All India Association of Industries (AIAI) on 3 years of Modi Government
Mumbai, May 27, 2017: Prime Minister Mr. Narendra Modi completes three years in office this month. Backed by a huge mandate, the new government which assumed charge 3 years ago had raised expectations of the India Inc and common man ubiquitously. Clearly, the euphoria has not dried. As the government enters fourth year, All India Association of Industries (AIAI) feels that the government that started on positive note has taken several pro-industry initiatives to boost economy and support growth and employment. However, the path is only half travelled and the country has a long way to achieve. Government’s clear vision in policy improvement has helped to improve macro-economic indices. However, the government has struggled to generate job employment and it is the biggest cause of concern.
“Since 2014, India has accelerated its growth to 7.2 per cent, 7.9 per cent and 7.1 per cent in last 3 years. With the moderate consumer price index and stability in macro-economic indexes, India is poised for a major leap.” The reduction in both the fiscal and current account deficits have also contributed to stability. This has helped the government to implement several reforms to strengthen the underlying fundamentals of the economy. Various new policy measures such as ‘Make in India’, ‘Skill India’, ‘Digital India’, ‘Startup India’ are excellent policy measures to improve the competitiveness of Indian businesses by providing it a facilitative environment. One of the important highlights is strengthening the ‘ease of doing business’ has been a special focus of this government and it has insistently worked with state governments to bring about an improvement. The higher FDI of USD 55-50 billion is testimony to this.
Urbanisation and urban infrastructure is being supported through the SMART City and AMRUT programmes are important milestones. Government’s focus on accelerating investment in public infrastructure is praiseworthy. Further, a plan like Sagarmala to create coastal economic zones to boost port-led development are necessary steps. Over the next four to five years, USD300-500 billion is likely to be invested in road, rail, inland waterways and port projects. Government’s improved thrust on renewable energy needs a special mention. UDAN regional connectivity if implemented well may prove to be a game changer in improving connectivity across the nation. With the falling prices of solar energy and expected target to achieve last mile electrification, AIAI feels that India will soon become renewable energy powerhouse.
Across the plethora of positives, India needs to achieve on several economic fronts. One of the pressing issues are the slowdown in the rate of banks’ credit growth. Today, banks are saddled with high levels of non-performing assets (NPAs). Mr. Kalantri added, “Government must revive the corporate bond market to tackle the growing mess of NPAs. Revival of languishing PSUs and Infra sectors will be a key here.”
Another stumbling block is job creation. This is one of the major failures of the government. Today more than 25 lakh graduates enter job market every year and government had promised to create 10 million jobs every year and it is worrying that we are not able to generate adequate employment feels Mr. Kalantri. The recent news of job losses in IT industry as well in MSME sectors post demonetisation are increasingly posing challenges to the economy. The job losses in some of these sectors need to be addressed immediately.
The implementation of the Goods and Services Tax (GST) from July this year will be a turning point for industry. Government’s aim to create a “common economic market” will get boost with GST and will help Indian products becoming globally competitive. However we strongly feel there should be three rates only as against the suggested four.
It is apparent that the government is taking various steps towards promoting investment and growth to fulfill its promise to deliver development and prosperity. AIAI feels that the government should continue in its path to achieve economic growth and would look forward to higher policy reforms and measures to support this.