The new Federal Government led by Prime Minister Narendra Modi has the requisite majority in Parliament and hence will not be held hostage by a messy coalition.
Assured political stability (the first in 20 years) is important for investor confidence and economic growth. The stock markets in India have shown their faith.
The ruling Bharatiya Janata Party (BJP) has committed to deliver good governance in contrast to the decision and policy paralysis seen in last few years under the Congress-led coalition.
The following are the highlights from BJP’s election manifesto.
Characterising the taxation policy of the outgoing Government as ‘Tax Terrorism’ and ‘Uncertain’, which created a negative outlook about Indian economy and investment climate, the BJP Manifesto has promised tax certainty, non-adversarial and conducive tax environment. It would rationalise and simplify the tax regime with substantial tax amendments. The State Governments would be asked to levy GST.
Barring the multi-brand retail sector, Foreign Direct Investment (FDI) will be allowed in sectors for job and asset creation, infrastructure and acquisition of niche technology and specialised expertise. BJP is committed to protecting the interest of Small and Medium Enterprises and those employed by them. The Foreign Investment Promotion Board would be made more efficient and investor-friendly.
The new Government will establish a system to eliminate the scope for corruption through (a) public awareness (b) technology enabled e-Governance, minimising the discretion in the citizen-government interface (c) system-based, policy-driven governance with transparency as the norm and (d) simplified systems and procedures at all levels, bestowing faith in citizens, institutions and establishments
The BJP will focus on manufacturing, healthcare, energy and infrastructure, expedite development of freight corridors and industrial corridors, border and coastal highways and encourage public-private partnerships. It would put in place ‘next generation’ infrastructure such as gas grids, nationwide optical fibre network to enable Wi-Fi zones, modernised railways. Incentives and optimum models for private sector participation may be expected, attracting FDI.
The new Government will accord high priority to job creation and opportunities for entrepreneurship and will strategically develop high impact domains like labour-intensive Manufacturing and Tourism; and strengthen the traditional employment bases of agriculture and allied industries and retail, through modernisation as well as stronger credit and market linkages.
It will harness the opportunities provided by upgrading infrastructure and housing, encourage and empower the youth for self-employment. Incubator entrepreneurship will be stimulated along with creation of jobs in rural and urban areas.
India can expect transformation of Employment Exchanges into Career Centres, connecting the youth with job opportunities in a transparent and effective manner.
The Government should be able to take tough and pragmatic decisions, which may be necessary to restore and increase investors’ confidence.
The short term looks very bright and bullish.
Nitin Shingala is Regional Director of the TMF Group (India) based in Mumbai.