Lok sabha elections 2024:The Indian economy looks well poised to move to a higher growth trajectory path in the coming years. The latest gross domestic product (GDP) growth numbers point to the inherent resilience in the economy. Against this background, the following can be the main agenda points for the new government.
First, the need to boost consumption is important and here the Budget could be used as the right platform. With tax buoyancy being very high in the last few years as well as the first two months of the year, there is room to rationalise tax slabs under GST. Further lowering of income tax rates is also an option to increase disposable income and hence spending power. The biggest achievement in the last five years has been in better compliance by taxpayers as all loopholes have been plugged. This provides scope for giving concessions.
Second, private sector investment has been lagging and restricted to specific sectors. To make it broad based, from the policy perspective five non-infra based sectors can be identified to bring about some buoyancy. These can be food processing, textiles, pharma, auto and housing. These have linkages with other sectors as well as exports and can be the focus for the next 5 years where there is potential to be leveraged.
Third, the government along with the industry associations need to get the right mix of free trade agreements that are signed to ensure that India can get integrated with global value chains in the next couple of years. Here, it would be essential to also bring in the SMEs and to begin with there has to be some initiative taken to create a pan India association for SMEs so that there is a common voice as well as targeted focus. As MSMEs contribute to 40 per cent of exports, they need to have a voice in decisions and should not be just followers.
Fourth, a nagging issue which has had socio-political implications are the farm laws which have the potential to transform the way agriculture performs. More importantly agriculture needs to be commercialised and hence a special committee needs to be set up which discusses the same with the stakeholders in a time bound manner to have a tenable solution. This will also include a firm stance on policy relating to exports and imports and futures trading. This will ensure that the sector which has been outside the purview of reforms for almost two decades gets back the vigour that is needed to make the sector stronger. India is the largest producer or consumer of almost every farm product and logically should be a price setter.
Fifth, there is still quite a bit of inter-state disparity when it comes to economic development with the southern states having better economic parameters. Here the focus would be on elevating the economic status of states at the lower end of the scale through specific transfers (which could be recommended by the Finance Commission). Also, the central government could work with the concerned states to reach out to the private sector to invest.
Lastly, the policy focus has to be multi-layered to ensure that there is dividend to be had from the demographic distribution of population. This points to the need for having a skilled labour force; and work has to start from school level. Hence education needs a fresh look to ensure that the demand for such skills in a fast growing economy is met. In parallel, the need to improve health conditions is also necessary for which the centre will need to work with states.
Given the strong platform already constructed by the present government, it would require more fine tuning measures to take the economy ahead. The unfinished agenda in the last round can be completed with relative ease so as to reach both the medium and long term goal of becoming a global economic behemoth.
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