SPONSORED BY

Auto Segment
Mutual Fund Segment
My Budget
Expert Speak
In Association With
 
Business Standard

Vandana Gombar: Journey to 2014

There is a good chance that by 2014, the economy would be at or near a double digit GDP growth rate

Related News

It seems that notwithstanding the global financial crises, India is set to become a high-growth state and more of a under the new government. The so-called work programme of 2009-2014 has already been chalked out in the party manifesto and there should be no political or other constraints in pushing it through. There is a good chance then that by 2014, the economy would be comfortably chugging along towards a double digit growth rate or may even have reached it. At the same time, the footprint of the state would be much larger in the welfare space. Here are the key elements of that journey to 2014:

The boost: While there may or may not be another stimulus package, the move to a “moderate” goods and services tax (GST) in about ten months would provide a big boost to the economy. As much as $15 billion of additional output could annually be added to India’s trillion dollar economy as a result of the tax which would subsume all other central and state level indirect taxes and lead to the all-India common market.

The productivity push: The plan to invest Rs 30,000 crore or a whopping $6 billion on a nation-wide skill development programme focused on the youth of the country should enhance national productivity, even if one assumes a low efficiency of the spend. Similarly, the plan to connect each and every one of the 600,000 odd-villages of the country to a broadband network within three years would yield productivity gains even if one takes into account the fact that many of these villages continue to be denied the most basic facilities like electricity and water. There is also the odd chance that broadband connectivity would expedite the provision of other basic support infrastructure.

A Welfare State: Having sensed that its aam aadmi thrust has yielded results, there is going to be no holding back the Congress government on its welfare agenda. There is a plan for enactment of a Right to Food law. There is a commitment to provide 25 kilograms of rice or wheat monthly at Rs 3 a kilo for families below the poverty line. Subsidised community kitchens are proposed to be set up in all cities for the homeless people and migrants. And of course, the rural employment guarantee programme is to be strengthened. There is also a plan to extend rural health insurance to every family living below the poverty line in three years. Social security cover for urban homeless, elderly and backward communities is proposed. Educational loans or scholarships are to be extended to all students. There is talk of more schools with better trained teachers. There are special incentives planned for survival of the girl child aimed at correcting the adverse sex ratio. There are also plans to take forward the scheme of monetary incentives to female students on the completion of various levels of schooling. The spends on these initiatives are certain, even though the outcome may not be.

Welfare agriculture: In the case of agriculture, what is proposed to be done to boost industralisation of agriculture is not so clear though the welfare aspects of the government’s agricultural plan are clearly marked out. All small and marginal farmers in the country will have access to soft loans. To check the moral hazard that arises from the massive loan waiver programme, there is a plan to extend interest relief to farmers who repay their loans on schedule. Crop insurance, direct income support to farmers in ecologically vulnerable areas and procurement at the doorstep of farmers are some of the other measures that are proposed in this term.

Missing the SME beat: The one sector which would boost employment and growth together would be the small scale industry, which contributes 40 per cent to the national manufacturing output and accounts for about a third of the country’s exports. The small scale units are among the worst hit by the financial crunch though they are yet to get a serious relief package. The Congress party has however promised a “new deal” for the small units, as well as first generation entrepreneurs, which would include access to collateral-free credit and freedom from multiplicity of laws and inspectors. There is also a plan for a cluster-based approach to growth of SMEs though one needs to see how quickly it would be put in place.

Plugging the Infra gap: The new government needs to work out a focused plan for the infrastructure sector if it is to meet its overall objective of high growth. It is not immediately clear how much of the targeted $500 billion investment planned in the current five year plan has been managed in the two years that have passed, though one can be sure that it is inadequate. Investment in infrastructure needs to be enhanced and tracked, even though it is not part of the work programme. The only thing mentioned there is the aggressive target of adding 12,000-15,000 Mw of power generation capacity every year without any explanation of how it will be done. What is nevertheless welcome though is the stated intent of creating a new model of urban administration with financially-viable self-government institutions.

Land @ market rates: Market rates for agricultural land required for industrial projects and an option for the farmers to become stakeholders in the industrial ventures on their land, which is part of the work programme, would finally set to rest the controversies on land acquisitions.

Read more on:   
|
|
|
|

Read More

Abheek Barua: Post-policy blues

In spite of the RBI's rate cut and the Centre's reforms, any recovery will only be half-hearted

Recommended for you

Advertisements

Most Popular Columns

Ashok Lahiri

Ashok Lahiri: Move forward on infrastructure, not back
Ashok Lahiri

Shifting to a PPP model where the state bears most of the risk could repeat the errors of the past

Paul Krugman

Paul Krugman: Walmart's visible hand
Paul Krugman

The retailer's wage hike seems to reflect the same forces that led to the Great Compression, albeit in a much weaker form

A K Bhattacharya

A K Bhattacharya: The politics of Budget 2015-16
A K Bhattacharya

So far, there has been very little assessment of the political content in Finance Minister Arun Jaitley's second Budget, presented last Saturday. Its ...

Advertisement

Columnists

Nitin Pai

Nitin Pai: When Iran enters the global mainstream
Nitin Pai

The strategic consequences of a nuclear deal between Iran and the West

Devangshu Datta

Devangshu Datta: The ABC of life on Earth
Devangshu Datta

Data from space and some experiments by NASA show that many of the key building blocks of life could arise spontaneously without biological ...

Shreekant Sambrani

Shreekant Sambrani: Bang for the buck
Shreekant Sambrani

Like the proverbial trees, much of the commentary on the Budget has obscured the real wood. The numbers have been scrutinised, as they should ...

Back to Top