Six Challenges that await Modi Government in their 4th year in office

In this ongoing series, we have used publicly available data to analyse Modi government's performance on various dimensions. The government seems to have done exceptionally well on numerous fronts, but there are some areas where one finds a lot of scope for improvement. In this article, we shall look at six key challenges that the Modi government should focus on over the next 365 days:

Unemployment and Jobs

In a recent survey conducted by a Delhi based research organization - Lokniti-CSDS, around a quarter of the respondents (24 percent) said that unemployment was the biggest problem in the country today. Though it is difficult to assess the scale of the problem, due to a paucity of data, it is safe to argue that it is one of the foremost concerns of the country today.

Citizens would assess the performance of flagship schemes like Make in India, Start up India, etc. based on their larger impact on employment generation in the country. For instance, promises of investment may remain irrelevant to them unless they lead to incubation of projects on ground.

Also, with the MUDRA Yojana already leading to a surge in formal credit for small entrepreneurs and MSMEs, there should be focus on capacity building of borrowers and transforming them into job-givers.

Farmer Distress

The recent farmer agitations in many states indicate that the government needs to be alert about addressing concerns of the farmers. The agriculture sector requires a holistic approach with seamless coordination between various ministries.

The current focus of the government has primarily been on increasing productivity and safeguarding farmers from shocks. Programmes like Soil Health Card, Neem Coating, PM Sinchai Yojana contribute towards increased land productivity, while the PM Fasal BimaYojana is aimed at protection from crop failure.

Over the next one year, the government should also focus on improving access to formal credit and increasing gains for farmers in the market. This requires trade policy and price control measures to be in sync with the agricultural policy of the government. Also, the electronic National Agriculture Market (eNAM) must be expanded and promoted.

Infrastructure - Foundation to Inauguration

Infrastructure is one focus area where the Modi government has been fairly successful in reviving the growth. Marred with policy paralysis, various large infrastructure projects got delayed under the UPA government. In its first three years, the government has been able to substantially improve the performance in this sector.

In the last two years, one expects to see relatively more inaugurations apart from the foundation stone laying. Also, as of now, there is little doubt that the government has performed much better than its immediate predecessor. The focus should now shift towards completing goals which the government has set for itself

Namami Gange

There seems to be limited progress in the government's Namami Gange programme. A project like this requires multi-pronged approach and streamlining of efforts by the centre and states. Independent projects under the programme like building of sewage treatment plants, reducing release of industrial effluents into the river etc. don't seem to be going at the desired pace.

Most importantly, as of now, the government has been unable to convert Namami Gange into a programme like Swacchh Bharat which induces public action.

Alongside,infrastructure projects and cleaning of the river, there need to be concentrated efforts for increasing public sensitivity. Steps like rebranding of the project through fresh brand ambassadors and sustained information campaigns may be required to bring back Namami Gange on track.

Economic Growth and Inflation

Slow economic activity post Demonetization has led to India registering a lower GDP growth rate of 6.1% during the first quarter of 2017. In its 4th year, one expects that economic growth would come back on track and inflation would continue to remain under control. On the macro economic front, the government needs to ensure that private investment starts increasing. This is extremely important for increasing economic growth and employment generation. Largely being able to keep inflation in check has been an important achievement of the Modi government. One expects that the newly formed Monetary Policy Committee approves a rate cut, which could lead to an increase in investment. ​

GST Implementation

The launch of the Goods and Services Tax on 30th June - 1st July would be a landmark moment in the history of modern India. Considered to be one of the biggest economic reforms in India since independence, this decision have an immediate impact on almost all citizens. For instance, prices of most daily use commodities are likely to change.

Ensuring compliance and making tax collection a simple process may be challenging for the government. The compliance process needs to be simple if the government intends to expand the tax base considerably. In the first few months, the government's communication strategy will be extremely critical as many people are likely to face some inconveniences due to the changeover.

Conclusion

Overall, we believe that the Modi government has managed more hits than misses in its first three years. Importantly, on most aspects the government's performance is much better as compared to its predecessors. But we also find that in many areas the government falls short of its own targets. Hence, moving forward one would expect the government to strive extra hard in achieving ambitious targets it had set for itself on many fronts.

(Nitin Mehta is managing partner, Ranniti Consulting and Research. Pranav Gupta is an independent researcher.)