The reforms brought in lately by the Narendra Modi government, especially the agriculture and labour reforms, may help the Indian economy to back on track and boost India’s economic growth in the medium term.
India highly depends on the agriculture sector and it is important to bring the reform in the agriculture sector to reduce the burden of finance on the farmer. These reforms are made to give farmers more flexibility over where and to whom to sell their product as per their decided value without interruption of the middle man. They can now more reachable and work authentically without facing the pressure of the market.
Fitch Ratings Report claims, “Stripping out middleman could improve farmers’ income and leave better options to them to deal with while reducing consumer prices.” Also, the labor reforms may improve worker access to social security, strengthen occupational safety requirements, ease migrant workers’ ability to move between states, and resolve their disputes quickly, which would further support the economy.
Important Highlights:
- The Reports are claiming that these labor reforms help the Indian economy to recover from the bad phase. Labour reforms will further support the formaliasation of India’s labour market and improve their way of performing by providing flexibility in the market. Their reach will be improvised with positive efficiency gain, however, in practice, their impact will be modest. Reports underline that the government are indenting to privatise some PSUs could be transformative.
- These farmer and labour reforms seem risky but their implementation is beneficial for both India’s economic growth and labours’ standard of doing business. These reforms will be considered as productive for the economy, their policy implementations are believed to be playing a key role in driving the growth.
- Fitch Ratings also added that these implementations are not going to be easy as the process of reform in India remains complex and implementation at times has proven difficult. Change is something which brings both the complexity and risk, and growth and solidarity.
Obstacle to Implement Two Landmark Reforms:
The government of India earlier introduced two landmark reforms (IBC and GST) which seemed failure at the time of implementation. The report added that two landmark reforms know as – Goods and Service Tax (GST) and Insolvency and Bankruptcy Code (IBS) – from the government’s previous term faced failure recently may be due to the pandemic but it causes the heavy losses to the economy. While IBS has been suspended temporarily in line with forbearance regulations for banks, the revenue collection from GST has faced a major fall, which in turn puts the burden on the center government to issues compensation amounts to the states who suffered the loss due to GST implementations. This setback making it more challenging to separate these revenues among the center and states.
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