Paradigm shift in governance

The Prime Minister set the tone for development and growth by announcing programmes like Make-in-India, Start-up India, Skill Development, MUDRA, PM Jan Dhan Yojana, JAM, DBT and several more. To support these initiatives, he put in place the required framework for policies and reforms. The decision of demonetisation and the amnesty scheme to flush out black money assisted in cleansing the economy to a certain extent. The creation of NITI Aayog in place of the outdated Planning Commission is in line with the new demands and aspirations of a young nation and a "New India".

The historic indirect tax reform, the boldest step since Independence, came with the introduction of GST (Goods & Services Tax) on the midnight of June 30, 2017. The GST regime put the countrymen under a "One Nation One Tax" administration. The reform is aimed at bringing forth transparency in taxation with an ultimate goal of safeguarding the interests of the consumers as well as the business and industries. The indirect tax reform decision, supported by all the states in the country including Jammu & Kashmir, was hailed by many countries world over. The signals from the first month of GST implementation display a promising trend with a bright economic future for the nation.

Meanwhile, the Modi government has achieved thunderous success as far as the implementation of the Direct Benefit Transfer (DBT) policy is concerned. Particularly, the DBT introduced for cooking gas proved to be the biggest DBT scheme in the world. Nearly 15 crore cooking gas consumers have come under the DBT known as PAHAL which has been acknowledged by the Guinness Book of World Records. The DBT has saved over Rs 56,000 crore of government money from possible leakage. The NDA government is now proposing to introduce DBT for fertiliser and kerosene subsidies on a pilot basis.

The UPA policy of retrospective taxation and the stagnation in further opening up of sectors spoiled the environment for Foreign Direct Investments (FDI) in the country. Soon after coming to power, the NDA government announced that the retrospective taxation aspect would be considered case by case in a bid to assuage the feelings of the foreign investors. It liberalised the FDI policy and announced a slew of decisions to attract off-shore investments in sectors like insurance, railways, defence and retail marketing.

The Union Finance Minister, Arun Jaitley, in his budget speech, announced that FDI in insurance will be automatically allowed upward of the sectoral cap of 49 per cent. He also allowed more than 50 per cent FDI in defence. Not only that, most of the railways sector was opened for 100 per cent FDI with DIPP Press Note 8 (2014), issued on 8/27/2014. Similarly, the DIPP Press Note 12 removed almost all restrictions prevalent on FDI in construction. Removing the restriction on foreign investment in single brand retail, the Centre also allowed FDI up to 100 per cent via the government approval route additionally requiring that 30 per cent of goods sold in the first five years should be manufactured in India. This period is tolled at three years for 'cutting edge' technology. The Government also allowed for more than 50 per cent foreign investment in direct retail e-commerce with a rider that FDI is not allowed in business-to-consumer e-commerce unless all items are being sold under a single brand while meeting local content requirements. The NDA government has placed the fuel pricing reforms on fast track. Following the deregulation of petrol prices, the diesel prices were deregulated from October 18, 2014. Similar applies to the natural gas pricing.

Realising that the mining sector plays a key role in propelling growth, the Modi government placed laws and policies for the development of the sector. The MMDR Act was amended to bring in transparency in leasing out non-coal major minerals. It also opened the coal mining sector to private and foreign investments by a legislation, the Coal Mines (Special Provisions) Act, 2015 on March 20, 2015. The transparent e-auction in the mining sector has also fetched the government massive revenue. Similarly, changes were brought in the policies to conduct the telecom spectrums with utmost transparency. India has now conducted multiple free and fair telecom auctions with no complaints from stakeholders.

As an aspect in the ease of doing business, the government extended the expiration date of industrial licenses. DIPP issued an order on December 20, 2014, increasing the maximum validity of an industrial license from two years to seven years. Removing sectoral investment limit, the government on April 10, 2015, removed the last 20 products from the reserved list. The government has also recently enacted bankruptcy laws to ease out the path for companies to opt for liquidations.

The Modi government has several reform initiatives on its agenda. Now, a further reform in subsidy expenditures is the top priority of the government. Bringing in reform is a long-term, continuous process. The real dividend of the reform processes that have already been initiated is expected to come in place within the next two years. PIB