Letter to BS: Budget 2019 likely to be a good indicator from Modi govt

This refers to “Lighten up equity portfolio” (January 7). While the article says that the next coalition government has more hope for reforms regardless of who leads it, I think it will be important to analyse what reforms may be actually possible. Typically, reforms are carried out when they do not jeopardise the politicians’ vote banks and when they are agreed upon by all members of the coalition. Politicians get popular by creating more opportunities and get stronger through more funding from those who gain from those reforms.

The previous reforms came in sectors such as telecom and IT and even others that helped in opening up the economy. Those reforms were already late but they easily formed the least common denominator of their times. The next set of reforms are possible in the fields of labour, manufacturing, land acquisition, banking, privatisation, civil services, health, education, agriculture and taxation but each comes with a different challenge.

For instance, labour reforms make unions, the vote banks, insecure. Manufacturing is heavily state-driven and linked to land acquisition, which makes farmers insecure. Banking reforms were good but the government's ability to arm twist the Reserve Bank of India on monetary policy, instead of solving structural issues, exposed it.  

The next Budget may be a good indicator/signal from the Modi government. The only issue I see with the government is its inability to quickly identify the least common denominator and then implement them all the way. I only expect taxation-related reforms in the upcoming Budget. 

Puneet Khanna, via email

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