Laying firm foundations for the future

In the aftermath of the 2008 financial crisis, which was followed by global meltdown, the Indian economy had to negotiate daunting headwinds. Foreign Direct Investments almost dried up. Exports suffered as demand from the US and European markets nosedived. Domestic market too was not very encouraging. However, over the past two years, the Indian economy, which was floundering like a rudderless ship caught in cross-currents of stalled projects, currency depreciation and dismal employment figures, has come a long way indeed.

Innovative programs like Swachh Bharat, Make in India, Digital India, Skill India, Start Up India, Beti Bachao Beti Padhao, and Mudra Bank etc. have been adopted to resolve existing and long standing issues like financial inclusion, female infanticide, sanitation, unemployment etc. Measures like fast-track decision-making, crackdown on corruption and black money, taming of inflation, and encouraging investment aimed at restoring confidence and boost growth. Further, the government's fight against black money has resulted in the new law against black money held in foreign banks which has already resulted in disclosure of more than Rs. 4,000 crores. The 32-year-old tax treaty with Mauritius has been amended and a new compliance window allowed from June 1 for domestic black money. The introduction of DBT and Aadhaar card resulted in huge savings for the government and helped plug loopholes in the subsidy regime, which used to be a huge source of black money earlier.

The government decided to reform labour laws and improve processes and procedures, resulting in India jumping thirteen positions from last year to rank second among thirty developing countries this year on ease of doing business. The IMF has termed India as a bright spot amid a slowing global economy. This is borne out by the fact that India’s FDI inflows in 2015-16 increased to 55.46 billion dollars as against 36.04 billion dollars during 2013-14. In contrast with a decelerating world economy India showed unambiguous signs of rejuvenation. According to the UNO’s World Economic Situation and Prospects Report, India’s GDP is expected to grow at 7.3 per cent and 7.5 per cent in 2016 and 2017 respectively. FDI has increased by 48 per cent, while industrial output growth picked up from 1.7 per cent in June 2014 to 12.6 per cent in 2016. Inflation is under control whereas foreign exchange reserves have touched a record high of 363.12 billion dollars. For the first time India has overtaken China, with the largest inflow of FDI.

On 21 June this year, in order to lay strong foundations for future growth and to boost job creation, the government introduced substantial relaxation in FDI norms across nine key sectors including defence, aviation and food processing. Prior government approval is not required anymore for up to 74 per cent FDI relating to brownfield investment in pharmaceuticals. In the defence sector, the government has permitted foreign investments beyond 49 per cent, and done away with the condition of access to ‘state-of-the-art technology’. Local sourcing norms for single-brand retail trading have also been relaxed for products deemed as having ‘state-of-the-art’ and ‘cutting edge’ technology. 100 per cent FDI has been permitted in teleports, direct-to-home, cable networks and mobile TV under the automatic route. It has also permitted 100 per cent FDI under the government approval route for trading, including e-commerce, for food products manufactured or produced in India.

The government is also pursuing projects that have long gestation periods but promise enduring benefits for the entire nation. Some of these are enumerated here.

Digital India was launched on July 1, 2015. It envisages creation of digital infrastructure that covers the entire country. The government is seriously promoting digital literacy so that people could avail of the government services electronically, especially in rural areas. The Smart Cities mission too is making impressive progress. It was launched with the purpose of urbanising 100 Smart Cities by 2022. Already work in 20 cities has begun. Others will be covered in due course. Moreover, thanks to rapid growth in its e-commerce, India’s retail sector has expanded at a compound annual growth rate of 8.8 per cent between 2013 and 2015, with annual sales crossing the 1 trillion dollar mark. Today, India is the world’s second largest internet market.

Pradhan Mantri Jan Dhan Yojana was launched on 28 August 2014. It aims to ensure easy and inexpensive access to financial services, namely Banking Savings & Deposit Accounts, Remittance, Credit, Insurance, and Pension. Already, deposits in these accounts have crossed Rs. 30,000 crores. In fact, Jan Dhan bank accounts, Aadhaar identity number and mobile phone connectivity together form the trinity that aims at reforming India’s broken delivery system and facilitating direct benefit transfer through bank accounts.

Pradhan Mantri Ujwala Yojana was launched on 10 March 2016. It has provisioned Rs. 8000 crores for making available LPG connections to the rural poor. People with income of over Rs. 10 lakh per annum were requested to give up the subsidy, which elicited an encouraging response. Consequently, a massive campaign is in progress to provide LPG connections in names of women members of poor households.

To promote sanitation, the Swachh Bharat mission was launched on 2 October 2014. It covers more than 4,000 cities and towns, as well as rural areas. Its purpose is to provide clean streets and roads throughout the country. The campaign also aspires to end defecation in the open by October 2019, and provide toilets for all in rural and urban areas. Similarly, there are ambitious programs for cleansing the country’s rivers like Maharashtra’s Swacch Bhima Nadi Abhiyan and the National Mission for Clean Ganga.

In the budget for 2016-17, an amount of Rs. 19,000 crores has been earmarked under the Pradhan Mantri Gram Sadak Yojana to connect all villages with roads. Even as road construction is going on at the rate of more than 6000 kilometres per year, and targeted for 10,000 to 15,000 kilometres this fiscal, the Rs. 50,800 crore Setu Bharatam program will make all national highways free of railway level crossings. The Indian Bridge Management System is mapping all 1,50,000 bridges in the country. In addition, gradation of bridges is being done through space technology. Further, a total of 208 rail over-bridges and under-bridges will be built at a cost of Rs. 20,800 crores. Besides, 1,500 bridges, which are more than a decade old, will be reconstructed and revamped at an estimated cost of Rs. 30,000 crores.

Several positive steps have been taken for boosting power generation. For example, the defunct Enron project has been revived, thereby creating about 500 megawatts of additional power generation capacity and preventing thousands of crores of bank loans from becoming non-performing assets. This is in line with the government’s plans to make the country energy surplus. According to the Load Generation Balance Report for 2016-17, the Centre has set a target of generating 1,178 billion units with overall surplus of 1.1 per cent and peak surplus of 2.6 per cent. Consequently, the goal of bringing electricity to 18,452 villages may be achieved much before than the target date of May 2018. 

Thus, strong foundations have been laid for building infrastructure, increasing industrial growth and generating employment. Various government departments and ministries are monitoring the progress of specific programs and policies. The Prime Minister’s Office accesses the updates continuously through the E-Samiksha portal. There is optimism in the air as far as improving the people’s quality of life is concerned.

 Broadcast on All India Radio World Service in July 2016