Overall Solutions to achieve a New India by 2022

Tax cuts and rebates aim to give people more money in their pockets. The idea is that when consumers have extra cash, they are likely to spend it at different businesses. This, in turn, boosts the revenues, cash flows, and profits of those businesses.
The additional cash also allows companies to invest in capital, improve their technology, and overall, expand and grow. This increased financial flexibility leads to higher productivity, contributing to the overall growth of the economy.
Proponents of tax cuts and rebates argue that by putting more money directly into the hands of consumers, the economy gets a natural boost. When people spend, businesses thrive, and this positive cycle fosters economic growth.
As an example, the government took steps to reduce corporation tax rates last September. Specifically, it lowered corporate tax rates for domestic manufacturers from 30% to 22%. For new manufacturing companies, the rate was reduced even further, from 25% to 15%, as long as they refrained from claiming any exemptions. This policy is strategically crafted to spur economic growth over the next decade.

Stimulating the Economy With Deregulation

In 1991, deregulation took center stage in India’s economic landscape as the government decided to loosen the rules governing various industries and businesses. This shift primarily targeted sectors like financial institutions, industries, and foreign investments, sparking a notable boost in economic development.
Over time, regular updates to these regulations, such as the disinvestment of unprofitable Public Sector Undertakings (PSUs), have played a crucial role in sustaining and enhancing the country’s economic growth.

Using Infrastructure to Spur Economic Growth

When a government invests in building or fixing things like roads, bridges, and ports, it’s called infrastructure spending. This isn’t just about construction – it’s about creating the essential foundations for businesses and society to thrive. Imagine well-maintained roads and bridges helping trucks move faster without getting stuck in traffic. That means businesses can run smoothly, which boosts productivity.
Infrastructure spending isn’t just about bricks and cement; it’s a job creator. When the government gives the green light to projects, it means hiring workers to get the job done. But it’s not just about those jobs – it’s about kickstarting new economic growth. For example, building a new highway can lead to other businesses popping up, like gas stations and stores for drivers.

Now, if we look at India, we see some awesome economic possibilities. But, of course, there are hurdles to overcome. The government has taken steps, and we’ve seen some local solutions. Now, let’s explore some big-picture ideas that could turn India into a major economic powerhouse.

Growth:

Let’s boost investment rates to 36% of our economy and aim to increase the tax-GDP ratio to 22%.
We’re teaming up with states to make it easier to do business and simplify land and labor regulations.

Employment and Labor Reforms:

We believe that economic growth is key to creating jobs.
We want to fully organize central labor laws and increase the participation of women in the workforce to 30%.
We’re focusing on improving the skills and health of our workforce and expanding apprenticeship programs.

Technology & Innovation:

We’re creating a powerful group to manage scientific advancements.
There will be a dedicated fund for innovation at the district level.

Industry:

We’re building self-sufficient manufacturing hubs with ready-to-go spaces for small businesses.
Supporting labor-intensive export firms is a priority.
We’re launching a big effort to bring Industry 4.0 practices into our industries.
A “single window” system will simplify interactions between investors and the government.

Doubling Farmers Income:

Farmers, we’re investing in modern technology, processing facilities, and diversifying crops.
We’re making changes to agricultural laws to empower farmers and create a better system.
Our goal is to connect production to processing, and we’re setting up centers to buy directly from villages.

Energy:

To streamline taxes and support businesses, we’re considering bringing oil, gas, electricity, and coal under GST.
We’re promoting smart energy grids and meters.

Ports, Shipping & Inland Waterways:

We’re working on doubling the use of coastal shipping and inland waterways for transporting goods.
The Sagarmala project is a priority, and we’re opening up opportunities in dredging.

Logistics:

We’re developing a tech platform to integrate different modes of transport seamlessly.
Simplifying tariffs and ensuring fair prices across transport modes are on our agenda.
An overarching body will keep track of all transport data for better coordination.

Rationalising GST

Rationalization of GST Slabs and Rates as suggested by Kelkar Committee.
Inclusion of Petroleum Products within the GST Regime.
Addressing the issue of Inverted Duty Structure under the GST for few imported products.
Inclusion of all the Real Estate Transactions within the GST Regime.
Faster processing of GST Refunds for Exporter.

Resolving NPA Problem

Raghuram Rajan has proposed a more thorough examination of loan applications for Mudra Loans, emphasizing the importance of careful scrutiny before approval.
The Prompt Corrective Action (PCA) guidelines should be reevaluated in a balanced manner, taking into account the dual goals of promoting growth and resolving Non-Performing Assets (NPAs).
The Economic Survey of 2016-2017 recommends the establishment of a centralized Public Sector Asset Rehabilitation Agency (PARA). This agency would handle the most challenging and significant cases, making tough decisions to reduce NPAs, even if they are politically sensitive.
Dr. Aravind Subramanian’s 4R Strategy for NPA resolution highlights the importance of the fourth R, which is Reform. Giving priority to reforms is crucial to prevent the ballooning of NPAs in the future.

Conclusion

India has a great opportunity to play a significant role on the global stage, but to do so, it needs to undertake crucial internal reforms. One key area that requires attention is the health system, where a shift towards emphasizing primary medical centers (PMCs) can make a substantial difference.
To truly enhance the lives of the majority of its citizens, India must reconfigure its growth process to be less detrimental. While this might mean slower growth, it’s a necessary step to direct more benefits towards the poorer sections of society. As we aim for double-digit growth, it’s essential for sustained development at all levels, especially considering the massive number of young people entering the workforce each month.
India’s favorable demographics can be a significant advantage if utilized effectively. By seizing this opportunity, India can aspire to become an upper-middle-income economy with a thriving middle class, paving the way for a prosperous future.

Read Also: GST Council-Centre State Relations