The economic upturn and financial inclusion achived in
just one year after the landslide victory of the NDA on the promise of
inclusive growth is almost unprecedented
in the 67 years' post-independence history of the country. Economy has
rebounded on a growth trajectory of 7.5 percent, eclipsing even the China
within a year, from the lowest ebb of last one decade. The wholesale and retail
price indices are now reining at (-) 2.3 percent and 4.9 percent from a record
high of 4.6 percent and 10.2 percent respectively. The current account deficit
(CAD) too is now at less than one percent of GDP after hovering at a record
high of 6.1 percent, only a year before.
On top of all, the new project announcements are picking up fast, with
the promise of a sustainable revival. The NDA government
has well excelled to bring down the double digit CPI inflation hovering at
10.2% level since 2007, to 4.9 percent now. The prices of food articles
were up by 9.5% only a year ago in May 2014 over May 2013. The potato prices were
up by 31% and onion prices too were surging fast at a time when monsoon was
deficient by 12% against a Long Period
Average (LPA). So, the government then, restricted exports of onions and even
dumped the imported onions in market at prices below the import cost and also
raided onion hoarders. In July, it also took a major decision to liquidate 15
million tonnes of food grain stocks to curb food inflation and in September the
APMC law was also changed in Delhi to allow trading of fruits and vegetables
outside the mandi.
But, the flip
side of the story was also equally worrisome, where the falling global prices
of agri-commodities were leading to a slowdown in exports of several
commodities, causing almost a crash in domestic agri-prices, most notably of cotton.
The government therefore, put the Cotton Corporation of India (CCI) into
action, to procure more than 9 million bales at minimum support prices for
giving a breather to cotton farmers and
avert a potential spate of farmer suicides in the cotton belt. Focus is also
being laid now upon the development of
irrigation facilities too, under the Pradhanmantri Krishi Sinchai Yojana to
further help and support the farmers. A fund has also been proposed to be set
up for marginalized farmers with a corpus of Rs. 25,000 crores in the NABARD.
The most praise-worthy feat of the
Modi government is the attempt of financial inclusion of masses, wherein the 80
% of the Indian population was untouched hitherto till last year, by services
like banking, insurance and pension for last 67 years, notwithstanding the nationalization
of banks and insurance sector long back. Almost 68 percent of the population had
no bank accounts only a year ago. The Jan Dhan Yojana has made a miracle of opening
more than 13.2 crore bank accounts with the infusion of Rs 10, 500 crore into
the system in such a short spar. The three recently launched social security schemes viz.
the Pradhanmantri Jeevan Jyoti Bima Yojna (PMJJBY), Pradhan Mantri Suraksha
Bima Yojana (PMSBY) and Atal Pension Yojana have got nearly 6.5 crore
subscriptions. The PMJJBY scheme offers Rs. 2 lakh cover for a mere Rs. 330 per
year provided they are bank account holders and are from age 18-50. Under the
PMSBY, a renewable one-year accident cum disability cover of Rs. 2 lakh is
provided for a paltry premium of Rs.12 every year which an ultimate social
security cover unheard any-where in the world. The Atal Pension Yojana is aimed
to benefit people who work in the unorganised sector and do not fall under the
ambit of regular pension. The scheme offers pension under various brackets
depending on the contribution made over a period. The scheme is for people in
the age bracket 18-40 years. The social focus of the government is quite
unambiguous and explicitly evident from the very fact the government has
continued with previous schemes and linked them with technology for targeted
interventions through the JAM. The JAM (Jan Dhan Account, Aadhaar Cards and
Mobiles number Trinity) as mentioned in the budget speech is an example of the
same.
Government’s move for cooperative federalism
is also well reflected in increased tax devolution from 32% to 42% to the states,
in pursuance of the report of the
Fourteenth Finance Commission, which would ease the central
government stranglehold on states, hitherto mandating them as to which schemes to be run and how. Moreover, allocation of royalties from coal
auction to states will also go a long way in bringing prosperity to
mineral-rich states.
The index of industrial production
(IIP) also reveals growth and revival in most of the important sectors like
manufacturing, mining and electricity among others indicating a rapid
turnaround in offing. The separate ministry for entrepreneurship, along with thrust
on skilling would further bring a sea change on the front of fast overcoming unemployment
and poverty. Industrial policy initiatives for 'Make in India' can also do
wonder if focused on providing impetus for the development of indigenous
products and brands under the scheme. Ultimately the government has to evolve ways
to mobilize domestic resources as well, for investment in trade, commerce and
industry. Impetus being given for greater domestic participation in defence
production is a bold step towards and needs to be further stepped up
In the area of education as well,
the government in past one-year has come up with several new initiatives
including the Beti-Bachao Beti Padhao Abhiyan, Swachh Vidyalaya and GIS Mapping
of schools and has opened several new institutions. Moreover, with respect to
higher education the government seems equally keen to have holistic development
with several new AIIMS, IIM and IIT like institutions being opened in states
that have a paucity of these.
The focus of the government for up-gradation and development
of infrastructure is well reflected in the push for railway up-gradation and
improvement in customer service along with setting up of a target of 30 km
roads a day by 2017. In March this year 11 km of roads were being laid. In the
broad ambit of infrastructure covering the development of roads, highways,
ports, airport, waterways, canals, and railways clearances for projects close
to Rs. 6 lakh Crore across 10 key sectors shows sincere intent on the part of the
government for infrastructure development. The successful auction of the coal
mines, which is slated to rope in a massive 15 lakh crore over the 30-year timeframe
if all the mines are auctioned and work at optimum output. With India Inc’s
hesitation to invest in infrastructure the government has boldly said that it
would finance infrastructure projects more directly till the PPP problem was
sorted out—most PPP projects, across the board, are in all manner of trouble,
ranging from lack of clearances to lack of funds with the promoter.
Rampant corruption and cronyism, that prevailed in allocating mineral rights and other assets to
favoured beneficiaries is no more there
under the Modi government, which has
changed that completely by holding fair auctions for both radio spectrum and
coal mines, and enacting legislation for auctioning other minerals. Stashing of
black money abroad has been proposed to be made punishable with deterring
punishments. The much-needed de-freezing of
defence orders and contracts and pruning the list of defence products that
required licences, would also enhance growth. There has been a spate of other
executive measures for improving the ease of doing business, including larger
scope for self-certification, bringing together 10 licensing requirements on
the single e-biz portal, setting up of new NMZs and an industrial corridor
authority.
Modi
government has swiftly ended the previous regime’s policy paralysis and cleared
stuck projects worth Rs 7 trillion. The economy is therefore, now in quite
a better shape today. Inflation is down; growth rate is up, foreign reserves
have grown by 12% from $304 billion to $341 billion in a year; current account
and fiscal deficits have been reined in and a series of investment projects
have been cleared and new ones announced, especially in the public sector for
quick impetus.
