With the re-election of the Narendra Modi-led NDA government almost certain, attention now turns to what the core economic agenda is, and what should be the major priorities and challenges over the next five years. Our focus is on the micro economy.
Jobs
Economically, there are six core agenda items. First is employment. Various estimates have unemployment as high as 15% for some segments of society, with also the pervasive impact of under-employment ever present (or, those wanting to work more but who do not have the opportunity). Tackling employment generation, including especially more secure, stable and higher value jobs, must be a priority. This has many facets. At the top of the list is reforming labour market laws to free the economy from rigidities and other constraints on hiring and associated work practices. While some progress has been made in simplifying and rationalising labour codes, much more needs to be done. There is a sense that dealing with labour laws has simply been passed on to states in buck passing manner. In addition, a well- crafted industrial policy that has as its focus job creation, revitalisation of existing sectors, and development of emerging sectors, in tandem, needs to be a priority. Government procurement as a means of stimulating the demand side of the equation could also be a major consideration. A sleeper issue that appeared to gain little traction in the course of the election campaign is the need to re-energise the education, skills and training capabilities to ensure that courses and qualifications meet employer and industrial needs in a flexible and adaptable way, and that graduate employability needs to a firm focus.
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Inequality
The second and related imperative is to address rampant inequality. By any measure India has one of the worlds most unequal societies, which is harmful both for social cohesion and economic growth in itself. The Modi administration could take a leaf out of the oppositions book and countenance a Universal Basic Income (UBI). This could be a piloted ‘UBI of sorts, directed at the lower socio-economic groupings in the first instance, and then extended over time, depending on the results of the trial and broader benefit/cost assessments.
Business environment
The third suggested priority is to continue to reform the general business environment. While India has made significant inroads in the World Bank Doing Business Index rising to 77th place out of 190 countries, up from 100th place the previous year, now is not the time to relax. Making continued improvements in infrastructure performance, and promoting greater efficiency and effectiveness of institutions, in the legal system and enforcing contracts for instance, requires ongoing attention. It is also case that the World Bank Doing Business Index captures only Mumbai and Delhi, thus masking what is going on elsewhere in the country, and not addressing uneven spatial performance. The Modi government should build on its previous achievements in areas such as tax reform, more transparency in accessing Government services, and easier business functioning through such measures as the single window clearance for approvals.
Exports
The fourth area of attention is the need to promote greater export performance, and to engage more effectively in global markets. Compared to a number of counterparts, India is not necessarily a leading player in export terms, save for some commodities and ICT in the service sector. A comprehensive export plan, which identifies new markets that have been under-served, consolidates existing overseas markets, integrates India into global value chains, and which links inward investment with exporting, are all critical. In particular, moving towards higher value exports is important as a basis for wealth creation. Addressing the export imperative would enable India to further create jobs, and to address chronic difficulties on the external account.
Science and tech
The fifth area, which may not be front and centre in the eyes of many, is overhauling and developing the science and technology capability and infrastructure. Such an enhanced science and technology capability is necessary to focus effort and address a number of pressing economic, social and environmental problems and issues in areas such as resource management, climate change, urbanisation and food security, among other things. Multi-mission mode is required. The BJP’s election manifesto was light on this respect, apart from proposing a National Research Foundation, working in partnership with the states. Developing, deploying and diffusing the latest technology and research and development is critical to addressing Indias parlous environmental performance, as one example.
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Agriculture sector
Finally, and by no means the least important, is to reform and develop agriculture. While some progress has been made, this is a highly volatile sector. The focus has been on a quick fire subsidy approach rather than a developmental agenda per se. By the latter we mean removing bottlenecks to a seamless national agriculture market (the electronic national market for trading while a fine idea has had patchy success in implementation), ensuring that any price support better reflects demand and supply patterns and moving up-market to facilitate the production of higher value, more lucrative agricultural products (with appropriate research and technological support). Further addressing and reforming the surrounding infrastructure for agriculture in areas such as transport, logistics, warehousing and refrigeration is critical.
The Modi administration will have its work cut out in its second term. It can and must build on achievements, while at the same time boldly tacking new issues and challenges. This is not the time for the government to rest on its collective laurels. The future is uncertain, however, including globally where trade spats, like that between the US and China, cast a pall over the global and national economic environment.
Anand Kulkarni is a consultant and principal adviser for planning and performance at Victoria University.