India has come a long way since the re-election of the Modi government, 2019 General Elections, Article 370 of the Constitution has been abrogated, the long-pending Union Territory status demand of the people of Ladakh has been fulfilled, CAA has been enacted to accommodate the victims of the 1947 Partition, the Bodo issue in Assam has come to an end and the 150-year old Ayodhya dispute has been resolved.
The first year of the Modi government was more about cultural reclamation, and solving old problems that were several decades old. With the nation united and well-integrated, India is now pushing its way towards economic prosperity and with a wave of economic reforms, it is now clear that the second year of Modi government focus on economics. The Coronavirus Pandemic too has turned out to be just the crisis that stimulate bold economic reforms.
The context of Modi government’s first year in power was to fulfil long-pending demands which had propelled the BJP to prominence and power. And the ruling BJP has delivered extra-ordinarily on this front.
One may argue that the Ayodhya verdict was a Supreme Court ruling and not executive action, but we cannot lose sight of the fact that it was years of BJP-led activism that brought the Ram Janambhoomi dispute close to resolution.
But the context of 2020, in India, like any other part of the world is the COVID-19 outbreak, lockdowns and an economic downturn. India isn’t immune from the global economic slowdown and the GDP growth forecasts for the current fiscal are rather bleak.
But India sits in a peculiar position, as the country which is expected to replace China as the global manufacturing hub in a post-Coronavirus world. India has taken note and has kickstarted some big-bang economic reforms, some of them probably as big as the 1991 economic reforms. This means that cultural reclamation takes a backseat for the time being.
In his speech announcing a massive Rs. 20 lakh crore economic package, PM Modi had hinted at reforms.
He had explicitly mentioned Land, Labour, Liquidity and Laws as part of the reforms agenda. The ruling BJP has moved ahead on all these fronts.
BJP states like Uttar Pradesh, Karnataka, Gujarat and Madhya Pradesh have relaxed labour and land norms in a massive attempt to woo foreign companies exiting China.
At the Central level, Union Finance Minister Nirmala Sitharaman has announced massive reforms. The government announced a package of 6 lakh crore rupees, with government-backed MSME loans without collateral alone accounting for 3 lakh crore rupees. Previously, RBI had announced various liquidity measures of more than 6 lakh crores. Out of financial package worth 20 lakh crores, more than half is focused on liquidity.
One of the boldest reforms have been initiated in the Agricultural sector, which is getting deregulated for the first time. Enactments like the Essential Commodities Act and the pari materia legislations called the Agricultural Produce Market Committee (APMC) Act across several states have been watered down by the Modi government and BJP-ruled states respectively.
Both these legislations controlled the demand and supply side of the agricultural sector, strongly regulating farm storage, supplies and prices. But this edifice is getting dismantled to ensure that the farmer gets the highest possible value for his produce.
At the Central level, Finance Minister Nirmala Sithraman has given the biggest push to privatisation since the 1991 reforms. Accordingly, the Centre has announced that non-strategic Public Sector Undertakings (PSUs) will be privatised, and the role of the PSUs will be restricted to non-strategic sectors. Even in the strategic sectors, there will be at least one but not more than four PSUs.
Pushing economic reforms could have never been as easy as cultural reclamation because the fact remains that there is a huge Political Socialism establishment in India which goes all out to oppose such economic reforms. Therefore, you invariably need a crisis that leaves you with no option but to push economic reforms.
The Balance of Payment crisis in 1991 allowed then Prime Minister Narasimha Rao to unveil economic reforms, and the COVID-19 crisis in 2020 has allowed PM Modi to initiate big bang economic reforms. Eyeing an opportunity to make India the ‘world’s new factory’, PM Modi is not letting this crisis go wasted, and therefore the second year of Modi government is going to be all about economics.