The Show Must Go On: As the Election Results Come In, An Agenda for the Next Government

Why in News?

• The 2024 general election results in India have defied market and exit poll expectations presenting a pivotal moment for India's incoming government.
• Despite this, the mandate for the incoming government is clear: to create a rapid increase in per capita GDP through accelerated, inclusive, and environmentally sustainable growth.
• Therefore, it is important to outline a comprehensive strategy to achieve these objectives by addressing various economic, social, and environmental challenges and opportunities.

India’s Growth Aspirations and Changing Global Landscape

• India's growth aspirations must consider the rapidly evolving global context.
• The world is shifting from globalisation to protectionism, with elevated interest rates and diminishing fiscal stimuli.
• Environmental concerns and technological disruptions are also poised to impact many businesses.
• The incoming government has a multifaceted challenge to drive rapid, inclusive, and sustainable economic growth.

Key Steps for the Incoming Government to Propel India’s Growth

• Addressing Disguised Employment in Agriculture
  • One of India’s critical challenges is the disguised employment in the agriculture sector.
  • The country must create sufficient employment opportunities in industry or services, both domestically and internationally.
  • The manufacturing sector faces high power and logistics costs due to subsidies on agricultural power and passenger fares.
  • Strategic divestment of Public Sector Undertakings (PSUs) can raise resources to absorb these subsidies, thereby making manufacturing more competitive and leveraging the China-plus-one opportunity.
• Boosting Consumption and Monetising Gold
  • To stimulate consumption, especially at the lower end of the economic pyramid, a gold monetisation scheme could be implemented.
  • This would bring gold from the parallel economy into the mainstream, generating additional resources and liquidity to support growth.
• Enhancing Agricultural Productivity and Exports
  • Agriculture remains a cornerstone for inclusive and sustainable growth.
  • By replicating successful cooperative models like Amul in other commodities, substituting imports with local production, and focusing on agro-product exports, India can create significant opportunities for farmers.
  • Bilateral arrangements, such as food-for-oil deals, can further enhance agricultural investments and secure essential supplies.
• Facilitating Free Labour Movement
  • Securing free labour movement through Free Trade Agreements (FTAs) can increase remittances, a crucial source of income for India.
  • Preferential access to markets in exchange for long-term work permits for Indian workers can benefit both trade and labour mobility.
• Providing Skills and Expanding Manufacturing
  • Skill development through institutional mechanisms is vital.
  • Expanding Production Linked Incentive (PLI) schemes can boost manufacturing jobs, particularly in sectors like garments, processed agro products, and engineering.
  • This not only creates jobs but also enhances export potential.
• Supporting Services Sectors
  • Integrated development of the tourism, education, and healthcare sectors is
  • Encouraging the Indian diaspora to act as brand ambassadors can promote these services globally.
  • Developing local ecosystems for travel and education can retain spending within the country and create domestic jobs.
  • Unlocking Domestic Savings: Investment is crucial for growth, and unlocking frozen domestic savings in real estate, gold, and currencies through innovative financial instruments can provide much-needed capital for entrepreneurs.
• Ensuring Rule of Law and Ease of Doing Business
  • A robust judicial infrastructure is essential for investment.
  • Improving judicial efficiency to resolve cases swiftly and creating special economic zones with streamlined processes can significantly enhance the ease of doing business in India.
• Investing in Future Technologies
  • Investing in future technologies through public-private partnerships can position India at the forefront of global technological advancements.
  • Establishing institutes for artificial intelligence and integrating the pharma industry with primary research can drive innovation and growth.
• Promoting Green Growth
  • While India is a low per capita carbon emitter, adopting a green growth model is imperative.
  • Seeking compensation through technology and capital grants for historical emissions can level the playing field globally.
  • Initiatives like carbon credits and emissions tax based on historical contributions can further this cause.

Some Other Measures for the New Government to Boost India’s Growth Amid Evolving Global Economic Landscape

• Developing Responsible Mining Policies
  • Balancing local and industrial interests in mining is crucial for sustainable growth.
  • Implementing responsible mining policies, as demonstrated by Odisha, can reduce dependency on coal imports and increase revenue.
• Enhancing Education and Healthcare
  • Sustainable growth requires a healthy and educated populace.
  • Leveraging technology to provide quality education and healthcare, along with public-private partnerships, can improve these sectors.
  • Direct Benefit Transfer (DBT) through education coupons can enhance the quality of education for needy citizens.
• Encouraging Financial Literacy
  • Improving financial literacy is essential to prevent suboptimal savings allocation.
  • Initiatives to educate investors can ensure better financial decisions, reducing poverty and promoting economic stability.

Conclusion

• The incoming government has a formidable task ahead, but with a comprehensive strategy addressing various economic, social, and environmental challenges, India can achieve accelerated, inclusive, and sustainable growth.

By focusing on these key areas, the country can navigate the global landscape effectively and ensure a prosperous future for its citizens. 

Q) What are the key strategies to address the disguised employment in the agriculture sector and enhance manufacturing competitiveness in India?

To address disguised employment in the agriculture sector, the government should create adequate employment opportunities in industry or services, both domestically and abroad. Enhancing manufacturing competitiveness involves reducing higher power and logistics costs by absorbing subsidies currently placed on industrial power and commercial railway freight. This can be funded through the monetization of PSU stocks, whose market cap has increased significantly in recent years, thereby making Indian manufacturing more competitive and taking full advantage of China plus one opportunity.

Q) How can India leverage its agricultural sector for inclusive and sustainable growth while boosting consumption at the bottom of the economic pyramid?

India can leverage its agricultural sector for inclusive and sustainable growth by replicating successful cooperative movements like Amul for other commodities, substituting imported agricultural products with locally produced alternatives, and focusing on agro exports. Boosting consumption at the bottom of the economic pyramid can be achieved through a gold monetization scheme, which would unlock resources currently held in the parallel economy, injecting additional liquidity to support growth and provide resources to enhance consumption.

Source:The Indian Express