The recent rate cut by the RBI is expected to provide significant support to the Indian economy The RBl and the central government have now decided to work together to ensure that the cumulative rate cut of 125 basis points is transmitted across the board.

India is moving to a low interest rate regime. Now is the right time for the government to capitalize on the rate cut and move quickly on other administrative and legislative reforms. The Indian economic model is very different from the Chinese one Unlike the export-driven Chinese economy. India is domestic demand-driven and there is no excess capacity of the kind now being witnessed across China.

One reason for the low rate of investment in India is the lack of demand.

This should recede as soon as demand picks up. The lack of good and efficient physical infrastructure provides the government with an opportunity to ramp up public expenditure in sectors that would naturally be crowded with private investment. Taking cue From this, the government had planned large scale investments in infrastructure. These are in addition to the mega investment plans unfurled by Prime Minister Narendra Modi like Digital India’, Make in India’, Start Up India’, smart cities, power sector reforms and coal block auctions.

The manufacturing sector is competitive and is not subsidy dependent like the Chinese counter part. The trickle of investments from abroad under schemes like Make in India’ should soon turn into deluge once the various steps being taken by the government kick into action. The panic driven flight of global financial capital will hopefully reverse in the near future as India provides the best risk adjusted returns on Investment to this capital.

Because of this government’s over-emphasis on the goods and services tax and Land. Acquisition Bill, many in the corporate sector seem to be losing sight of the multiple steps being taken by the Centre. The government is seeking to establish an overarching framework under which citizens entrepreneurial potential can flourish.

“This is what minimum government. maxium governance’ is all about.

The business sector can be excused for its impatience. With the lack of major  reform during the previous regime and 17 months of the Modi government down the line, India Inc is desperate For action.It is seeking palliatives while the government is committed to structural change. A good example of this is the issue of land acquisition.

After strong opposition by various political parties, the government has decided to allow state governments to have their own land acquisition laws.

This, at once, converts a potentially political showdown into a great opportunity for the states to come with their own laws. A healthy competition between states will ensure that the policy is attractive to industry while state-level politics is expected to ensure a fair deal to the farmers. An issue that has also attracted major attention is that how India should focus on the gross value added (GVA) in these times of tax collection and falling subsidies. The GVA has increased from 6.1% to 7.1% of GDP showing that the economy is gathering momentum, rather than being stagnant.

The picture, however, is not rosy. The banking sector, for instance, has emerged as a weak link in the current narrative. The public sector banks (PSBs) are saddled with massive non performing assets (NPAs) and restructured loans of doubtful quality. This is coming in the way of credit flow.

The government has taken a number of steps to restore vitality to the PSBs, including restructuring capital and professionalising the bank management. Steps like putting the focus on micro, small and medium enterprises (MSME) sector finance through Mudra Bank and new initiatives of payment banks will bear fruit in the near future. A free-float currency also provides the RBI with more headroom to take steps to manage capital flows.

In the debt market RRI policy has allowed government to borrow 1.2 lakh crore inter nationally over the next five years, giving ample opportunity to the government to take up mega investment plans, generating the much needed demand push to the economy.  Even the private sector has been per mitted to go for cheaper external commercial borrowings (ECBs).

The economy is gathering momentum and its underlying fundamentals remain strong. India has a government at the Centre that is committed not only to maintain this momentum but to also take steps to further accelerate the growth rate. Opportunities await.

By Gopal Krishna Agarwal,

National spokesperson, BJP

PRIME MINISTER Narendra Modi has been able to leverage India’s economicadvantages to improve international relations and vice versa. He recognises that India’s ambition to become a $10-trillion economy and create 175 millions jobs by 2032 will depend on linking the country’s foreign policy to domestic transformation. The Modi government’s policies have been geared to attract foreign capital and towards regional stability, peace and prosperity.

The prime minister’s personal rapport with international leaders has significantly enhancedIndia’s profile and given it a confidence neverseen before. Western economies are facing serious challenges. Global economic growth is seeing a downward trend.

However, Modi has been successful in convincing the international community that India will realise its true potentialas an economic power. He has removed apprehensions about corruption and showed commitment to reforms in tax and corporate laws, better resource allocation, faster goverment clearances, removal of bureaucratic hurdles and retrospective taxation. Two major apprehensions under the UPA regime – policy paralysis and large-scale corruption – have been effectively checked.

The government has embarked on initiatives like Make in India, Digital India, Smart Cities, Clean India, Clean Ganga, GST and the bankruptcy law, speeded up project clearances and revived stalled projects.

Over the years, bilateral trade relations and agreements have gained enormous significance in the international business arena and are now more influential than multilateral pacts like the WTO and GATT. It is becoming more and more difficult to bring developing countries to common agreeable points at multilateral platforms and, there-fore, small trade blocks like ASEAN, SAARC and BRICS and bilateral Free Trade Agreements have gained prominence. PM Modi has leveraged this tend to India’s economic and strategic advantage. Over a span of two years, he has visited more than 42 countries and nurtured new developmental and economic blocks. The Act East policy connecting Bhutan Bangladesh India Nepal (BBIN) through GPS and common licensing policy, a road corridor from the North East to Myanmar are commendable initiatives.

The Modi government ratified the Land Border Dispute Agreement (LBA) and addressed the maritime boundary dispute with Bangladesh. It fast-tracked development projects in Afghanistan. India’s participation in the development of the Chabahar port in Iran and forging a trilateral pact to build a land transit-and-trade corridor through Afghanistan are stepping stones for bigger future involvement. The PM’s Tehran visit underlined the changing context of Iran, now a stable and resourceful country and important for our energy security.

India-Japan relations are at their best India hopes to attract $5.5 billion of investments from Japan. Modi has built a good rapport with the German chancellor. Germany is the key provider of high-end technology and has surplus capital. India is looking forward to both technology and capital investment from Germany. In partnership with France, India has established the International Solar Alliance, with the head office in Gurgaon. This alliance, with 120 countries as members, aims to harness the country’s solar power potential. Modi’s reconnect with Central Asia has also been a crucial intervention Uzbekistan has strong cultural ties with India. Turkmenistan is rich in energy; Kazakhstan has huge hydro potential while Tajikistan is historically significant. Africa offers India a massive opportunity to expand our global economic footprint. The continent is an important market for the Indian economy. The 54 African states have a combined GDP. Which is larger than that of India? The third India-Africa Summit in New Delhi in 2015 focused on enhancing India’s engage with Africa.

A visionary step of PM Modi was leveraging India’s powerful diaspora. While empowering the diaspora in their domicile countries, the government has coordinated with them for advocacy and building influence. He sought to connect directly with NRIs in a unique fashion. His first outreach in New York – at Madison Square Garden – attracted 15,000 NRIs. About 5,000 people attended his meeting in Beijing whereas over 60,000 people turned up for the Wembley Stadium programme. The significance of the diaspora is self-evident in the flow of remittance to India: According to the World Bank, India received $72 billion in 2015 as foreign remittance, making it the world’s largest remittance-receiving country.

India is now among the world’s top destinations forFDIflows. It has attracted investment of close to $200 billion from foreign in-vestors. In 2014, India’s total trade was 46 per cent of the GDP. India plans to double its aggregate global trade over the next decade.

Our targets for 2019 include becoming the top start-up destination in the world, achieving 60 per cent digital penetration and increasing the share of manufacturing in GDP From 16 percent to 25 percent by 2022.

By Gopal Krishna Agarwal,

National Spokesperson on economic Affairs, BJP

Prime Minister Narendra Modi’s recent trip to America has elevated Indo-US ties to new heights, especially economic partnership. The confidence exhibited at the India-US business conclave earlier this week is a case in point.

His government has recently completed two years in office. Going by the reports of various international think tanks land international institutions, the Modi government has set India on the fast track to growth by introducing a raft of measures to boost the economy.

Recent data from the Central Statistical Organisation (CSO) points towards the fact that the Centre’s focused approach over the last two years is bearing great results. Some people have expressed their reservations on these economic growth figures. But apart from a few well-reasoned arguments, most of the criticism is politically motivated. It should be borne in mind that the GDP now is being calculated using the globally accepted Gross Value Added (GVA) method.

With the growth rate nearing 8 percent in the last quarter of 2015-16, there is no doubt that the economy, which was left in complete shambles by the previous UPA government, is on the fast track to recovery. All fiscal parameters are on target, whether it is revenue collection or expenditure or fiscal deficit at 3.9 percent of GDP.

Per capita income has also risen to Rs 93,293 from Rs 86,879 last year. Experts believe that the economy could grow in the range of 8-8.2 percent in 2016-17. This would be backed by agriculture sector growth surpassing the 3-4 percent mark depending on the monsoon.

All these achievements are the result of the Modi government’s tireless efforts. Flagship initiatives like UDAY, PAHAL, and renegotiating Mauritius tax treaty, the revival of held up projects in roads and rural infrastructure, are showing extremely encouraging results.

These initiatives have created the requisite infrastructure and demand in the economy to attract domestic and foreign investment. Corruption-less and transparent governance in the last two years has added more than Rs 4 lakh crore to the government treasury on account of spectrum allocation, coal block, and mineral auctions, etc.

1 would like to highlight some of the key areas of focus for the government. The first focus is towards dealing with corruption and crony capitalism. Over the past 20 years, the world has been reeling under the thumb of crony capitalists. To the uninitiated, crony capitalism is a nexus between businessmen, obliging bureaucrats, and politicians. It undermines the state, distorts resource allocation and is against the spirit of equal entrepreneurship opportunities.

Through a fair judicial system, efficient regulation and transparency in political funding, one can bring positive results over a long period of time. Immediate steps to tackle this menace include the careful and transparent process of transfer of government resources into private hands, management of state-owned banks, especially their debts and NPAs, control of parking and stashing of illegal money abroad.

On this count government has been very focused and successful in its approach. In its recent edition, The Economist stated: “Encouragingly, India seems to be cleaning up its act. In 2008 crony wealth reached 18 percent of GDP, putting it on a par with Russia.

Today it stands at 3 percent, a level similar to Australia. A slump in commodity prices has obliterated the balance sheets of its wild west mining tycoons. The government has got tough on graft, and the central bank has prodded state-owned lenders to stop giving sweetheart deals to Moghuls. The pinups of Indian capitalism are no longer the pampered scions of its business dynasties.”

A point of caution is that we have to be very careful with the public-private partnership model.Under this system, crony capitalists have devised a mechanism of transferring government resources in a nontransparent manner. A case in point is the DND project in Noida.

The second important issue is the management of overall debt. The world has been witness to China’s financial problems and its debt bust. The Chinese Debt/GDP ratio has increased to 260 percent from 150 percent in a decade. The latest issue of Economist says that its problem loans have doubled in two years.

Hungry for profits in a slowing economy, plenty of Chinese banks have miscategorised risky loans as investments to dodge scrutiny and lessen capital requirements, according to The Economist. “These shadow loans were worth roughly 16 percent of standard loans in mid-2015, up from just 4 percent in 2012.”

There are many lessons India could learn from China. The Modi government has learned them well. Instead of pushing the problem under the carpet, the Modi government has tackled it head on. The ongoing clean-up of bank balance sheets will help spur economic growth and improve the lenders’ profitability. “Prompt actions are being taken on willful defaulters,” said Jayant Sinha, Minister of State for Finance.

“One of the key considerations in a situation like this, the banks should be empowered and consequently protected so that they can bring about prudent settlements,” said Union Finance Minister Arun Jaitley. “The overall operational profit of public sector banks last year was quite significant. It was in excess of Rs 1.4 lakh crore. It is on account of provisioning that the overall the PSBs declared a net loss of Rs 18,000 crore

The government has already enacted the Bankruptcy and Insolvency Code. Another set of amendments to the debt recovery legislation and securitisation legislation are before Parliament. The government is also considering setting up of Stressed Asset Management Funds.

The focused approach is not limited to empowering and supporting banks to deal with NPA menace, but the government agrees that the bad loan situation has also arisen on account of certain sectoral stresses like held up road construction, blocked environmental clearances, and dumping, among others.

The government is doing everything to restart held up projects, clearances, anti-dumping measures and do away with policy paralysis. The government has gone even further ahead and implemented the recommendations of the Nayak Committee Report like the setting up of a Bank Board Bureau.

The third important initiative is the ease of doing business. These initiatives have helped in catalysing private investments. Some of the initiatives include easy exit policy for genuine investors, repealing of about 1000 redundant laws and more to come, faster and transparent project clearance policy and better dispute resolution mechanism in the tax department where thousands of crores of individual and government resources are blocked.

There has been a reduction in the cost of collection of direct taxes from 1.36 percent in the year

2001-2 to 0.59 percent in 2014-15. The government has also initiated premature retirement and the removal of inefficient and corrupt employees from various departments. And finally, targeted and focused approach to ending corruption and black money, giving one-time compliance window to declare illegal foreign and domestic assets.

Some areas, which require flagging for the future, are labor reforms, disinvestment reforms, especially for loss-making PSUs, lowering of interest rates as demanded by business community with inflation, particularly of food items looming large, and land acquisition issues and above all the passage of the Goods and Services Tax Bill.

Narendra Modi’s philosophy of economic development is growth through empowerment. The government has not only been successful in generating resources for the benefit of the weaker sections but also spending this money to reach the target beneficiaries in a transparent manner.

With the use of JAM and direct benefit transfer (DBT), the government has plugged leakages and created additional revenue for social security. The government has given them social security and also generated widespread demand to boost the economy.

The resources at the command of the government are being utilised to build rural infrastructures like toilets in rural areas, electricity to each and every household, housing for by 2022, irrigation and rural roads.

Employment opportunities for the weaker sections are being enlarged through Skill India, Startup India Stand-up India and by easy access to loans under MUDRA Bank. The real game changer in the near future will be the doubling of farmers’ income through reduced cost, better national market access facilities, risk mitigation through user-friendly crop insurance cover, soil health card, efficient irrigation like drip irrigation, neem coated urea and digitisation and reforms of land records, etc.

Truly this government is focusing on the development of all sections of the society across cast, creed, religion and geography. As a result of this focused approach, India has become one of the fastest-growing major economies in the world and has been able to attract largest Foreign Direct investment (FDI). We are sure that the government will not sit on its laurels. There is much more in store.

By Gopal Krishna Agarwal,

National Spokesperson on economic Affairs, BJP,

The announcements on demontisation have created a disruption in the country’s economic eco-system. There is a Debate whether it will help us curb corruption and eliminate Black money. What will be its impact on the economy in the short medium and long term particularly in the important segments such as the rural and agriculture sectors micro small and medium enterprises and the unorganized sector such as small traders shop owners and daily wagers? But demontisation has to be seen in a larger perspective.

Bringing economic growth and curbing corruption and eliminating black money were the two important mandates on which our government came to power. Some important aspects have to be kept in mind. A recent world bank report stated that 20 percent of black wealth of our country is stashed across all assets class- real estate gold and currency etc. The Global Wealth report 2016 shows that 1 percent of the population has over 58 percent of the country’s wealth. In this India ranks second after Russia. It also states that 97 percent has wealth of less than $ 10000- approximately Rs 7,00,000. This points out that over the years a lot of our wealth was accumulated in the form of black money in the hands of a select few. A large population was deprived of benefits of growth. Though the GDP Grew fast employment could not keep pace with it leading to skewed growth in the economy.

This has to be corrected at all cost. Objectives and effects of demonetization cannot not be analysed in isolation. It is a part of the series of measures undertaken by the Narendra Modi Government. The very next day Shri Modi came to power a Special Investigation Team was setup to suggest steps to curb corruption and eliminate black money.

The government has money objectives in mind from demonetization. First , due to huge currency in circulation the economy had inflationary pressure and housing  was out of the common man’s reach.

Demonetisation will reduce prices in real estate and bring down inflation. Second It will bring resources to the government for social benefits schemes for the poor and low income groups and infrastructure development. Third, We will be able to move towards a low interest rate economy. It will help create infrastructure for smoother implementation of GST which will help us reduce indirect taxes. It will also curb terrorist and criminal activities. Fake currencies will be eliminated. As the cost of online payments and mobile banking are cheaper compared to physical transaction, we have to benefit of lower cost of transactions. And finally with audit trail and transparency, There will be higher tax compliance visible from the third quarter tax collection and 15 percent increase in direct tax collection. The government is aware of the liquidity crunch but this will be sorted out by December 30. It will Bring liquidity back into the system but at a reduced level of about 9 percent of GDP.

Objectives and effects of demonetization cannot be analyses in isolation. It is a part of the measures undertaken by the Modi Government

The government knows that a squeeze in liquidity can negatively affect economy activities. Therefore,  It has a roadmap to revitalize GDP Growth. The Increased current account and savings accounts deposits of banks will reduce their cost of funds and increased availability of funds. The Government will focus on credit off take through startup, mudra loans to medium and small and rural sectors of the economy at the reduced rate of interest. Real estate prices have started falling and with the fall in the rate of EMI housing will come within the reach of the common man and will boost the construction industry. If the black money in circulation does not come to RBI through the banks, It will reduce the liability of the central bank bringing several benefits to the economy, but this will be achieved only when black money is not recycled therefore temporary restrictions on withdrawal. With higher tax compliances the government will be able to create a premium on honesty and move towards lower rates of taxation, as already hinted by the Finance Ministers.

Gopal  Krishna Agarwal,

India had 51.52 per cent of population in the working age (15-64 years) in 2016 according to the World Bank. This high ratio of working to non-working age population, places our country in the position to reap the demographic dividend, if we are able to gairifully employ this population. Keeping this in mind and also the fact that employment is poverty alleviating, employment generation has been one of the biggest focus areas of the current government.

Data collection on employment and job growth in India is not satisfactory. The National Sample Survey Organization (NSSO) conducts primary survey on various indicators of labour force and is the most important source of data but his survey is conducted after a gap of five years. Thus. it cannot serve as an effective input for policy making in the areas of labour and employment. There are other primary and secondary sources that provide a snapshot of the employment situation during the interim period but they are not comprehensive in nature.

Labour Market: Structural Regidities

Any assessment of the performance of government must be done in the background of the unemployement challenge that our economy faces. According to official statistics, proportion of person in the laböur force declined from 43 per cent in 2004-05 to 39.5 per cent in 2till-12, with a sharp drop in female participation rate from 29 per cent to 21.9 per cent. Unemployment problem is challenging in India because it emerges from structural rigidities of our labour market, scarcity of capital and low skill levels of our labour force. The present government has tried to tackle each one of these problems.

Critical issue

lndian labour laws are considered compter and restrictive. One of its defining characteristîcs is job security of workers covered undor it. Complexité also implies huge compliance burden for the companies. As a consequence of this, the .labour to capital mtio is low despite the fact that India is a labeur abundant and capital scarce country. Rigidities in the labonr market have alno ensured that the employment elasticity of lndian economy has remained low. Accoiding to, an Intemationa) Labour Organisation (ILO) report, the employment elasticity oflndian œonomy is0.IS pement. Tberefore, GDP growth docsnot leadto commensufate employment generation without focused apptoaeh. Overhang of l8 bour supply also results in lower wage rates, affecting the quality of employment., We also suffer from disguised employment in the farm    sector, therefore providing alternative employment in rural areas is very important, along with time bound target of doubling of farmer’s income.

Addressing Labour Market Rigidities

ln order to address the problem of labour market rigidity, the government initiated a series of steps The most important is the introduction of ‘Fixed term contract’ employment in certain employment intensive industries like textiles. lt allows employers to hire workers for a  pre-defined fixed term with a proportionate share of all the benefits to which any permanent worker is entitled, boosting employment in industries that experience seasonality in production and the employment generated would be formal in nature. Under the new ‘Pradhan Mantri Rojgar Protsahan Yojna’ Government of IndÏa is paying the full employer’s contribution Towards EPF and EPS from IST April 2018 onwards thus encouraging new employment.

lndia has an entrepreneurial culture, which is stultified due to non-availability of capital. According to the NSSO survey of 2013, there are 5.77 crore small businesses, mostly proprietorships, running manufacturing, trading or service activities but only 4 per cent of such units are able to access institutional Finance. The government launched its ambitious scheme of MUDRA (Micro Units Development Refinance Agency) to provide collateral free loan of Rs. 50,000 to 10 lakhs for non-agricultural purpose. As on 29^th June, 2018 the total loan disbursed under the scheme is Re.5, 95,056.15 crore to over. 13 crore individuals.

Employment Generation through Ease of Doing Business

Under the rubric of ‘ease of doing business‘ (EODB) the Labour Ministry has undertaken a number of steps to reduce the compliance burden of the industry. According to the Economic Survey for the year 2017-18, government has numerous technology-enabled transformative initiatives such as Shram Suvidha Portal, Universal Account Number and National Career Service Portal in order to reduce the complexity burden and better accountability for enforcement. Under Ease of Compliance, the government bas pruned the number of registers mandatory for all establishments to be maintained under nine central acts to just five from 56, and the relevant data fields to 144 from 933.

Focus on MSME

The biggest beneficiary of the improved EODB is the Micro, Small and Medium Enterprise (MSME)  Sector., This sector produce 40 per cent of India’s GDP and employs a higher number of people per unit of capital employed. One of the first steps that the present govemment toök after coming to office was to form a taskforce to recommend steps to facilitate the growth of MSMEs. A number of its suggestions like, easier registration and exchange-traded platform for bill discounting has already been lmplemented. The problems of delay in payments have been addressed by ‘MSME Samadhun’, allowing registering complaints online and through Delayed Payment Act. Government e-market portal (GeM) and public Procurement website is providing better access to markets. Credit is being facilitated by Price Minister’s Employment Generation Programme (PMEGP), Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE), ASPIRE Fund of Funds .and Smalll industrial Development Bank  of lndia (SIDBI). As a result of thèse steps, MSME sector is doing well and generating considerable employmeñt. India’s potential for growth in the services sector, catering to such a .large population is being encounged by Ata1 Innovation Mission hand holdñig through Start-Up portal.

Skilling the Worh Force

India faces a paradoxical situation; it has a large labour force, engaged in how productivity jobs and the industrial sector complaining that it is unable to meet its requirement because of the skill gap. Skilling had been on the radar of governments for the last few yearn but the present government has taken the goal of skilling India’s labour force to a completely different level. Ministry of Skill Development añd

Entrepreneurship launched its flagship scheme Pradhan Mantri Kaushal Vikas Yojana (PMKVY) in 2015, under which close to 50 lakh candidates (19 lakhs under PMKVY 1 + 27.5 lakhs under PMKVY 2016-2020 so far) have been trained across the country. PMKVY targets to train one crore youth by 2020. Most of the discussion around the unemploymentsituation in India is based on anecdotal évidence, as the data collection about it is not very comprehensive. Government of lndia is also working on generating high frequency data on employment generation and other mechanisms to plug the information gap. Towards this employees’ Provident Fund Organization (EPFO), Employees’ State Insurance Corporation(ESlC) and the Pension fund Regulatory and Development Authority (PFRDA) released monthly payroll data for the first time for the formal sector to facilitate analysis of new and continuing employment.

Quantity VS Quality of Jobs

A lot of debate has been on the quantity of jobs but      much less on the quality, which is equally important.

India faces a paradoxical situation it has a large labour force engaged in low productivity jobs and the   industrial sector complaining that it is unable to meet  its requirement because of the skill gap. 93 percent of India’s labour Force works informally About 80 percent of it works in the informal sector and the remaining is employed informally in the organized sector of the economy. This mean that the worker has little access to social security and hence these jobs are rightly considered to be poor quality jobs. Due to steps like demonetisation, GST, reduced regulatory burden and financial assistance for PF and ESI, a large part pf the informal sector is getting formalised, improving the quality of jobs.

The noise about lack of jobs does not square with facts that have bearing on employment generation. For example: the government has spent massive amount on infrastructure, which generates highest employment per unit of money spent. Government’s estimated budgetary and extra budgetary expenditure on infrastructure. for 2018-19 has been increased to Rs 5.97 lakh crore against estimated expenditure of Rs 4.94 lakh crore in 2017-18. The Union budget (or the year 2018-19, for the time had discussed number of job- man days that would be created under various government spending schemes like construction of toilets under Swachh Bharat Mission, rural and urban houses under Pradhan Mantri Awas Yojana, rural roads under Pradhan Mantri Gram Sadak Yojana and National Highways etc. In his budget speech, the Finance Minister said that the total amount to be spent by various ministries would be Rs 14.34 lakh crore (including extra-budgetary and non-budgetary resources of 11.98 lakh crore) and this expenditure would create employment of 321 crore-person days. We see that a number of steps have been initiated by the government which together, are likely to have a tangible impact on the employment situation in the country.