Economic Restructuring- How should the new government act
11 May, 2014
Post the 16th of this month, development and earning prospects will be the areas of concern for all. It can be interpreted that the nation is on the verge of electing a stable government at the center, which can take tough, wiser, and above all, quick decisions. The ruin of the economy is what everyone has talked about; however past cannot be altered.
The future has to be rendered pace, stability, and robustness. The new government is probably to be led by a personality who has delivered more than the expected outcomes in Gujarat
and is looked forward to for equivalent consequences across the nation. It is however vital to note that only with the consolidated endeavors of distinct departments of the government, expected outcomes can be accomplished. I will discuss prominent areas of concerns and probable measures that can add to the prosperity.
SWOT analysis will be a pre-requisite for the new government; post the ministers hold their respective departments. Every ministry must spend reasonable time in evaluating the strengths and weaknesses of the national economy and their respective areas of concern; and in comprehending the opportunities and threats posed by the external environment. Planning is the base of project implementation, hence sturdy plans and feasible goals should be set. We know that none of the ministries in past years has justified its role in the strengthening of the economic, social, and technological spheres of the nation. Remember, the new ministers would be inheriting burning chairs with limitless bottlenecks and past failures. Top to bottom restructuring will be the sole solution for the departments to bring in the much-needed synergy.
When economy is talked about, Finance Ministry is the department of the government that is looked upon for bringing in viability. Ranging from the expansion of banking services and financial inclusion of all to controlling the inflating prices and interest rates, the finance department has multiple targets to accomplish. A way has to be located with a view to minimizing the NPA level that has emerged as the most prominent threat for the financial system. Apart from the declared figures, probable NPAs are to be uncovered, which otherwise can add to the trouble. While past NPAs are the areas of concern, the government along with the financial intermediaries will have to come up with measures that can check likely NPAs. Incapable borrowers have to be recognized prior to their turning into bad debts so that appropriate recovery mechanism can be resorted to. Financial inclusion is the need of the hour with expansion in terms of number of bank account holders and participants in the savings sector. After all, savings of the households and retail investors is what that provides the requisite pace to the investment domain. Inclusion will not only ensure basic banking facilities to all, it would also serve as a way for mobilizing savings and allocating credit. Entrepreneurial credit products have to be rationalized so as to help enterprises secure credit on easy terms, which in turn will bring in technological advancements. Financial inclusion as a target would remain unachievable until the strict KYC norms are addressed to. The general public while approaching the branch for a bank account has to deal with concerns of extensive documentation and unfavorable attitude. Also, to pave way for new entrepreneurs and fresh talent the lending mechanism has to be simplified and rejuvenated.Ranging from betterment of the agricultural sector to the advancement of manufacturing units, challenges are many. The topmost necessity is to bring in technological encroachments sooner than later. Lack of proper infrastructure and technology
is the prime hindrance of many sectors. Expansion of railway network and advanced tools for procuring coal are the only solutions to enrich the power sector. This in turn would automatically pave way for the success of business
entities as well as the agricultural sector. Undoubtedly, technological advancement will be an effective answer to distinct bottlenecks. It has to be recognized that multiple state-backed and private projects are awaiting implementation, which has increased the overall cost of resources. Plus, the capital and the money markets that have extended money to these projects are on the verge of losing their stake. Quick decisions and workable strategy will be the key drivers.We talk about revolutionizing education, literacy, agriculture and SMEs, and providing access to clean water in every of our five-year plans. The planning commission has been including the same targets since past many decades, however real outcomes have remained unachieved. The working of the commission in the last ten years projects that the department comprehensively failed to recognize the distinct needs of the states and carried out its operations with the same old laidback attitude. The most vital part ‘Planning’ was for sure missing. Preparation of vision documents for the coming future and devising effective policies is the core of the working of the commission. However, this body of so-called thinkers and planners failed to realize the goals. The commission rarely has any control mechanism to evaluate deviations from the anticipated outcomes. Inclusion of competent strategic planners and visionaries can be an answer.To be precise, every discrete department of the government will have to focus on respective strengths and weaknesses, and will have to devise appropriate plans accordingly. Else, as seen in the reign of the UPA, departments would blame each other for the letdowns rather than recognizing their role in the nation building. For sure, the country would be led by a person with requisite know-how of dealing with worst situations; however, sole leader would not be able to deliver conclusions that are being anticipated. The team too will have to accept the accountability and work dedicatedly. The declining GDP and the inflating prices are not the only concerns. Basic necessities and the overall restructuring of the social as well the economic sphere are being looked for. Surely, tough time would commence once the outcomes of the polls are declared, where from the representatives will have to deliver what they have promised.
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About The Author
A Chartered Accountant by profession and Director on the board of Punjab National Bank (PNB), General Insurance Corporation of India (GIC) and Rural Electrification Corporation Limited (REC). Dr. Sunil Gupta is working flawlessly for the economic and social prosperity of India.