reforms, then India can grow at eight per cent from here on till 2047.” The good policies, however, cannot be redoubled by downplaying unpleasant realities. But the government seems uncomfortable when reminded of such realities. For instance, when the ILO recently said that the employment scenario in India remains grim, especially among youth, the government disputed the UN body’s data.

There may be political compulsions to dispute the ILO data, which indicated that youth form nearly 83 per cent of the unemployed workforce in India, but when it comes to decision making, the government should be focused on improving EoDB. But, unfortunately, this cannot be said about some of its recent decisions. One such decision was the Ministry of Skill Development & Entrepreneurship’s notices to about 1.80 lakh companies, mandating them to comply with the provisions of the Apprenticeship Act, 1961. Then there was a binding order on auto companies to keep a gel in the first-aid kit, which is used to halt bleeding. The problem is that the gel is in short supply, which is why the companies are seeking an extension of the deadline. Apart from expediting reforms, the government should also ensure that decision making is in consultation with all stakeholders and not a unilateral one.