Opinion

Economic Reforms : catching up speed!

Reading Time: 3 minutes
The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley holding a Press Conference on the Goods and Services Tax (GST), in New Delhi on August 04, 2016. The Minister of State for Finance, Shri Santosh Kumar Gangwar and the Secretary, Revenue, Dr. Hasmukh Adhia are also seen.

The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley holding a Press Conference on the Goods and Services Tax (GST), in New Delhi on August 04, 2016.
The Minister of State for Finance, Shri Santosh Kumar Gangwar and the Secretary, Revenue, Dr. Hasmukh Adhia are also seen.

Former UK prime minister Margaret Thatcher, who brought major reforms during her regime had made a famous statement when she started the reform process “You may have to fight a battle more than once to win it.”

The classic statement made by Thatcher proves correct in the context of passing of the Goods and Services Tax (GST) Bill in Indian Parliament.

This is also a big strategic step ahead for the ruling dispensation at the Centre after the setbacks in Land Acquisition Bill.

With the passage of the GST Bill in upper house of Parliament, the Indian democracy has once again reiterated that it has the necessary space for smooth political maneuverability for a sound policy making.

Moreover, the reform process which started in 1991 under the Structural Adjustment Programme has crossed another important milestone in 2016 by bringing all hues of political spectrum under a broad consensus.

The focus is also shifted towards the positive aspects of reforms. In the process of reforms, the trajectory of Indian democracy has certainly started catching up the speed.

What is extremely pertinent to observe here is the ability of Indian democracy in stewarding the reforms irrespective of weak or strong dispensation at the Centre.

The Narasimha Rao government which was weak in terms of parliamentary strength brought in reforms process with big political risk and the present Modi government which is quite a strong also played a risky political game in terms of bringing in major reforms like GST.

It indicates towards the broad common consensus on carrying forward the reforms across the political spectrum.
Last year, India’s image as a democracy facilitating economic and administrative

reforms got a boost with the ‘ease of doing business’ indicator. In the World Bank’s ‘Ease of Doing Business’ report 2016, India sharply moved from a position of 134 to 130 out of 189 countries.

What is relevant for discussion here is the common point between the parameters of ‘ease of doing business’ and GST.

One of the important criteria has been ‘payment of tax’ where India’s overall performance in ‘ease of doing business’ had worsened.

Another criterion which pulled India’s ranking down has been ‘access to credit’.

As the Indian democracy has shown its ability to undertake big and bold reforms, hopefully its image and credibility as the most reformed economy and country in the world will be enhanced.

Keeping in mind the sweeping changes all across the globe, the Indian democracy has also come up of age by bringing in sweeping reforms since 1991.

The ‘Make in India’ initiative of the central government has also provided additional credibility to the fact that India has started accelerating in terms of big reforms.

Looking deeper into the political-economy aspect of passage of GST Bill, it can be said that it will bring in new set of dynamics of centre-state relations and the contours politics around it.

The process of bargaining in terms of availing more central funds from the Centre will emerge in new format in the post GST phase.

With the passage of the landmark bill which will streamline 15 goods and services taxes across the country, the political economy sets to face tremendous changes as this big reform initiative will directly affect growth of economy.

However, there also remain few immediate concerns, like fairness and equity in sharing the benefits of the growth in a highly fragmented society.

Moreover, the government has a big task on hand in selling the reforms to its electorates in the coming days in the post-GST phase.

(The author is a policy analyst and can be reached at prusethsujit@gmail.com)

(The author is a policy analyst and can be reached at prusethsujit@gmail.com)

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

To Top