Atma Nirbhar Bharat

The Goverrnment has launched a variety of programs/reforms to make India self-reliant. The reforms in the MSME sector, Migrant workers, Agricultural sector, Vocal for Local and sectoral reforms measures like increase in the FDI limits of defense manufacturing are welcome and long-pending measures which nation was looking for. Was it all necessary? The answer is yes. Would it be sufficient? Therein lies the caveat. 

There is a vast difference between policy announcement on the paper and policy execution on the field. The gap lies in the absence of an ecosystem. For example,  as a businessman, I would ask 3-4 key questions before I invest my energy in a field.

1. Do I have skilled labor for the business?

2. Do I clearly know my business segment, the start, and the endpoint of production and consumption?

3. Do I have the entire ecosystem like infrastructure, legal services, and other market services, and ancillary industry in place?

4. Most importantly, how easy is it obtain to get a business loan?

For most questions, the answer would be a no or full of uncertainty. In the absence of such support system and information asymmetry, the businessman would not prefer to burn his hand. For example, today when India talks about reducing dependence on Chinese imports, is there any portal (public or private) where businesses can obtain clear information about what are the items India wishes to manufacture? There is no place where a businessman can know single-window information about the scales of the market and the challenges in starting a business. The government may make an announcement of a collateral-free loan but in reality, no banker would lend you money without collateral. The government should first fix the infrastructure and elementary issues like a land availability, and bureaucratic delays.

Off late, the government has taken various positive steps like gradual removal of subsidy from diesel and petrol. The GST has also come in full action and slowly maturing in the process. The need of the hour is to reform the Income Tax side of the act. The work has begun on this front as well. The three fundamental principles which any government should follow in the process is:

1. Whenever a policy is introduced, there should be an automatic review or sunset clause embedded in it.

2. The Judiiciary is the weakest link in our system. This needs to be reformed on an urgent basis. Without a strong punishment and justice mechanism, businessman would always be demotivated.

3. Income tax needs to be simplified heavily. It needs to be streamlined. The complex web of exemptions, deductions, and discretion breed corruption.

4. A precursor program to Make In India is land reforms. And the precursor to land reforms is urban reforms and rehabilitation and resettlement in the country. All of this has to be in tandem. Just focussing on one aspect of the big problem will not take us anywhere.

5. The issue of urban reform can not be solved without taking local political factors into stride. For this, deep level political reforms are also necessary.

Hence, the government may do a service to the nation by utilizing the COVID time to bring drastic reforms in the entire system. However, this will only happen with some political cost and requires major political will.