New Delhi: With the economy growing under 5 per cent for straight two years and inflation high for several years, things were never going to be easy for the Narendra Modi government. Mr Modi himself has tried to prepare the public for some harsh measures on the economic front by asking them to be ready for the “bitter pill”.
There’s already a steep hike of around 14 per cent in rail fares. There is talk of further cutting the huge subsidy burden by increasing fuel and fertilisers prices and targetting subsidies to the poorest of the poor.
This may not be liked by the people who are already bearing the burnt of high food prices and when there are prospects of a weak monsoon. But it may be necessary to control fiscal deficit amid slow growth in taxes.
The real test for the government will be its first budget to be presented next month, which will indicate its priorities and policies to come in next few years. It will be keenly watched by the industry and investors, who have put huge faith in the new government.
However, tackling inflation will be a challenge for the government. Recently government asked the states to crack down on black marketers who are hoarding food items in anticipation of the poor monsoon.
The Centre has itself taken a number of steps to increase supply of vegetables and fruits in local markets including discouraging exports of onion and potatoes and allowing farmers to directly sell fruits and vegetables into the market by-passing the mandis.
On the brighter side, the Sensex has climbed new heights increasing the wealth of domestic investors and the FIIs. In the first 30 days government also started the reform process. The commerce and industry ministry has initiated steps to hike FDI in defence and railways.
The environment minister has indicated that he will fast track environmental clearances. Many things are also happening on the infrastructure side. Power minister Piyush Goyal is looking to increase power generation and enhance the transmission capability of the country.
Increase in power will be a boon for the industry and the services sectors and will help to increase growth. Mr Goyal is also looking to increase coal production. The steel, coal and power and environment ministers have started meeting to thrash out issues which are holding up growth in their sectors.
The government is also expected to start the disinvestment process after the budget. To bring back the black money, government has set up a SIT. Thirty days may be a short period to judge a new government. However with such huge expectations from the Modi government every move taken by it will be minutely judged.
