Recent 3 Economic Reforms

Economy

Healthy economy of any country means rising GDP, equitable distribution of money, opportunities for employment and controlled inflation. This is possible when the country has sufficient natural resources and manpower. India has both. However a crucial factor is the political dispensation and its strength and willingness to rule.

Any economy, especially ours, requires continuous course correction and reforms. Since some reforms will hit the interest of some people in short term, therefore most of the time governments are reluctant to take any step except populism of throwing money to people. We have seen how three Farm Acts are being opposed by rich farmers and commission agents of mandies in Punjab and west UP. They are holding large number of poor farmers to ransom.

It is encouraging that central government has recently taken three decisions which can be called timely reforms. The foremost is the creation of Bad Bank for cleaning all other banks of their bad debts and red account books. A bad bank is a corporate structure that isolates risky assets held by banks in a separate entity. It is established to buy non-performing assets (NPAs) from a bank at a price that is determined by the Bad Bank itself.

On September 16, the government announced to transfer around Rs 2 lakh crore non-performing assets (NPAs) to the new Bad Bank. The purpose is to clear the banks of their bad debts so that they can concentrate on credit flow. We have to wait and see the actual operation of Bad Bank.

In the second reform the government has brought sensible reform in telecom sector. The government has approved a relief package for the stressed telecom sector that includes a four-year break for tele companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and allowing 100 per cent foreign investment. This will help Vodafone and encourage competition among Delhi companies. India can see rapid spread of 5G.

The third reform declared is big scheme of production linked incentives (PLI ) to boost competitiveness in many sectors. The scheme provides incentives to companies for enhancing their domestic manufacturing apart from focusing on reducing import bills. This is likely to boost production in sectors like electric vehicles and 5G telecom equipments.
Covid has very seriously impacted the economy and even a fast recovery may take some time to reach pre-Covid level. It is good to see that in spite of crisis of pandemic, the government is doing something for improving economy.