Economy looks up, next 100-day period crucial

Economy looks up, next 100-day period crucial

The first signs of revival in the economy, acceleration in economic growth, enhanced industrial production, exports and manufacturing, have given a boost to the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi.

However, the next 100 days will show how bold the structural reforms are taken to put the economy back on track.

The immediate task ahead for the government will be bringing reforms in labour laws, cutting subsidies and revising the land acquisition laws to bring about ease in doing business and improve supply-side measures to ease inflationary pressure. Experts hoped these reforms would give a strong base for stable long-term growth.

There are tax reforms awaiting to be cleared for greater investment in India. Several sectors have been opened up for the foreign direct investment (FDI). Defence and Railways are among the more significant ones but the FDI in insurance sector needs to cleared by Parliament.

While ease of doing business is the key agenda, there are no practical legislation yet on the Companies Act, 2013, to overcome hurdles affecting hassle-free industrialisation.

Businesses have also been complaining of the government not spelling out its stand on whether foreign investment in multi-brand retail is allowed or not.

On insurance front, the government hopes to get the insurance bill passed in the winter  session of Parliament in November. But it may not be easy.

The  Congress, which originally piloted the bill, has asked the government to refer the legislation to a select panel of the Rajya Sabha. The BJP-led government does not have enough members in the Upper House to get the bill passed.

On indirect taxes front, states have not relented much on the issues regarding Goods and Services Tax (GST).

There were murmurs that Madhya Pradesh and Gujarat, originally opposing GST, have relented. But Finance Minister Arun Jaitley told Deccan Herald that Gujarat still has some reservations and has been asking the Centre that manufacturing states be given greater concession under the GST regime.

Corporates feel that unless the laws on insurance, labour, land acquisition and mining become clearer, the statements by the government will begin to sound like mere rhetoric.

Last month, Minister of State for Commerce Nirmala Sitharaman said the government was thinking of revising some clauses in the Companies Act, but there has been no forward movement yet. A hassle-free Companies Act is a major foundation for future investments.

On the subsidy front, the diesel subsidy appears to be relieving the government in the near future, after the gap between administered and market prices is bridged in a month, but LPG and kerosene subsidies are going to stay, said Jaitley. The government also faces a major challenge in making subsidies more targeted. Reforms in supply and distribution need to be expedited.

Amid all this, there is a hope that the government will pursue bolder reforms more aggressively once the bypolls in major states are over.

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