What are the economic challenges that Modi must address urgently
The victory of the BJP and the NDA has not only been emphatic it has been largely decisive too. While India has maintained above 7% growth in the five years of the Modi government, it gets a lot more complicated now. The global slowdown, higher oil prices and BREXIT promise a not so healthy cocktail.
Complete reforms agenda
Industry has been talking about third generation reforms but that can wait. The immediate priority for the new Modi government will be to take bad debt resolution and GST to its logical next step. Better implementation of GST, lesser leakages and simpler rates must be something to be worked on immediately. Secondly, the IBC has made a good start but the remaining insolvency cases have to be disposed off quickly to be effective.
Project divestment starts
With a decisive second mandate, the Modi government can afford to be more adventurous. Greater autonomy to the PSUs, majority private participation and strategic sale must be pushed forward on a war footing. It is not just about revenues with respect to divestments. It is also about making the Indian PSU sector more competitive in the global market place. But above all, this effort will ensure that quality paper comes into the stock market. That will largely do away with risk of market bubbles.
Big export thrust
Over the last 30 years, the Indian economy has managed to follow a specific export narrative. Initially in the 1980s it was textiles followed by gems & jewelry. Later, software and pharma became multi-billion dollar export cases. In the last 10 years, India has not really had a clear export story. That is what India needs to focus on. Whether it is automobiles, steel, aluminum defence production; that is a call the government has to make. But whatever the choice, the government must have a multi-pronged strategy. This will include easy funding, easy processes, marketing support, collaborations etc. It is only a combination of all these that can give a true-blue thrust to exports.
Need to create more jobs
The people did not really question the Modi government on jobs in his first five years. However, voters may not be so charitable in the second innings. The government needs to seriously brain- storm on how to create more jobs. Agricultural has to become more profitable and SMEs need to get back their thrust. Government recruitments must start in a big way and the government has to take the lead on this subject. CMIE data may or may not be precise but intuitively you can see the unemployment problem all around. Jobs can put an end to a lot of problems, including that of consumer demand!