Reforms for a new India in the 21st century

By Nirmala Sitharaman

This year, we mark 30 years of the deregulation of the Indian economy. It began, as some would argue, under the compulsion of the Fund and the Bank, with a looming balance of payment crisis. By then, the economy was almost completely constricted by the rule of licenses, quotas, and discretion, with no breathing space for enterprise.

 

Suffocated as it was, the economy welcomed the breath of fresh air with the liberalization of 1991. We recall the political will of Prime Minister (PM) PV Narasimha Rao and an abiding finance minister (FM) Dr Manmohan Singh for having pulled it through.

 

Just before that lost decade, Prime Minister Atal Bihari Vajpayee showed this political will and commitment in planning for the Goods and Services Tax (GST). However, that failed to take off between 2004 and 2014. Both GST and the Insolvency and Bankruptcy Code (IBC) were passed by the Narendra Modi government in its first term.

 

The National Democratic Alliance (NDA), under PM Modi, believed and committed itself to deregulate our economy. It was stated in “minimum government, maximum governance”. The simple guiding philosophy, Sabka Saath, Sabka Vikas, Sabka Vishwas meant that there shall be no discretion or appeasement on any ground — no “first charge on the treasury” exclusively to anyone.

 

Minimum government, maximum governance implies that both structural reforms and ease of doing are being undertaken. Disinvestment, deregulation, monetization are happening equally as archaic laws are being banished, compliances are being brought down in number, and greater transparency is infused by the adoption of technology.

 

Archaic laws, irrelevant even as they may be, were useful instruments for unscrupulous regulators. In the first term itself, PM Modi ensured the weeding out of 1,200 such laws, discarding 58 more in the second term.

 

Sabka Saath, Sabka Vikas, Sabka Vishwas is the all-inclusive, non-discriminatory empowering objective. It clears out all the pitfalls and biases of all earlier attempts at welfarism. Equally, it settles the debate of welfare-versus-reforms for development. It is a philosophy that believes in empowerment and discourages patronage.

 

The previous government’s emotional but stand-alone call to remove poverty, garibi hatao, failed because it was not well thought-through. It did not simultaneously build the necessary ecosystem for aspirational growth and choice for individuals.

 

This is clear especially in how the PM Jan Dhan Yojana, coupled with the near saturation achieved in the Aadhaar, and spread of mobile usage — JAM, the triad for financial inclusion — in addition to Direct Benefit Transfer (DBT), proved effective during the Covid-19 pandemic.

 

The health sector and its regulations are being ramped up. Power sector reforms are being undertaken to bring in private sector efficiencies and comply with sustainable environmental goals. The importance of one nation-one ration card being achieved through digital technologies cannot be lost on any of us. Migrant workers and their families so deserve it.

 

Prepared in the midst of the pandemic, for lifting the economy out of the hardships faced by this unprecedented situation, Budget 2021 gave a leg up for infrastructure spending. It also lays a policy prescription for public sector enterprises and provides a road map for financial sector reforms.

 

The 1991 reforms were the 20th-century story. Being undertaken today are the reforms for a New India of the 21st century.

 

(Nirmala Sitharaman is India’s Finance Minister. The op-ed appeared in The Hindustan Times)

 

 

Image courtesy of Wikimedia

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