How Modi Government Used India Economic Summit To Showcase Its Reforms Agenda

The recently concluded World Economic Forum’s three-day India Economic Summit focusing on the nation’s economic prospects and social development (organised along with industry body Confederation of Indian Industry in New Delhi) was an opportune platform for the newly formed Narendra Modi-led government to emphatically tell global investors and the industry and economy watchers that it is determined to bring a clutch of path-breaking reforms that will transform the country from a ‘paralysed’ economy to a high-growth juggernaut and a world power.

In fact, the Modi government had a string of pro-reform measures—which it has already initiated—under its belt to showcase at the summit. First it tried to make the mammoth slouching bureaucracy accountable. Then came the ‘Make in India’ campaign which aims to transform the country to the world’s factory and create 100 million jobs by 2022, which was followed by the politically sensitive decision to cut in diesel subsidy which is expected to help hugely reduce fiscal deficit and the move to open the coal sector to the private sector.

The significant representation from the government at the summit—close to half a dozen ministers from Modi’s cabinet, including finance minister Arun Jaitley and power and coal minister Piyush Goyal, addressed the summit—helped sent a strong message that the steps that have already been initiated are just a beginning. This was amply conveyed by Jaitley who inspired hope among the investor community—at home and spread across the globe—by assuring a transparent and rule-based policy environment and promising to continue to push for economic policy changes to make regulations in India more business-friendly. He touched upon two key expected moves to help push this change. First, the government’s resolve to aggressively continue its divestment agenda—Jaitley said the government is open to completely privatising loss-making public sector undertakings (the country has 79 loss-making PSUs of which 49 are sick enterprises) and the government is aiming to bring down its equity in public sector banks to about 52 per cent. Second, the decision to push ahead with reforming the land purchase law, blamed by the industry and business community for slowing industrial projects. The complex procedures of the law—which seeks to set fair compensation for loss of livelihood for farmers who sell their land to industrial or infrastructure projects—have made it hard for companies to acquire land for large-scale industrial projects.

The optimism was echoed by World Economic Forum's managing director Philipp Rosler who told a business daily that Modi government seems to have a strategic vision and the right approach to reform and that the ‘standstill’ like sentiment about India that prevailed before the elections has turned around. Rosler said Modi government has shown that it has a long term perspective and wants to go step by step which is much more realistic than promise everything and achieve nothing.

However, critics are as vocal as supporters and fans and say that the new government has failed to live up to the expectations stirred during Modi’s glossy election campaign trail studded with rhetoric (bullet trains, 100 smart cities, et al). They also say the government failed to use the India Economic Summit as a platform to announce ‘big bang’ reforms desperately needed to take the country ahead towards high voltage growth after years of stagnated momentum, scams and policy paralysis.

Jaitley tried to counter this argument at the summit when he said that consistently and relentlessly pursuing economic reforms, which the government is trying to do, is more practically feasible that a few sweeping big bang steps. It seems, for a change, the investors—in India and elsewhere—have enough reasons to believe what Jaitley is saying.

Image: Indiatimes