In the backdrop of the Coronavirus vaccination program, the Punjab CM crisis, the campaign kickoff of the upcoming UP elections it is easy to ignore something major happening in terms of economic reforms. Since the past few months, the government has become more aggressive towards reform as evidenced by several recent policy changes. This should be noted and more importantly, encouraged. The post-Covid, or rather the living-with-endemic-Covid world offers major opportunities for India to accelerate its economic growth momentum again. This economic growth alone will get us out of the job crisis and increase incomes, both of which have taken major hits due to Covid.
Four remarkable reforms, all done within a span of few weeks highlight a shift towards a more reform-based agenda. The first one was the scrapping of retrospective taxation laws, which occurred on August 9, 2021, when the Rajya Sabha approved the Taxation Laws (Amendment) Bill, 2021. This change was universally welcomed by the investor and corporate community, and rightly so. It is rare that a government willingly signs on something to reduce its power, and this amendment alone signaled a new outlook towards private companies. The second major announcement came on August 23, 2021, when the government announced an Asset Monetization Program, along with releasing a detailed guidebook created by the Niti Ayog. This program aims to raise 6lakh crores, by letting private players harness public sector assets for a certain duration, without any transfer of ownership. The execution will come over time, but the program has good intent – to let private sector efficiencies come into running public sector assets and to allow the government to raise money upfront, while not fully privatizing the assets. Again, this reform signalled a move to make the government work ‘with’ the private sector, rather than ‘versus’ the private sector. Third, the government announced major reforms in the telecom sector on Sep 15, 2021. These include a four-year moratorium for companies from paying statutory dues, changing the definition of revenues on which levies are paid, allowing for 100% investment through the automatic route and permission to share spectrum. These reforms were directly targeted to provide immediate relief to the telecom sector companies, some of which have massive debt obligations due to statutory dues. Again, the attempt was to change the government attitude from ‘who cares’ for the private sector to ‘we care’ for the private sector. Fourth, the government seems to be extremely keen to close the Air India sale deal. Every past government has lamented about Air India’s massive debts, cash burn and other liabilities. Many plans have been made to sell the airline. However, due to unreasonable expectations from past governments, the deal remains a non-starter. This time, with debt guarantees and transfers, the government was able to get two real bids on the Sep 15, 2021 deadline, from the Tatas and SpiceJet. To sell a loss-making government airline is a challenge in the best of times, to be able to pull it off in the middle of a pandemic will be a major win. Let’s hope that the deal closes, the winner is announced, and the government can finally achieve this long-standing goal.
These aren’t the only four announcements that indicate the shift towards reform. Also, reforms come from activities other than announcements as well. The massive and ambitious infrastructure plans (the Delhi-Mumbai expressway for example) also count as a major reform. The digitization and online services projects done or underway in all major government departments also count towards reform as well. Sure, there’s still a long way to go. Many sarkaari websites still have some sarkaari quality to them. They can be inward looking, complex or have dated designs. But the trend is positive. More and more people in the government now understand QR codes and document uploads.
If four major reform announcements happened in the last six weeks alone, one can be sure they won’t be the only ones going forward. As reforms pick up pace, we must encourage them. Just as there is a tendency for government sycophants to praise whatever the government does, there is perhaps an equal tendency for government opponents to condemn and criticize every step taken by the government. Social media grandstanding and polarization exacerbates this further. While everyone has a right to their opinions, all of us Indians, particularly the more enlightened and more privileged ones (if you are able to read this, then you are in that category) must come to a common agenda and consensus on one thing – we need more economic reforms that will lead to growth. This is not to say that every reform announced is perfect, does not carry risks or a lot of the success will depend on the actual execution. Sure enough, we can and should point out the concerns. The asset monetization program for instance, still needs more clarity when it comes to the actual terms of the deals. However, the overall view should be to encourage reform. Too many times in the name of politics, we start labelling every reform as a selling-out to the private sector. That is incorrect. When a government does a welfare scheme for citizens, it does not ‘sell out’ to the citizens. It’s taking care of them. Similarly, when the government takes care of its private sector, mainly with the view to increase incomes and jobs for its citizens, it is to be encouraged, not discouraged.
Nearly all economic reforms will involve the government working with or taking care of the private sector. That in turn takes care of our overall economy, which then takes care of our citizens. If we understand that, we can appreciate and encourage the current drive towards economic reforms. Growth and prosperity for India should be welcomed, irrespective of political inclinations.