EBM News
EBM News

Economic menu for Modi 2.0 government

NEW DELHI: As a new Cabinet with some old faces and a few new take oath to be part of the NDA 2.0 government, the bureaucracy is readying a list of tasks ahead for most of the economic ministries. These are likely to feed into a larger plan for India till 2022, a milestone year when the country will celebrate its 75th Independence Day. Though the crucial finance ministry’s main task will be to ready a growth-oriented budget, which would also aim at fiscal consolidation, it will also be working on stepping up work on a larger plan for PSU bank mergers as well as a merger of three insurance companies — National Insurance, Oriental Insurance and United India Insurance.
Besides creating new avenues for raising funds for infrastructure to meet a target of spending Rs 1 lakh crore over the next five years, the government will also fast forward disinvestment including strategic divestments like in Air India which were stalled last year. Other key priorities will include solving the banking crisis which broke out after India’s largest non-banking financial company IL&FS defaulted on payments last year. This will include a combination of addressing liquidity issues along with an asset quality review of NBFCs.

The Modi government is also expected to roll out a New Industrial Policy, with a focus on jobs creation through a package for MSME sector while encouraging a new wave of industries using AI and internet of things through policy initiatives. A separate Commerce ministry paper proposes WTO-compliant export promotion scheme which would ensure refund of all central and state levies taxes paid on raw material used for exports.

Increasingly, powerful trade partners like the US, the EU and Japan have been taking India to task for subsidising its exports, which are non-compliant with WTO rules. At the same time, the government will work to encourage import substitution in the telecom and ICT manufacturing sectors. It will also auction 5G spectrum for which trials are currently on. Auction of coal and iron ore mines are part of the agenda being drawn up.