Wednesday 24 July 2024

Indian Prime Minister Narendra Modi

India: Big bang reforms 'to continue under Modi’s third term'

NEW DELHI, June 10, 2024

Narendra Modi, elected leader of the National Democratic Alliance (NDA), took oath as India's prime minister for a third term on June 9, 2024, said a report.

Times of Oman cited economists as saying that India’s economic agenda will continue under the NDA-headed coalition government, with the Telugu Desam Party and Janata Dal (United) as key partners.

Economists believe that Modi 3.0 will not slow down the reforms and to achieve the goal of Vikshit Bharat by 2047, economic reforms and policy reviews need to be continued across multiple sectors, including infrastructure, labour, and manufacturing.

"The oft-repeated target of becoming a developed country by 2047 requires far-reaching reforms in the factor market, opening up of the economy and infrastructure development and a thrust towards labour intensive manufacturing. In a coalition environment it may not be easy to carry out big bang reforms, but the thrust of incremental reforms should be in this direction," said M Govind Rao, Member, Fourteenth Finance Commission and former Director, National Institute of Public Finance and Policy.

The government will continue with its focus on ‘Made In India’ reforms. Sectors like infrastructure and manufacturing will remain the priority of the government.

"There's likely to be a swerve towards greater populist spending and some commitment of resources to states of alliance partners is also likely,” said Gautam Sen, retired political economist London School of Economics and author, and former member of the Indo-UK Roundtable and Senior Consultant UNDP.

But India's public finances are in relatively robust health and to be augmented by significant reserves from the RBI.

India's infrastructure spending will continue apace but perhaps with greater private sector participation.

Expenditure on defence modernisation and indigenisation will also undoubtedly continue"

The full budget expected to be announced in July, will reflect the economic agenda of Modi 3.0.

Meanwhile, in a significant boost to the start of Modi 3.0, the Reserve Bank of India on June 7 revised upwards the GDP growth projection for the current fiscal to 7.2% from 7% on rising private consumption and revival of demand in rural areas.

India’s Reserve Bank of India Governor Shaktikanta Das said estimates released by the National Statistical Office (NSO) placed India's real gross domestic product (GDP) growth at 8.2% in 2023-24.



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