Modi’s economic ideas have won India’s trust in 2019. Now he must begin to implement them

From revisiting ‘Make in India’ and fixing GST anomalies to addressing agrarian stress, Modi’s NDA will need to be bold in its second term.

File photo of Narendra Modi | SeongJoon Cho/Bloomberg

The Narendra Modi-led National Democratic Alliance had swept the Lok Sabha elections in 2014 on a promise of inclusive economic development – “Sabka Saath, Sabka Vikaas”. Modi has continued with this winning streak in 2019, leading the NDA to another sweeping victory. In its first five-year term, the NDA developed an economic agenda that sought structural policy changes and economic reforms as Modi quickly diagnosed the key impediments throttling the nation’s economic engine.

‘Ease of doing business’ was identified as a key factor to restore investor confidence and push the economic growth agenda. To enable businesses, concepts like self-attestation and five-year licence renewal were sought to replace the annual renewals.  However, policy shapers should not just reduce the height of speed breakers but remove them altogether if business is to run faster. For example, perpetual licences with self-attestation and periodic compliance audits ought to be the way forward to break free from the ‘licence raj’.  While it’s true that India has moved up to 77th position in the World Bank’s ‘Ease of Doing Business’ ranking for 2018, NDA 2.0 ought to measure ease of doing business by benchmarking current practices with those of the Top 10 countries preferred by international businesses.

‘Make in India’ was another lever to spur the economy through investments and catalyse jobs creation. However, failure to back it with the appropriate fiscal incentives that could reduce cost of capital and cut the gestational time for realising return on investment led to sub-optimal investments in both greenfield and brownfield manufacturing projects. NDA 2.0 must revisit this economic driver and reinstate Special Economic Zones (SEZs) and other fiscal incentives.

Let’s look at another potentially game-changing idea, ‘Start-up and Stand-up India,’ which was aimed to be a disrupter in jobs creation and economic growth.  Looking back, we can confess that the policies were sub-optimal and did not serve to deliver on the potential of this opportunity of transformational inclusive growth. Start-ups are mired with bureaucracy, starved for capital and have remained stunted or perished. Having personally gone through the experience of founding start-ups simultaneously in Boston and Bengaluru, I know what travails start-up entrepreneurs face in our country. I was able to register a company and commence operations in less than a month in Boston whilst I am still dealing with compliance formalities in India and yet to start. This sector needs urgent attention and both investors and entrepreneurs must get tax breaks, tax holidays and other incentives.

Then comes the Goods and Services Tax (GST), a great reform that could have been the elixir for accelerating the wheels of our economy, but we botched up the roll out. NDA 2.0 must urgently fix the anomalies and implement a single slab GST of perhaps 15 per cent to boost our sagging businesses and revive consumer spending. The flawed multi-tiered GST unveiled by NDA 1.0 has decimated the garment industry and hurt Farmer Producer Organisations (FPOs) in the agricultural sector.  The automobile and FMCG sectors are slowing down, which is a cause for huge worry. GST rationalisation has to be an urgent deliverable for the new government.

Agrarian stress has been highlighted throughout these elections as a blot on our economy. NDA 2.0 must focus on innovative policies to create viable and sustainable farming models.  FPOs are the best co-operative farming models available to provide equity to farmers. They can also be leveraged to create value-added agriculture through food processing projects. Welfare funding programs like MNREGA, which aims to assure ‘part employment’ to unskilled labour for a certain part of the year, have fallen short of creating viable economic equity. The same funds ought to be directed to FPOs and micro-entrepreneurial clusters that can boost our rural economy.

I now come to the path-breaking Universal Healthcare scheme, Ayushman Bharat, which the NDA 1.0 needs to be commended for initiating. NDA 2.0 needs to shape this into a viable and sustainable scheme that involves primary healthcare clinics (PHCs) and private sector hospitals. Technology needs to play a key role in early diagnosis and down-staging chronic diseases to sustain the viability of the scheme.

Another huge opportunity recognised as being disruptively transformative is the ‘digital economy’ and ‘e-commerce’. Digital payment gateways, online retailing, on demand services, e-education, e-healthcare etc. must be further enabled by NDA 2.0 through bold policies that empower, not hinder such businesses.

Importantly, NDA 2.0 has the mandate to quell the unfounded allegations on personal data security. India must wisely leverage the Aadhaar unique identification system and pull ahead of other economies in the way it delivers social welfare schemes and other personalised schemes including universal healthcare.

Innovation must be fostered and I do hope NDA 2.0 will double its spend in R&D and Science & Technology.

In conclusion, I would like to convey that NDA 1.0 succeeded in formulating a five-year strategic plan which has been well appreciated by the country as is evident from the poll results. Therefore, NDA 2.0 must focus on the implementation of this plan in order to unlock opportunities for inclusive economic growth.  Over the next five years NDA 2.0 must introduce policies that are bold, innovative and transformational to translate the economic potential into prosperity for all.

Kiran Mazumdar-Shaw is an entrepreneur and an investor in ThePrint. Views are personal.

To get the latest updates on the Lok Sabha election results, click here