Modi faces many challenges enroute to 2019

Winning streaks in states and a defeated Opposition may have left the field open for Prime Minister Narendra Modi, but within government circles, the focus is on finalising a gameplan for the next two years —a plan that will ensure that the Modi governemnt is re-elected in 2019. Three years ago, PM Modi had promised to address policy paralysis, inflation, black money and corruption. The long-term agenda he pronounced included reforming the system —administrative, judicial, police and electoral —and bridging the rich-poor divide. Though he has achieved  much, jobless growth —with just 4.4 lakh jobs being created in the past two years —is a major cause for worry.

Insiders say that there is a direction from the top to aggressively pursue steps to rebuild investor confidence while keeping fiscal consolidation in sight as part of the next two-year plan.

They say, next year the government and political leadership will go in election mode, so there is just a year left now to put a structure of recovery on tracks. Among plans for the next two years are to shun populism and quick fixes and instead focus on a concrete plan to fix the struggling economy affected by global recession and other factors. The government is banking on rolling out of GST to net maximum tax revenue in order to pass on some relief for individual taxpayers.

There is also talk of creating additional spending by abolishing the diesel subsidy and restructuring social sector schemes. Detailed deliberations have already begun in the government to ensure faster clearances and timely implementation, and also to rope in state governments for large projects at the initial stages itself -- since it is the states where the actual implementation takes place. Officials say the Project Management Group in the Cabinet Secretariat is working overtime to set up an action plan for the next two years, away from the glitz and glamour of ‘Modifest’ and drumming up of achievements.

Revival of manufacturing has been identified as a key priority area and the government could look at creating new dedicated hubs as the special economic zones tend to have turned more into tax shelters for IT. There is also realisation that  Delhi-Mumbai Industrial Corridor, which was aimed  to revive manufacturing, is not enough and a wider national outreach is needed.

Even though inflation is no longer a major worry and perception-wise the government has scored, the low employment generation and lack of progress in entrepreneurship development could be causes for worry among policy-makers. Another issue is to connect the missing links to increase the pace of governance.