Few pointers that suggest Modi's Bharat is away from major reforms

[prasad1]

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Four months ago I had commended the Modi government's economic policy initiatives in its first year in office. A third of a year later the picture looks much less promising. Economic reforms have clearly lost momentum and there is a sense of drift in economic policy.
To better understand what is going on, it may be useful to break up the problem into four different (but related) parts: setbacks to major reform efforts; slowdown in other reforms; inaction or back-tracking in some areas; and a revival of fiscal populism.


Setbacks to major reforms
By the government's own statements, amendment of the UPA's legacy land acquisition Act (2013) and passage of the Constitution amending Bill for the Goods and Services Tax (GST) were the two most important items on the economic agenda for the monsoon session of Parliament which was prorogued on Wednesday.


Slowdown in other reform initiatives
There are quite a few in this category. For example:
Hardly six months ago, at Budget time, the finance ministry had emphasised the opportunities for rationalising and reducing major central government subsidies (food, fuel and fertiliser) by shifting to direct benefits transfer (DBT) systems based on the trinity of Jan Dhan, Aadhaar and Mobiles ("JAM").
The Jan Dhan programme has greatly expanded the number of households with bank accounts, while the coverage levels of Aadhaar unique IDs and mobile ownership are now very high.
But, after the success with transiting to DBT for the cooking gas cylinders, there seems to have been little progress with the much larger subsidies for foodgrain and fertilisers.


Inaction and back-tracking
Here, too, examples are not hard to find:
The Shanta Kumar Committee submitted its report in January, with recommendations for restructuring the Food Corporation of India and undertaking major reforms of India's food economy.
Not much seems to have happened in the eight months since.


Revival of fiscal populism
The surge in indirect tax revenues in the first third of the year and reduction in petroleum and fertiliser subsidies on account of slumping international commodity prices has bred a sense of comfort, even complacency, about our fiscal situation.
This may be premature, especially if one looks ahead to 2016-17.
That is when expenditures are likely to spike from recent decisions and predictable processes.

The ship of fiscal consolidation will certainly be buffeted, if not blown off course, with obvious, unhappy implications for fiscal deficits and interest rates.
In sum, economic reforms seem to be on a slow train, while good old fiscal populism is alive and flourishing. Against the background of a slowing world economy and slumping exports, this does not bode well for India's economic growth and job-creation.



http://www.rediff.com/business/colu...harat-is-away-from-major-reforms/20150910.htm

 

[sangom]

I personally feel that a sensible government should try, first of all, to create a self-reliant nation (at least as self-reliant as is humanly possible) instead of working itself into a frenzy on the basis of "development" norms and indices supplied by countries like US, UK and IMF, World Bank, etc. To me therefore, neither the UPA nor the present NDA governments appear to be doing any good to this country. India will most probably go the Greek way, although some economic Pundits may immediately retort saying, "our fundamentals are very strong"!

According to my way of thinking items like land acquisition Act, GST, etc., are not really "reforms" but western prescriptions for getting the government out of all trouble and responsibility and letting the (poor) people to fend for themselves as best as they can; it will only enable the rich to become richer, by making the poor still poorer!

Other items like DBT, restructuring of FCI etc., have not been taken up because the govt. itself has become a little shaky and unless Bihar gives some oxygen, it may well lapse into some kind of Parkinson's Disease! BTW, FCI is not simply a GOI owned corporation, it is like the Viswaroopam of BG, and has myriad facets which if we know, will make us swoon!

 

[Jaykay767]

first off, what are the major reforms from this govt??. Land act is not a reform, it is a step in the backward direction. The land act prior to the junk one put by UPA was from the colonial days, where the Govt can acquire any and all land by placing a notification, & pay the owners any amount !!.

Now this act would have helped build massive infrastructure & IT corridors across the country as it gives unprecedented power to acquire land.

Now the fools went & put an unworkable act & stopped all land development in the name of socialist distribution of wealth !!