One year after it swept into power riding on a historic mandate, the Government led by Prime Minister Modi has restored a faltering economy back on track. The wheels of Government are moving. There is a palpable sense of hope and confidence, and better days to come.
The uptick in the economy is perceptible. GDP growth in FY 2014-15 was 7.4 per cent. The Index of Industrial Production grew 2.8 per cent in the April-February period of FY 2014-15, compared to a decline of 0.1 per cent in the corresponding period last year. The current account deficit has been contained and foreign exchange reserves stood at $341.6 billion at 2015 March-end, compared to $304.2 billion a year ago. The fiscal deficit target of 4.1 per cent of GDP has been achieved. The Wholesale Price Index inflation for all commodities averaged 2 per cent in FY 2014-15, against 6 per cent in FY 2013-14. During the year, the rupee has been one of the most stable currencies against the U.S. dollar. The performance has prompted the rating agencies to upgrade the outlook for India.
PM Modi has moved swiftly in key areas. A fair and transparent auction process was speedily implemented to allocate coal mines, resulting in a surge of revenues to the Centre and to States where the mines are located. In the same vein, the auction of spectrum has set the stage for unleashing the telecom revolution. The decision to shift to pooled pricing for natural gas will help to clear bottlenecks in the energy sector. Concerted steps are being taken to restructure the non-performing assets of banks. The Government has shifted to market-based pricing of petrol and diesel. The landmark nationwide Goods and Services Tax regime is now much closer to taking off.
Changes are happening at the micro level too. For instance, the number of factory inspections by different inspectors is sought to be drastically reduced. Moves are also afoot to revamp the Factories Act, the Apprenticeship Act, the Industrial Disputes Act and the Contract Labour Act. Once these changes are implemented, it will be easier to do business in India.
Many of the initiatives bear a distinct stamp of innovativeness. Game changing reforms such as the JAM trinity (Jan Dhan Yojana, Aadhaar identity, Mobile) for effective subsidy delivery, crucial tax reforms, and huge tax devolution to the states augur well for the nation. The Jan Dhan Yojana connects almost all households to bank accounts. Welfare and subsidy schemes have been redesigned so that leakages are reduced and benefits flow to those who need it the most. The Mudra bank will boost the funding available for small and medium enterprises, who account for the much of the employment generation.
There are numerous missions that have been unveiled. These span a wide spectrum, among them making India a manufacturing hub, making cities smart, improving the levels of sanitation and cleanliness, pushing bottom of the pyramid insurance coverage, developing highways, and capitalizing on India’s coastline and inland waterways.
One of the more notable and visible achievement of the government relates to India’s global footprint. The Prime Minister’s diplomatic push in the past year has extended across a wide swathe of the world — our South Asian neighbours, the U.S., China, Japan, Australia, South Korea, France, Germany and Canada. Key breakthroughs have been made in areas such as nuclear energy, defence, infrastructure and attracting foreign direct investments. India has played a lead role in establishing a multilateral financial institution that rivals the existing World Bank and IMF. The efforts to build bridges to the Indian Diaspora are laudable. He has given a clear message that there is much more ‘ease of doing business’ now in India.
India’s successful rescue and evacuation efforts, in Yemen and Nepal, have raised its diplomatic profile and standing immensely. The payoffs from these initiatives will surely unfold in the coming years. There are areas that still need to be addressed, key among them being legislation on land acquisition, revamping of labour laws, boosting growth and exports, generating employment, and stepping up agriculture output and productivity. The PM carries with him the burden of huge expectations. The initiatives over the past year have sown the seeds of future growth. There is every reason to be optimistic that the reforms bandwagon will keep rolling, steadily and surely.
(Mr. Kumar Mangalam Birla is the Chairman of the Aditya Birla Group)