PRIME MINISTER SH. NARENDRA MODI’S ROLE IN THE INDIAN ECONOMIC MIRACLE IN THREE YEARS
WE THE PEOPLE OF INDIA have chosen Sh. Narendra Modi as our Prime Minister at the time when our economy was in a critically bad shape, when there was total paralysis in decision making, corruption was everywhere infrastructures in all sectors were broken down and Foreign Direct Investment (FDI) investors were afraid to invest in our Country.
However, within three years of his active, dynamic and charismatic leadership, our Prime Minister Modi has taken out decision making process from ICU, restored the infrastructure building process, controlled corruption to an extent and convinced investors to start investing with a confidence of doing business in India without any fear of retrospective taxation, with the result that the Foreign Direct Investment has gone up to $ 156 billion in 2016-2017.
The Prime minister’s mantra is good governance and economic development. His action includes:
- Death of bureaucratic red-tapism
- Doing business made easy by swift environmental clearances
- Repeal of redundant laws;
- Monitoring of projects;
- Importance is given to cleanliness of water;
- Opening FDI in defense, raising the cap on insurance up to 49% and 100% in marketing food products.
Other measures include Goods & Service Tax (GST) Act, Insolvency, and Bankruptcy Act, closure of sick Public Sector Undertakings (PSU) and proceeding with the listing of non-listed PSU’s.
Rural development has been given special importance with new policy of empowerment in rural development and social spending, like rural electrification, rural road construction, LPG to rural BPL householders, Rs.10 million for new rural houses to be constructed and Aadhar has led to elimination of leakage through ghost accounts, amendments in tenancy laws, spread of digitisation and e-mantis. Furthermore, better federalism has led to a movement for labor laws reform and land acquisition. New ways are also being searched to rejuvenate agriculture.
The Prime Minister, for economic development, is attracting the foreign investors to invest in India by narrating following favorable factors:
- India’s commitment to long-term structural reforms for making it easier to do business in India;
- India’s reform measures are taking place in an environment of political stability which is providing greater credibility compared with other major economies like China;
- India has a strong central government which can take bold decisions to create a predictable environment for foreign investors; the showcase is the new goods and service tax;
- India has a young population with long working life;
- India being an ideal place for FDI because of new policies on infrastructure, no retrospective taxation, democracy, independent judiciary and potential for high returns;
- India has a huge capacity for absorbing large capital investment in infrastructures, like railways, defense, highways, housing and other sectors, which will also generate new jobs;
- Investment in India is safe because of government commitment to fiscal discipline, and enforcement of bankruptcy laws and intellectual property laws;
- India is seeing revolution in digital & mobile technology and e-governance;
- New trend in domestic saving moving towards financial assets;
China and other successful developing countries have built their economic success on rapid industrialization, taking advantages of cheap labor. This labour-intensive growth has provided employment to millions and also spawned a massive service economy employing more. India, by contrast, has taken the route of information technology through software developers and computer call centers. Western computer manufacturers and software developers took advantage of highly skilled English-speaking software engineers whose service were available for only a tiny fraction in comparison to their own countries. This version of growth provided employment to urban people, but the great majority of the rural population remained in poverty.
Why India followed the IT path rather than labour-intensive growth that was followed by China and every developed economy, even when India possesses an enormous population of potential factory workers. The primary reason is the restrictive labor laws that discouraged Indian and foreign investors to invest money into labor-intensive industries. Other factors were the deplorable state of infrastructure in the energy and transport sectors. We know that industrialization and infrastructure improvements go hand-in-hand. Another factor was the business confidence deficit. Prime Minister Modi has promised faster job growth by investing in infrastructure improvements and encouraging foreign investment and doing business easy in India. Whether Prime Minister, Modi will reform labor laws? His decision will determine whether the rural majority who have been bypassed by the Indian economic miracle will share the success.
Prof. Suman Gupta
Dean, Faculty of Law