The Bharatiya Janata Party’s stupendous success in the 2014 general elections was down to the common man’s frustration over the state of India’s economy under the Previous United Progressive Alliance government. One year since then, Union Finance Minister Arun Jaitley is probably the best candidate from the current government to assess the progress made by the current ruling dispensation.
Speaking to the media on Friday, Jaitley said that one year of decisive and corruption-free governance at the Centre has set the stage for a double-digit growth rate and promised to continue economic reforms with a view to <g data-gr-id="44">make</g> it easier to do business in India. With the economy growing at 7.5-8 per cent, Jaitley marveled at the reversal in the general mood of the country surrounding its economy and attacked the Congress for positioning itself as anti-growth and anti-development by obstructing reforms measures like Goods and Services Tax and amendments to the Land Acquisition Bill. Allied with falling inflation and current account deficit, it is fair to say that the ruling dispensation has taken steps in the right direction on the economic front.
The first positive step was the massive increase in the share of central tax collections to states. This move is in consonance with Prime Minister Narendra Modi’s efforts to enhance cooperative federalism. The government has increased the state’s share of central taxes from the current 32 per cent to 42 per cent. This massive jump will reportedly add an additional Rs 1.78 lakh crore to the states’ kitty this fiscal year. Experts believe that such a proposal will give states much more leeway to spend according to their needs, although it will leave the Union Finance Minister with lower sums to work with. Consequently, this move will place greater responsibility on states to ensure that they create the requisite institutional capacity to implement schemes and programmes.
The second positive step taken by the ruling dispensation was to create a unified and common domestic market by replacing a confusing array of taxes with the Goods and Services Tax. Not since 1947 has such a revolutionary reform like this been undertaken. A homogeneous GST is an economically efficient solution for all stakeholders concerned whether it be multinationals or those in the unorganised sector. The proposed reform, which will be promulgated soon, will simplify the indirect tax structure to one simplified universal rate, which can be paid by all corporate companies instead of having differential tax slabs. GST is clearly a long-term strategy; it would lead to a higher output, more employment opportunities, and economic inclusion.
It would, however, be unfair to label the Finance Minister’s achievements as merely pro-business. Several pro-poor initiatives, including the highly successful launch of Pradhan Mantri Jan Dhan Yojna (PMJDY) and Mudra Bank, marked this government’s first year. In just 100 days, over 12.5 crore family have been brought into the financial mainstream. The government has also embarked upon the use of Jan Dhan, Aadhar and Mobile (JAM), a unique combination of three, to implement a direct transfer of benefits. This innovative methodology will allow the transfer of benefits in a leakage-proof, well-targeted and cashless manner.
Although questions over the Land Acquisition Bill continue to haunt the government, the basic rationale behind’s the Centre’s move remains firm. With only a 15 percent share in the nation’s Gross Domestic Product, the Indian agriculture sector employs 60 percent of its population. Arguing for the Centre’s Land Bill, Union Finance Minister Arun Jaitley had said that the government has to bring people out of agriculture and create jobs in the manufacturing sector. One hopes that Jaitley and this government can do a better job firming up rehabilitation measures for the displaced.