The last 20 months saw Prime Minister Narendra Modi making a slew of announcements, expected of a new regime. With his team firmly in the saddle, and the Bihar Assembly election results delivering a resolute political message that only a positive agenda can win elections, now is the time for the government to act. A number of factors has come together to give the government a unique chance, which is not necessary to repeat itself next year.
When crude oil prices go under $40 a barrel, it means cheap energy for the nation and a big relief on the fiscal front. The government has been successful in keeping the fiscal deficit under 4 per cent of the GDP. The oil import bill is expected to be $88.2 billion for 2015-16 which would be 21 per cent lesser than $112.7 billion that of the previous financial year. Inflation has been in control: consumer price index has been 3.8 per cent against two digit figures two years ago, and even RBI governor Raghuram Rajan is not apologetic about what he does: to cut the interest rates.
Political parties often shy away from taking difficult decisions fearing elections which visit the states quite often. The NDA government at the Centre has an advantage on this count this year as the BJP has only limited stakes in West Bengal, Kerala and Tamil Nadu, the three big states that go to polls this year; the party anyway claims it has already made big inroads in Assam. On the other hand, it would be different next year with the all-important Uttar Pradesh Assembly elections scheduled for 2017.
Thus 2016 is the year which will define the character of the economic quotient of the performance of this government, which has already done a bit of ground work. For starters, it could be the momentum it would provide certain flagship projects such as Make in India, Digital India, Swacch Bharat and high speed railway system that will decide its score.
Make In India, announced in September 2014, aims at massive investment in the manufacturing sector with a view to doubling its share in GDP from the 12 per cent, and creating 10 crore new employment by 2022. The programme has so far netted investment promises worth Rs 1.10 lakh crore. There has been little progress in cutting red tapes and improving the licensing system, though.
Digital India seeks to deliver government services to the citizens online. If done properly, it would not only empower the citizen, but would push India’s standing several notches up on the ‘ease of business’ scale as it would cut down red tapism, improve transparency and make procedures easy for doing business.
The Smart City project is about building or renovating 100 Indian cities over the next five years; 20 each year. The process for the selection of the first 20 cities is in the final stages. There is criticism that it will create a world of apartheid and exclusion; still it will go a long way in improving India’s crumbling urban infrastructure which bursts at its seams across the country now.
The Rs 90,000-crore Mumbai-Ahmebdabad high speed rail project will be the first of its kind in the country. The government has already awarded the contract for the consultancy for the diamond quadrilateral network of high speed rail corridors. They are Delhi-Mumbai, Mumbai-Chennai, Delhi-Kolkata. Any forward movement on these projects would be keenly watched.
Best things happening in 2016
Be positive: india’s gdp is expected to grow 7.5% in the next financial year even surpassing China’s projected growth of 6.3%. The India growth story will continue in 2017 also, retaining the lead. The global economy, which grew 3.3% in 2015 will grow 3.8 in 2016, says the IMF.
sensex sense: The stock market is expected to outperform other emerging markets in 2016. It will, however, hinge on a number of policy initiatives, including the passage of GST and land acquistion Bills.
Oil spoils: India controlled its fiscal deficit by increasing the excise duty on fuel, even as crude oil prices fell across the globe. With no signs of crude price going up, the government will continue to enjoy the cushion in 2016. The oil import bill of $88 billion in 2014-15 is set to come down to $73 billion in 2015-16.
Swacch Bhaarat: For a better underbelly. The project which seeks to cover 1.04 crore houses, 1.5 lakh community toilets and 2.6 lakh seats public toilets, may not have a direct impact on the GDP but will raise nation’s HDI a notch up and better its image abroad. The government has of late woken up to the need for planning and funding it.