Prime Minister Narendra Modi has set up two cabinet committees to spur investment and growth and skills and jobs. That the PM, who had avoided the device of the cabinet committee during the first term, has now set up two is a sign that the style of functioning will be different in Modi’s second term, and that’s good. That he will himself head both committees is a sign of the importance and seriousness attached to these vital issues, which had got submerged in the welter of the nationalism and Hindutva-charged election campaign. Modi’s and Finance Minister Nirmala Sitharaman’s priority should be to reverse the economic sluggishness that has firmly set in. Wheels must be set in motion to achieve 10% GDP growth, with infrastructure expansion at the core. For this, big-ticket reforms are needed to revive both domestic and foreign investment cycles to push up economic growth and job creation. This should not be difficult with the ruling NDA commanding 353 seats in the Lok Sabha.
To tackle rural distress and improve farm incomes, one option is to link farmers to the commodities market through the e-nam platform and bring all the mandis onto it. Farm income support scheme could, at best, be a temporary and transitory measure, diversifying the income avenues for farmers should become the Centre’s priority. Involving farmers and their educated wards in the delivery of cost-based commercial and social services in rural areas should be considered. For instance, banking, insurance, pension and community services should be handed over to farmers as individuals, collectives or cooperatives. Leveraging un-irrigated wasteland and common village resources like water and forests with investments up to Rs 55,000 crore in the next three years could take the burden off the farmlands to induce prosperity in rural India.
Unlike in Modi 1.0, when most schemes of the previous UPA government were gift-wrapped and given new names, Modi 2.0 will have to unveil its signature economic agenda to revive sputtering industrial growth and exports. While public investment lead growth in Modi 1.0, domestic and foreign investments will have to take the lead now. The government must divest speedily from the likes of Air India. Consolidation of State-run banks, followed by trimming of the government’s stake in them to 33%, must be a priority, too. Modi 2.0 must move quickly to evolve a national consensus on labour reforms and revive tripartite negotiations with workers’ unions to tackle spreading industrial unrest. Making land acquisition easy for businesses at competitive prices should be linked to realising projects on the ground with firm timelines. Nirmala Sitharaman’s first budget, to be presented on July 5, must set the stage for the much-needed reforms.