Economy, Budget 2019
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Every political party issues an ‘Election Manifesto’ before the elections. The manifesto promises various developmental activities if the party comes to power. Similarly, the Bharatiya Janata Party (BJP) has made 75 promises that define its vision of a resurgent India. Apart from aiming to make India the third-largest economy in the world by the year 2030, this manifesto promises to double farmer’s income and usher in several economic reforms to give shape to its slogan of ‘Sabka Saath, Sabka Vikas, Sabka Vishwas.’

What does India want from the Budget by Modi 2.0?

Before we proceed into the details of what the government should do to fulfill its economic promises in the next five years, we shall look into some of the promises made by the BJP in its election manifesto.

Promises made in BJP Manifesto – A gist

Primary Aim – Make India the world’s third largest economy by 2030

Agricultural Sector

· Double farmer’s income by 2022

· Launch an attractive pension scheme for all small and marginal farmers, thereby ensuring social security to farmers after 60 years of age

Infrastructure Sector

· A pucca house for every family

· 100% electrification and LPG gas cylinders for every rural household

· Ensure toilet in every home

· Unify water management functions

· Double length of national highways

· Increase the number of operational airports

Railways Sector

· Broad gauge conversion of all rail tracks and electrification by 2022

· Build a dedicated freight corridor project by 2022

Education Sector

· Cover all secondary schools under the Operation Digital Board

· Increase the number of seats in management, engineering and law institutes

· Provide financial support to MSME units in north-eastern states by constituting a new ‘Entrepreneurial Northeast’ Scheme

Health Sector

· Carry forward progress made under Ayushman Bharat

· Increase doctor-population ratio to 1:1400

Economy

· Improve ‘Ease of Doing Business’ ranking

· Improve GDP share from the manufacturing sector

· Double India’s exports

· Ensure the growth of the retail business

· Single window compliance and dispute resolution mechanism for MSMEs

· Reduce tax rates while ensuring higher collection and compliance

· Incentivise compliance of the law

Inclusive Development

· Ensure complete immunisation of children

· Make all government buildings accessible

· Ensure comprehensive social security for unorganised labourers

Women

· Increase the female workforce participation rate

· Enact legislation against Triple Talaq

Good Governance

· Make banking services accessible to all by having a bank every 5 km

· Increase digital transactions

· Reduce air pollution levels

· Put an Indian into space in an indigenous spacecraft

Cultural Heritage

· Clean Ganga by 2022

· Complete all projects under various schemes

Now that we know the key promises made by the BJP in its election manifesto, let us see what the government should do to fulfil its economic obligations.

What should the government do?

Economic development is not possible without emerging the other sectors linked to it. It includes all the sectors mentioned above. Hence, the government has to ensure to fulfill all the promises made above to enable India to become the world’s third largest economy by 2030.

· Resolve the agrarian crisis

India is an agricultural economy. Hence, any efforts to improve the overall Indian economy should start with agriculture. At present, India is in the midst of an agrarian crisis because of the failure of the monsoon. Secondly, the farmers are not getting enough compensation for their produce. There is a massive difference in the price that consumers pay and the amount that the farmers receive. It is because of the presence of intermediaries in the business who take away a significant chunk of the profits. Thus, the farmer does not get the money he/she deserves.

The immediate task before this government is to eliminate these middlemen and ensure that the farmers receive apt compensation for their produce. Setting up a transparent market where the farmers sell the produce to the government at pre-determined rates can help to eliminate the middlemen in the trade. The government should increase the MSP (Minimum Support Price) of agricultural products, whereby it guarantees a minimum fixed income for the farmers. This government plans to create 10,000 new Farmer Producer Organisations to ensure that farmers get the right price for their produce.

The other area of concern for farmers is the loans they take from moneylenders at exorbitant rates. Hence, a significant portion of the farmer’s income goes towards repaying the interest component of these loans. The solution is to make sure that the farmer gets subsidised loans from banks. The government can go ahead and reward good credit behaviour by reimbursing the interest paid by the farmers. It is any day better than the en-masse writing off of farmer loans to reduce their debt. Usually, the undeserving farmer benefits more from such debt waivers, whereas the good farmer ends up repaying his/her debt on time.

The government can also arrange for a comprehensive crop insurance scheme to benefit all farmers in case of crop failure or other natural disasters. Under the present circumstances, the small and marginal farmers do not get the benefit of such insurance schemes. Secondly, the amount of red tape involved in such matters dissuades the farmer from availing the benefits of crop insurance schemes.

Improving the irrigation facilities can also help in providing the much-needed water for agricultural activities in drought-affected areas. The government should strive to encourage farmers to form

groups and set up irrigation facilities to bring water to their fields. In this way, the individual farmer ends up saving much money because of common installation facilities.

The disparity and inconsistency in the maintenance of land records are a matter of great concern. The government has much work to do in digitising land records and making them accessible at the click of a button.

Finally, the small and marginal farmers over 60 years of age need support from the government. A pension scheme that guarantees a stable and minimum income should be of great help under the circumstances. The government has already started its work in this regard by promising to pay Rs. 6000 every year to each small and marginal farmer directly into his/her savings accounts.

These initiatives can help in increasing the overall income of the farmer, thereby improving his/her financial condition. It can have a compounding effect on the economy as the purchasing power of the farmer increases. It sets the ball rolling for other industries to follow suit.

· Resolve Infrastructure Woes

The previous government had already started the Pradhan Mantri Awaas Yojana to enable every Indian family to own a house in its name by the year 2022. This government has to carry on this initiative to fulfill the promises made in its election manifesto. Similarly, the manifesto also promises LPG connections and electricity to 100% of rural households. The manifesto also speaks of providing piped cooking gas in the major Tier 1 and 2 cities. To achieve these objectives, the government should improve the infrastructural facilities.

Improving infrastructure involves the construction of roads, railways, airports and other facilities. These activities generate ample employment for people, thereby increasing their income levels. It also improves the connectivity between the different cities and villages in India to ensure the smooth movement of goods and products from one place to another. The construction of quality roads and improvement in the railways’ infrastructure results in better trade performances because of the quicker movement of goods from one place to the other.

The manifesto speaks of doubling the length of national highways and conversion of rail tracks to broad gauge by 2022. It also promises to ensure electrification of all railway tracks in India by 2022. The government can also plan to have a dedicated freight corridor to ensure free movement of goods. Equipping the major railway stations with Wi-Fi facility can also improve the communication levels between different sectors, thereby providing better connectivity.

· Improve the industrial scene

A robust industry is necessary to drive the economy forward. The government in its earlier innings envisaged programmes like ‘Make in India’ to boost the MSME sector. It had also put forward the Mudra loan schemes where small and micro-enterprises could get loans from banks to initiate start-ups. The present government is committed to continue the same programmes and take the MSME schemes forward, thereby boosting the industry as a whole. It also has plans to formulate a new ‘Entrepreneurial Northeast’ programme to provide financial support to MSMEs in the north-eastern states. It can also go on to generate employment in these states.

· Revitalise the Health Sector

The Ayushman Bharat Medical Insurance is already in force. The previous government had introduced this insurance product to ensure that every Indian has access to quality health services. The present government plans to expand the scheme to include as many people as possible under the Ayushman Bharat umbrella. This product solves a significant source of worry for all households. As it takes care of all kinds of emergency medical expenses, families end up having a higher disposable income on hand. Consequently, it helps to boost the economy because of the higher purchasing power in the hands of individuals.

Besides ensuring to expand Ayushman Bharat scheme, the government plans to set up 75 new medical colleges all over India. This move will increase the number of doctors graduating from these colleges, thereby improving the doctor-population ratio to 1:1400. The government has a task on hand to enhance the quality of medical diagnosis. It plans to address this issue by setting up telemedicine and diagnostic laboratory facilities, thereby ensuring proper medical care to the poor at their doorstep.

· Economic Reforms in the offing

India aims to improve its rank in the ‘Ease of Doing Business’ ranking. It will be possible only if the government proceeds to digitize all its procedures. The government should set up facilities to provide a single-window approach to resolving all issues faced by business units. India has the talent to be the best in the manufacturing sector in the world. The initiatives like Make in India, Digital India, and Start-up India are a step in the right direction to encourage entrepreneurs and promote the ease of doing business. These measures could go on to reduce our dependence on imports while improving our exports at the same time. As a result, the manufacturing industry can become one of the highest contributors to the GDP.

The government should work towards doubling the total exports by providing attractive incentives like interest subsidies and making it easy for exporters to access quality bank finance.

The government plans to establish a National Trader’ Welfare Board and formulate a national policy for retail trade to increase the growth of the retail business in India. A robust retail trading system will ensure that people get their products at a cheaper rate. You need a stable taxation structure to provide such substantial growth. The concept of GST is a welcome step in this direction. The ‘One-Nation-One-Tax’ concept has made it transparent and easy for the manufacturing, trading and service sector. The government should consult experts in the matter and tweak the GST regime to ensure maximum compliance. They can also incentivise compliance, thereby encouraging people to become transparent with their dealings. It can make it easy to do business in India.

The income tax structure in India today is good enough to increase the total taxation base. The government should take steps to reduce tax rates, thereby ensuring higher tax collection because of greater compliance and widening of the tax base.

· Good Governance holds the key

The government has always advocated good governance in its earlier stint in the Parliament. It proposes to carry the endeavour forward and ensure that there is a maximum level of transparency in governmental deals. By promoting and increasing digital transactions, it aims to increase the confidence of its citizens in dealing with government officials. Good governance plays a vital role in the improvement of the overall Indian economy.

The government is committed to inclusive development by taking everyone along with it. When you do not leave out any community behind, it improves the trust factor that people have in the government. It explains its slogan, ‘Sabka Saath, Sabka Vikas, Sabka Vishwas’.

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