Ideas to maintain growth momentum

Economic policies have played a major role in scripting India’s growth story and have helped to explore a greater range of growth prospects which were earlier unexplored. Today, India stands at the threshold of emerging as a global leader with steady growth momentum supported by strong economic fundamentals. The idea of India may be seen as India moving towards shared prosperity with sustained high double digit growth trajectory, competitive manufacturing sector, easy & efficient taxation system, doubled farmers’ income and improved ease of doing business. To achieve this, the government must focus on kick starting the economic growth, achieve sustainable GDP growth rate of around 10%, maintain fiscal discipline, sustain low inflation, increase ease of doing business, among others.

  1. The Fast Reforming Economy

India currently is positioned among the fastest moving economies in the world economic system, surpassing many emerging and developing economies. India has been growing with more than 7% (average) in the post-Lehman era (2009-17). The macro-economic environment has improved significantly during the last few years. Inflation is contained, fiscal consolidation is on the right path and foreign investment flows are growing year after year. According to all the major international institutions, India is a bright spot in the global ecosystem and its growth would be very lucrative in the coming years.

India is progressively becoming visible in global charts. In the World Bank’s Ease of Doing Business Ranking, India has improved significantly from 142nd rank in 2014 to 77th rank in 2018. Similarly, India has performed well in other indices by attaining 1st rank in the Global Retail Development Index in 2017, 44th rank in the Logistics Performance Index in 2018, 57th rank in the Global Innovation Index in 2018, and 58th rank in the Global Competitiveness Index in 2018.

  • Aspirational India/ Consumer, Demand Driven Society

India has become an aspirational country, with emergence of strong middle class. The rising disposable income of the middle class and their increased ability to spend has made this large pool of Indians the most crucial consumer market of the future. The expanding consumer market of India holds vast economic potential and plays an important role in modernizing Indian economy.

  • Job/Skill/Entrepreneurship Development

Employment plays a key role in developing countries, like India, from the point of view of achieving the goal of poverty reduction. Rapid growth is essential for expanding incomes and employment, but growth is not only the measure of development but also includes the objectivity to achieve broad based improvement in the living standards of the people. One of the indicators of this broad based improvement is to provide gainful employment opportunities to the working class population. Going ahead, reforms are required to make labor market more flexible with comprehensive social security programme. Further, focus must be put on agro and food processing for shifting disguised unemployment from agriculture to food processing sector.

In India, there is still a presence of vast pool of youth that have no or little opportunities because of the absence of the skill required for the job. And thus, bridging this skill gap in India is of huge importance. In this context, emphasis need to be laid on skilling the youth in such a way that they get employment and also improve entrepreneurship. Women entrepreneurship is another segment of entrepreneurial development that needs to be catered and government should initiate policies and themes related to widespread of education and training of women entrepreneurship. Further, a well-defined public-private collaboration which takes technology based learning in tier-1 and tier-2 cities would facilitate in skilling the growing population of the country to reap the benefits of demographic dividend in the times to come.

  • Conducive Business Environment – Easier Compliance, Ease of Doing Business and Simpler Taxation, Effective Governance

Creation and maintenance of conducive business environment is a pre-requisite for the growth and flourishing of internal and external trade in a country. Many reforms have been taken by the government to foster the business environment in the country and bring ease of doing business. As a result of these reforms, India is one of the economies to make to the list of top 10 improvers in World Bank’s ease of doing business ranking’s for the second consecutive year.

The implementation of GST and Insolvency and Bankruptcy Code along with improvements in registering for new electricity connection, upgradation of port infrastructure, among others have yielded positive results and facilitated the country to improve in various parameters of ease of doing business. Going ahead, to achieve the rank at around 50 on the Ease of Doing Business Index in the coming times, creating an enabling business environment, ensuring financial stability, simpler taxation,        making the Companies Act easier, improving export logistics infrastructure and setting up good governance are required. Further, reforms in the direct taxation must take place in which corporate tax rate should be reduced to 20% for all, ignoring the turnover criteria. Simplification and reduction in the tax structure applicable for startups are required. In terms of GST, high rate of 28% must be rationalised to the level of maximum 18%. Further, there should not be more than 2 slabs under the GST regime.

  • Effective Measures to Make the Developmental Goals Deliver

India, over the past few years, has directed its development pathway towards attaining and delivering development goals. However, still much work is required to achieve these goals, such as bring poverty level down to zero through increase in employment, equal distribution of income, fulfilment of minimum needs of the poor, among others; presence of schools within the radius of 1 km, colleges within the radius of 10 km and universities within the radius of 25 km in the next five years. Further, government must work on inclusive and approachable education; provide appropriate home care and timely treatment of complications for new-borns; formulate integrated management of childhood illness for all children under five years old; eliminate regional disparities so that health and nutrition services are accessible to the most vulnerable group; formulate green growth strategy for sustainable growth and reduce emission with minimal cost to GDP, among others.

  • Make in India- Digital India, Big Data, Artificial Intelligence

During Make in India’s four-year journey, significant achievements have been witnessed across different domains as increase in India’s Foreign Direct Investment inflows, improvement in the Ease of Doing Business, growth of the manufacturing sector, among other. Going ahead, clearance must be provided to delayed projects on priority with strong policy coordination between central and state governments and labour laws must be made flexible and uniform across the country. The definition of Start-ups under Start-up India scheme should be widened, provision of access to collateral-free credit must be created, labour laws must be made uniform and flexible, among others.

Further, Digital India is expected to have a widespread economic, social as well as sustainable development impact on the country. It is the need of the hour for India to adopt newer technologies and transit itself from traditional or conventional ways, so that it can compete with the rapidly growing economies, with manufacturing dominance in the world ecosystem. This could be done by enhanced use of big data and artificial intelligence.

  • Financial System

India has strong financial system, however, India’s banks still lag behind global banks in terms of financial depth or the size of banks and markets relative to economic output. Key challenges to the Indian banking system include low financial depth, a high share of Non-Performing Assets (NPAs) and a high concentration of public sector banks (PSBs). For tackling the problem of NPAs, banks need to do forensic audit for ascertaining the end use of funds, use Big Data Analytics and other IT based solutions for doing proper due diligence. India should strive to have a more robust and well capitalised banking system, with enhanced capacity to extend credit and productive allocation of resources. To increase financial inclusion, there is a need to extend financial inclusion to disabled; need for facilities like biometric-enabled and multi-lingual hand held devices which can provide confidence in rural masses; and need for flexibility in financial schemes designed for different segments of unbanked population.

  • Consumerism

India is the fastest growing economy in the world and this is complemented by the increasing disposable income of people, their rising standard of living and their increasing needs. Today, the consumers in India are highly exposed to the global market that is causing continuous change in their taste and preferences and thus, their level of choices and preferences has skyrocketed. For catering these needs of the consumers of India, retail industry of the country must be enhanced; policies must be formulated to protect them against unfair trade practices, nefarious activities of middlemen, exploitatively high MRP, among others.

  • Infrastructure

Increasing focus on development of infrastructure in the country has attracted major global players to invest in India. Initiatives in the last few years in this sector such as Smart Cities Mission and Housing for All, has worked their part to reduce the bottlenecks and provide growth to infrastructural sector. Going ahead, private investments needs to be increased in infrastructure services, improvement should be brought in physical infrastructure, especially in rural areas to strengthen the rural-urban connectivity to markets. Further, government needs to improve and expand airport infrastructure, modernise railways, fast track the infrastructure projects; expedite the building of National Highways to achieve the target of 10,000 kms, improve the quality of infrastructure, among others. In addition, infrastructure status to the real estate sector would be a major structural reform as it would boost the GDP, increase employment opportunities, lower the cost of home development and purchase and lead to rapid growth of the sector.

  1. Judiciary

An independent, strong and efficient judiciary system is a pre-requisite for any country and also forms an important factor in improving ease of living of people in the country. Therefore, efficient reforms in the judicial system are a must. Government must work to speed up the justice delivery system, vacancies of judges at all levels should be filled up to increase the judges strength, reform the court management system to increase its efficiency and accessibility, enhance representation at all levels of the judiciary for women, SC, ST, OBC and other minority classes, adopt new technologies for fast and efficient work, among others. Further, the procedures and laws must be simplified, laws which are obsolete and hinder the growth of businesses and smooth administration in the country are required to be either repealed or amended.

  1. Quality of life-Clean Air, Clean Water, Clean Energy

Growing pollution of water resources is a major concern that affects availability of safe drinking water, apart from depleting water levels. Government should take innovative initiatives to remove river pollution and enhance water cleaning facilities to make available safe drinking water to the population. Government should promote demand-driven, decentralized, community-managed water resource management, water supply and environmental sanitation. Initiative should be taken to encourage efficient use, water conservation, recycling and rain water harvesting. Similarly, reforms in the energy sector are needed for improving the quality of life since there is still some portions of population in India that do not have access to electricity. In this context, potential of renewable sources of energy including solar, wind, hydro and biomass must be harnessed and an integrated Energy Policy should be formulated. Further, adoption of renewables need to be increased at a faster pace to bring about an energy transition that would help achieve environmental targets, provide energy access to all and reduce air pollution.

  1. Security

In context of homeland and border security, the armed forces/police forces/ para military forces must be provided standardised bullet proof gears which are able to provide protection against the types of lethal weapons and ammunition being used by the terrorists/militants. Further, latest technology, big data and artificial intelligence could be used to scan, analyse, real time tracking, technology to process data in real time and hence make the forces of India stronger. India has unique borders in terms of the variety of terrain and climatic differences, therefore, it is imperative to have in place systems that required minimal maintenance and are easy to handle. In this regard, technology should have reliable and robust alarm systems to reduce the response time for counter-measures.

  1. Gender Equality- Women Empowerment

Women contribute equally to the economic and socio-economic development of the nation. Over the years, the equality gap in socio-economic sectors has reduced, however, continuous reforms and initiatives in this area are required to build a better nation with women empowerment. Women’s welfare and development needs to be accorded a high priority at all levels within the government, women and child healthcare to be made priority, skill development programmes dedicated to women should be formulated. Further, presence of women led startups in the area of manufacturing and electronics are less due to lack of awareness and low risk taking capability, so the government should create awareness regarding opportunities and provide incentives in these areas. To increase the women labour force participation rate, some tax rebate and fiscal incentives must be provided for companies employing certain percentage of women. In addition, number of crèche and child healthcare facilities must be increased, especially in the unorganised sector.

In a nutshell, above measures are enumerated to achieve the new India aspirational goals, which comprise of getting back on the position of fastest moving economy, realising the potential of expanding consumer market of the country, creating conducive business environment, making financial system strong, digitization in every aspect, bringing efficiency in judiciary, gender equality, among others and all this in sync with our journey towards shared prosperity.  Further, these can be an indicative direction for the new government to achieve not only USD 5 trillion economy, but also an inclusive and sustainable growth for decades to come.