The focus of the second term of the Narendra Modi government is accelerated economic growth led by the private sector and private enterprise, according to NITI Aayog Vice Chairman Rajiv Kumar who asserted that India will be at the "cusp of a major transformation" over the next five years.
In a keynote address at the 'India Investment Seminar' held at the Consulate General of India, Kumar acknowledged that the government is "conscious" of the fact that since 2011 private investment has "pretty much turned turtle", the Public-Private Partnership (PPP) models didn't work.
A large number of those PPP ventures converted themselves into Non-Performing Assets (NPAs), the risks were too much for the private sector to take, the risks associated with projects, land acquisition became too high and the investment to GDP ratio has declined.
"The intention and the sharp focus of the Modi government is very clear and it is that private enterprise must be given the space, the incentives to play its role in the economy. The government has no intention at all to try and be the main driver of growth in the country because it is not possible," Kumar said Wednesday.
He emphasised that the focus of the second term of the Modi government is accelerated economic growth, beyond the 7 per cent the country has achieved to an eight per cent plus growth that is led by the private sector and private enterprise.
"The next five years, India is going to be at the cusp of a major transformation and if we succeed, as this government is wanting to, you will see a decade plus more of sustained high growth which will be undertaken with inclusion but also with sustainability," Kumar said.
Kumar stressed there is "clear recognition" that some of the reform measures that have been undertaken, including demonetisation, has helped formalise the economy to a much larger extent than what it was before.
"It also meant that some of the fizz that was in the economy can be replaced by a much larger play of the private sector and private investment, he said.
He underscored that there is now need to make space and give the private sector a fresh play, which is why budget presented earlier this month announced higher targets for disinvestment, asset monetisation, encouraged private sector investment in railways.
Kumar also pointed out that the NITI Aayog is of the opinion that there is still space for bolder reforms in the country. Another set of sectors are expected to be soon opened up for FDI, such as insurance, and there is also talk about allowing more FDI in sectors such as civil aviation and media.
There is a thinking that the Indian industry has not become engaged as part of regional or global production chains so the intra-industry trade has suffered and as a result of which the country's exports have also suffered badly in the last few years, he said.
"So the boldness of reforms could come in this sector to make better use of external demand and to push up our exports by changing the incentive structure that is associated with exports, he said.
Kumar noted that there is an argument within the government as to how to ensure India's greater engagement in the regional and global production chains "so that our small and medium firms, which is where really the hunger is to grow, can get their joint ventures partners, get regular access to technology and markets and they can grow faster".
"This may require that the tariff policy is relooked, he said.
Kumar also the government is particularly focused on boosting growth agriculture, a sector that has not seen any investment, is still very backward and agro-processing has not seen any real corporate investment.
"We are looking at structural reforms in agriculture," he said adding that focus is also being given for "major transformation" in the mining, oil and natural gas sectors as well as "electric mobility" sectors.