A wobbly economy, low job opportunities, high inflation and political logjam in Parliament — the new government has its task cut out and the BJP’s now-famous “Achhe din aane wale hain (good days are ahead)” have greatly raised expectations.
Turning around business sentiment and pushing social sector programmes would be priority of the Narendra Modi-led NDA government. Important policy announcements will be made in the next few days, which will set the tone for the next five years.
“Cabinet secretary Ajit Seth will be making a presentation based on inputs from ministries on what the new government can do, on Tuesday,” a senior official said.
“The presentation will have proposals to cut subsidy, streamlining project approval process, skill development programme aimed at creating jobs and rationalisation of social sector schemes”.
More than Rs. 2,00,000 crore worth of projects are in a stalled stage at various stages of regulatory and procedural approval with sectors such as steel, petroleum products, mining, electricity and construction being the worst affected.
“We will fulfill the promise of creating jobs and all of us will work together to deliver,” said newly sworn-in cabinet minister Ram Vilas Paswan.
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A recent study by the International Monetary Fund (IMF) has attributed “policy uncertainty” being one of the key driving forces behind India’s precipitous slowdown in investment activities.
“Reducing regulatory uncertainty and simplifying procedures for obtaining clearances should be priority for the new government. It would also help boost investor confidence appreciably if the government can set up a single-window for investments related to infrastructure projects,” Deutsche Bank India chief economist Taimur Baig said in a research report.
Analysts are also keenly awaiting the government’s first budget—likely to be presented in the first week of July – to decipher its intent on tax reform, the controversial retrospective tax on corporate deals and its plans to tame inflation. “The final Budget for 2014-15 will be the administration’s first real litmus test,” Richard Iley, Chief Asia Economist, BNP Paribas, said.
Aside from business and trade, the government is looking at having more say in the way states use central funds. It may also introduce new policies to make education more job oriented, introduce affordable healthcare and take up the project to clean Ganga with new vigour.