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Narendra Modi's gameplan to revive the economy

As Prime Minister, Narendra Modi will face a huge challenge in bringing the economy back on track. The current GDP growth rate of less than five per cent is a record low in the past decade. Modi sold hope in his campaign, it is now time for him to deliver.

twitter-logo Anilesh S Mahajan        Last Updated: May 26, 2014  | 18:04 IST
Narendra Modi's gameplan to revive the economy
PM-designate Narendra Modi.

As Prime Minister, Narendra Modi will face a huge challenge in bringing the economy back on track. The current GDP growth rate of less than five per cent is a record low in the past decade. Modi sold hope in his campaign, it is now time for him to deliver. Below are a list of some of his challenges:

FINANCE MINISTRY

UPA Legacy

1. GST and DTC still a long way off

2.  Clauses relating to retrospective penalties added in income tax act, which has foreign investors worried

3. Rollover expenditure from the previous regime

4. Revenues stagnant

5. Huge subsidy bill    

NDA's game plan

1. Target is to introduce GST and DTC from financial year 2015-16

2. Retrospective interpretation likely to be put in abeyance

3. Investment in capital projects is expected to be increased from 1.7% of GDP to 2%. Expect movement in private sector as well

4. This will also increase revenue receipts

5. Likely to continue with the current subsidy cuts. Expect radical rationlisation of subsidies in fertilizer sector soon.
        

FOREIGN AFFAIRS    

UPA Legacy

1. India has issues with most of its neighbours

2. Relations with key countries, the US, China and Russia are not that great

3. Foreign ministry and Commerce ministry lacked coordination for implementation of FDI in retail sector and other sectors

NDA's gameplan

1. The invitation to all the heads of SAARC nations is a masterstroke. This is also target area of the NDA government to develop trade

2. Modi is fine with Russia and China, he is playing safe with the US. Moreover, his game plan is to develop relations with smaller countries in Asia and Africa, instead of leaning towards the West.

3. Department of foreign trade is made part of MEA in order to develop more coordination
        
NATURAL RESOURCES

UPA legacy

1. No substantial foreign investment came in Oil and Gas, Power and solar energy segments

2. Coal is still not open for FDI

3. Coal and Power ministry donot see each other eye to eye. Presidential decree had to come to force coal india to sign FSA with power companies

4. Coal Regulator could not be formed

5. UMPPs are still a mess

6. Could not take states on board for tariff revisions

7. Domestic gas price need to be fixed

8. Next round of NELP need to be finalized

9. Nuclear deal with the US formulized in UPA-1, but things struck at nuclear liability act.


NDA's gameplan

1. Reworking NELP rounds to accommodate the concerns of the existing and new players

2.  Bringing in Coal Regulator bill, plans to allow FDI in coal mining (as license)

3. Integrating Coal and Power ministry

4. Will form a new committee to look at the gas pricing formula. We can expect a new formula, or at least a modified one.

5. A committee with state chief ministers on board monitored by the PMO, will oversee implementation of vital projects like UMPPs et al.  

6. Changes in nuclear liability act expected
       
INFRASTRUCTURE

UPA legacy

1. Environmental clearances are tedious  

2. Center state relations plays negative roll

3. Judicial decisions went against this sector

NDA's gameplan

1. Introduction of technology to monitor the movement of file in environment clearences

2. PM-CM committee will monitor these cases as well

3. Time bound clearences from ministry of environment
   

RURAL DEVELOPMENT

UPA legacy

1. Land Acquisition Act is passed, industry is blaming that his will complicate the issues more.

2. There are series of complaints about leakages in MNREGA scheme

3. The scope of MNREGA is still limited

NDA's gameplan

1. Expect some changes in the current act, to make acquisition friendlier. Relaxation on fixing the price of land is expected.

2. Complete overhaul of this scheme is expected, right from scope of work to the way payments are been made.
    
   
AGRICULTURE

UPA Legacy
1. Took one step forward and two step back on GM food

2. Procurement and storage are still an issue

3. India is not been able to develop a real time data of grains and other crops

4. Introduction of technology is still not lucrative

5. APMC acts are amended, but more is required to make more markets available for farmers     "    

NDA's gameplan

1. Modi has an image of pro-technology politician. But expect no policy movement on GM products.
2. NDA government wants to break FCI into three, segregating procurement, storage and supplies
3. Plans to have nation market for farm produce.
4. The farm produce and procurement will be taxed under GST, this will allow free movement of products
5. Plans to bring in trains specially designed to freight farm produce -that too on relevant new routes

       
TRANSPORTATION


UPA legacy

1. Railways fares are still not market realized

2. Rail links to the coal rich areas in eastern India still a headache

3. Civil aviation is still not money making business

4. M&A norms are still not mature enough to make airlines FDI lucrative     

NDA's gameplan

1. Likely to take the correction of fares route, and improving the facilities

2. PMO office will take the three important lines in their hands, especially to evacuate the coal in eastern india

3. Expect more relaxations in M&A norms
       
TELECOMMUNICATION

UPA Legacy

1. Marred with scams, still India requires M&A norms for telecom players

2. Spectrum related issues need to be resolved


NDA's gameplan

1. Expect M&A norms within first year of the government

2. Focusing on smooth roll out of 4G network

3.   Wants to connect every village with broadband

4. Focus will be to build high speed ICT networks
       
DEFENCE

UPA Legacy

1. Could not increase 27% cap on foreign investment in Defence related production
    
2. Several scams related to purchase of defence equipments     

NDA's gameplan

1. FDI in Defence related manufacturing will increase to 51% and certain cases 50%

        
ENVIRONMENT

UPA Legacy

1. Opaque decision making

2 . Clearances delayed or denied

NDA's gameplan

1. Introduction of technology to monitor the movement of files

2. Ministry will have to give time bound responses
        
HUMAN RESOURCE AND DEVELOPMENT

UPA legacy

1. Skill development is still a big issue

2. IITs and IIMs do not feature among top 10 global rankings of such institutes


NDA's gameplan

1. Expect more industry involvement in skill development programmes

2. Expect more institutes like ISB to rival the IITs and IIMs

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