Covid opportunity sets stage to ring in mega reforms

PM Narendra Modi’s address on Tuesday was aimed at setting the stage for his government to undertake big-ticket systemic reforms which, if not for the Covid-19 crisis, may have been politically difficult to navigate.

Those familiar with the government’s thinking at the highest levels told ET that major reforms can be expected in agriculture marketing, enhancing the competitiveness of PSUs and simplifying laws to help the private sector make their businesses globally competitive.

With labour reforms already being rolled out by most BJP-ruled states, official sources said the emphasis will be to ensure nationwide compliance and replicate this in other areas such as easier land availability for the industry.

Unlike other countries, the PM was keen not to just announce a financial package but dovetail it with a road map for reforms, which, in his own words, could result in a “quantum leap” for the economy, as per official sources.

The idea, officials said, was to take steps towards “future-proofing India”, through an emphasis on self-reliance. “The PM was clear the package should have a direction and take India forward while fighting Covid. Days of brainstorming has gone into this. Other nations have been reactive to Covid, but India is being proactive. This is not just a financial package but a reform stimulus, and governance and mindset overhaul,” said an official.

Rather than just depend on a trickle-down approach through cash-based incentives like many developed countries, officials said India has opted for economic empowerment alongside funds infusion. This is to be achieved by broad-basing the interventions in a way that they impact livelihoods of all sections of the society — from street vendors and labourers to the middle class and industrialists.

Officials said that instead of tariffs, the package will aim for systemic transformation. They stressed that Modi’s call for a self-reliant India is different from the isolationist and protectionist impulses seen in other parts of the world. “Modi’s vision for India is neither exclusionary nor isolationist. There is a specific talk of improving efficiency, competing globally as well as helping the world,” explained an official familiar with the deliberations.

Government insiders also sought to make a distinction between the self-reliance model that the PM enunciated from what the Congress once followed, saying India was then reluctant to open up to the world. “That led to disastrous results for our economy,” said an official, pointing out that India was now looking within with confidence, not diffidence of the past.

Source: The Economic Times