Sarkar’s Reform Mode: On various economic reforms by the govt.

What is the news?

In the last few months, the government has become more aggressive towards reform as evidenced by several recent policy changes.

Introduction

The post-Covid, or rather the living-with endemic-Covid world offers major opportunities for India to accelerate its economic growth momentum again.

This economic growth alone will get us out of the job crisis and increase incomes, both of which have taken major hits due to Covid.

What are the recent reforms undertaken by the govt to boost economic growth?

Scrapping of retrospective taxation laws: This change was universally welcomed by the investor and corporate community and this amendment alone signalled a new outlook towards private companies.

Asset monetisation programme: This programme aims to raise Rs 6 lakh crore, by letting private players harness public sector assets for a certain duration, without any transfer of ownership. Again, this reform signalled a move to make the government work ‘with’ the private sector, rather than ‘versus’ the private sector.

Reforms in the telecom sector: These include a four-year moratorium for companies from paying statutory dues, changing the definition of revenues on which levies are paid, allowing for 100% investment through the automatic route and permission to share spectrum. These reforms were directly targeted to provide immediate relief to the telecom sector companies, some of which have massive debt obligations due to statutory dues. Again, the attempt was to change the government attitude from ‘who cares’ for the private sector to ‘we care’ for the private sector.

Air India sale deal: Many plans have been made to sell the airline. However, due to unreasonable expectations from past governments, the deal remains a non-starter. This time, with debt guarantees and transfers, the government was able to get two real bids from the Tatas and SpiceJet. To sell a loss-making government airline is a challenge in the best of times, to be able to pull it off in the middle of a pandemic will be a major win.

Other Reforms: The Ambitious infrastructure plans, for example, The Delhi-Mumbai expressway also count as a major reform. Digitisation and online services projects done or underway in all major government departments also count towards reform.

Source: This post is based on the article “Sarkar’s Reform Mode” published in TOI on 25^th September 2021.