HE ELECTION WHICH BROUGHT Prime Minister Narendra Modi to power year ago was fought in the backdrop of high inflation, unemployment, fiscal and trade deficits as well as allegations of corruption and anger against the administrative and political elites.
Almost all these issues were structural in nature, and hence, were not expected to be solved within a short period of 12 months. Viewed from this angle, the B JP government’s singular achievement has been to bring down the inflation rate from 11.16 per cent in November 2013 to 4.87 per cent in April this year.
True, many experts have attributed the reduction in the inflation rate to external forces such as the fall in prices of crude oil, agricultural commodi-
ties and gold worldwide. However, in the past, despite a favourable external scenario, the country had witnessed high inflation.
The government was successful in containing fiscal deficit substantially, despite the huge reduction in revenue on account of the cut in ‘ad valorem’ duty on petroleum products. If one thinks that low and stable inflation rate is a pre-condition for a stable and growing society, then India is coming closer to that objective today. Fiscal, revenue and trade deficits were managed with the highest-ever foreign exchange reserves of $352 billion.
The government is also taking several steps to augment infrastructure. In all his foreign trips, Modi has focused primarily on attracting foreign investment for the manufacturing sector. It is also to the credit of the government that norms for investments in defence, insurance and several other sectors have been relaxed to make India more attractive for foreign companies. The defence production strategy, which makes military procurement conditional upon making the equipment in India, will not only create a large number of jobs but also make the country a hub for hi-tech defence manufacturing in the future.
The single-window framework and project management portal is creating an enabling environment for the Prime Minister’s Office to track progress of important projects on a realtime basis. Projects worth more than Rs 6,00,000 crore — in both private and public sectors — are being monitored. Mechanisms have been devised to coordinate with states and cities to expedite projects with periodic reviews taking place and hindrances to project implementation removed in real time.
The concept of‘Team India’ — consisting of Prime Minister, other ministers and chief ministers of various states — has also been well received. Giving a larger percentage of taxes and other revenues to states are well-intentioned and allows for a more flexible approach to implementation on the ground.
Although initiated by the previous government, the new government has built on the direct transfer scheme based on the unique identification number platform and launched a massive drive to open more than 150 million bank accounts with the express aim of bringing a large number of unbanked people into the financial mainstream.
Creating social security schemes such as the accident cover linked to bank accounts, providing micro loans to account holders, launching a pension scheme with
more than 80 million registered users and giving them life insurance have been achievements unparalleled in India’s history. But these were not highlighted much in the ‘middle-class media’. Giving small loans to entrepreneurs through the Mudra (Micro Units Development and Refinance Agency) bank is a brilliant initiative. The Swacch Bharat initiative has also been well received and created awareness about much-needed cleanliness in India.
India is the largest consumer of gold, and gold imports account for nearly a third of the current account deficit. The gold monitisation scheme, which was announced in the Union Budget for 2015-16, will help meet India’s gold demand substantially, and will also improve its current account balance.
The prime minister’s vision to create 100 smart cities, with modern infrastructure to support the large-scale urbanisation without compromising the quality of life, is a necessity, if India wants to become a global leader in the next 20 years. The International Finance Centre (IFC) in Gujarat is one such welcome initiative. The setting up of IFC was part of Modi’s vision, which was supported by the Bombay Stock Exchange (the first stock exchange in the world to sign a memorandum of understanding with Gujarat International Finance Tec-City).
Moreover, infrastructure needs to be created for ports, airports, roads, factories, power, mining, etc. This will not only kick-off employment generation instantaneously, but will also create conditions for job creation in the medium to long term, which will help India in achieving its goal of Make in India.
The first year of the Modi government has seen tremendous energy and initiatives. Some of them have yielded results and others will do so over a period of time. If the prime minister continues with the same zeal for the next four years of his first term, I am sure India will progress much further and fulfil our dreams of a clean, equal and poverty-free India. ED
The author is managing director and chief executive officer of BSE