The government came to power with the hope that it would correct the policy paralysis that had set on the previous regime. In spite of the headway, there remains a huge backlog of policy decisions that still need addressing. Here are some of the major ones:
The single most important tax reform agenda for the government is the implementation of the proposed goods and services tax (GST). The GST is a complex challenge but the payoff will be huge. The other major tax reform is expanding the direct tax base in the country. In a country of 1.25 billion, only 40 million pay direct taxes.
Agricultural output for the year ended March is estimated at below 1.1 per cent as compared to the previous year's 3.7 per cent. Unseasonal rain and hailstorms in March this year have had a devastating impact on farm output. Unseasonal rains are estimated to have damaged 11 million hectares - roughly 20 per cent of the total rabi crop area. The government has a long way to go to address the issues of farmers.
The existing Land Acquisition Bill is a millstone around the nation's neck. Without the government's amendments, there is unlikely be any land acquisition for industrial or infra development. Even though the opposition is determined to thwart the bill, the government seems determined to keep renewing the amendment ordinance till it can make it a law. As things stand, the ordinance has ensured that the amendments are in effect.
India is not creating jobs fast enough. Employment grew at 0.5 per cent CAGR in the last decade. In 2012 the labour force increased by 14.9 million but there were only 13.9 million jobs created. Additionally, the country suffers from low wages and lower benefits. Industry, caught with no easy hire-and-fire policy, now resorts to contract labour across sectors. Such contractual employment in turn has no or minimal benefits attached.
The differentiated banking licence, measures to improve governance and reduce stressed assets have built some confidence in the finance sector. In a turnaround from conventional behaviour, the government now is rewarding more efficiently-run banks, rather than supporting those that are not. The RBI too has pitched in with the aim of boosting infrastructure financing. It has allowed banks to issue long-term bonds for which they do not have to meet the statutory liquidity ratios.
There are also other important moves on the power front. It plans to invest ₹. Three lakh crore under the Deen Dayal Grameen Jyoti Yojana and Integrated Power Development Scheme to correct the complex problems of a sector reeling from fuel scarcity, regulatory bottlenecks and financially unviable. Among the government's most ambitious targets is to provide 24-hour power to all households by 2019. The recent coal block auctions added transparency to the system.