The newly-elected Government of India has some difficult tasks ahead of it to drive the nation through the next five years.
One of the top priorities is banking reforms. An important policy of the previous government was the Insolvency and Bankruptcy Code (IBC), 2016. The recovery rate through the provisions of this legislation was 43 per cent in 2018-19 against 27 per cent of the previous mechanism used. But the average time to resolve stood at 324 days against the mandated 270 days. The government needs to implement a strict and time-bound process. “Without proper reforms, recapitalisation of PSBs is not effective.”
Second is the the unemployment challenge. According to the NSSO survey, the unemployment rate rose to 6.1 per cent in 2017-18, a 45-year high. Due to demonetisation and GST, 50 lakh people lost jobs in 2016-18 (a report by Azim Premji University). The manufacturing sector’s labour intensity has been declining. Due to demonetisation, SMEs got hurt badly. The Make in India move has not gained ground. However, India will benefit from the changing global scenario like the US-China trade war if it plans its move right. The government should work on an efficient policy to handle this.
Third is the agricultural crisis. The Indian farm sector employs half the workforce but its contribution to GDP is still under 18 per cent. The 2018-19 period has been worst for farmers’ income in 20 years. Due to disinflation in farm-gate prices, farmers are buying the resources at high prices and selling the produce at low prices. Many agricultural policies like farm loan waivers, fertiliser subsidy and minimum support price (MSP) are flawed.
Which are the other problem areas that need the most urgent attention by the government?
As India has emerged as one of the fastest growing economies in the world, human capital plays a major role in future growth. Thus India must focus and invest in this capital.
Firstly, the health sector needs urgent attention. Ayushman Bharat is a great initiative by the government towards making the healthcare burden easy on lower class people. But the outcome of the initiative is not that fruitful, as the biggest gainers under this scheme are insurance companies, not the people. To improve the outcome of this step, equal focus should be placed on issues like developing primary health infrastructure at the local level, maintaining quality and standards.
Secondly, the education sector also needs equal attention. Education at primary and higher levels needs close observation. Data explains unemployment rate is highly concentrated in the educated society rather than the uneducated. Thirty-five per cent of the post-graduates are unemployed in India. This clearly explains a huge gap between skill and degrees. The government should work closely with regulators to fill this gap by investing more on research, easing the regulatory burdens that make institutions to settle for poor quality and standards.
The next sector which needs close attention of the Government is the housing sector. In developing India, cities have emerged as key boosters for numerous opportunities and rapid growth. If cities develop, people will develop as well. The country is urbanising at a fast rate. Funding urban local bodies, rental systems, better governance at metropolitan bodies are some of the key issues the government should concentrate on.
Finally, many sectors like Railways, Coal and Environment lack regulators. Even in the power sector, the regulatory bodies have great powers at state as well as national level, however, their efficiency is in question. To ensure the sovereignty of regulators, ministries should give control to regulators over their finances, hiring process and organisations with minimal interference.
(The writer is a student at IFMR-GSB, Krea University.)