Challenges Before the New Government

Today India stands at the cross road of poverty among plenty, lack of political credibility,rampant corruption and economic stagnation.For last ten years political corruption is rampat which naturally affected Indian economy badly.The cases of  the scams of Commonwealth games,2G ,Coalgate and many other corruption cases have damppened economic mood of the nation and also shaken faith of  institutional investors in India. Not only this  worsening law and order situation and sluggish judicial functioning have also taken spirit out of the nation.Since elections are mostly over in the country and the main focus will now be shifted towards the formation of a new government,therefore ,a few questions are standing like Yaksh Prashn(questions needed to be answered at any cost).The new government will have to be prepared to face these questions and challenges and therefore I thought it appropriate to highlight them as  people of India need a clear vision of the new government and concrete answers to these questions.

ECONOMIC POLICIES OF NEW GOVERNMENT:The new government will face big challenges in the field of industry,agriculture and infrastructureand empolyment generation.All these sectors suffered badly due to policy paralysis and political indecision.In fact the economic reforms of India of 1991 have mostly lost their impacts due to wrong sequencing and lack of political will to take tough decisions.Therefore, the new government will have to release the economy from political control and develop a new mechanism to guide it for social welfare.This will require both short and long term refoms and measures.The industrial sector needs great policy boost as all the industrial parameters are showing down slide .At the same time policy contradictions need to be removed.Especially the manufacturering sector is waiting for overhauling.The biggest problem is poor investment in the Research and Development sector as a result India is working mostly with the second generation technology  in the industrial sector.Therefore ,we have to make it mandatory for the industrial units to invest more money in Research and Development .For this tax concessions can be given to the industrial sector.
There should be single window clearance for investment proposals with least possible official interference so that foreign investment in India is promoted and the growth rate is boosted.At the same time corporate sector social responsibility needs to be fixed so that there is integrated growth process. No doubt there is rampant corruption in the private sector which needs to be addressed separately.In other words the new government will have to make corporate sector more transparent and more responsible in the growth process.

AGRICULTURE AND RURAL DEVELOPMENT:This sector is the worst affected sector in last ten years. Since peasants don't have big say in policy making as well as in election matters therefore,they are easily manupulated by MANREGA like programs and loan waiver.All eye washing and a wastage of state resources.There is an urgent need of policy change over in the agricultural sector so that income generating assets can be created and modernization of this sector takes place.For the new government a complete divorce from old policy regime is required so that both challenges and chances of agriculture sector are focused in the next ten years.We  all know that there is a great need for enhancing agriculture productivity to feed more than a billion population and it is not possible without agriculture sector reforms.The new government will have to make an adjustment between urbanization and agricultural development because urbanisation is taking place at the cost of agricultural land. Proper delivery mechanism has to be developed for the agriculture sector so that it is able to cope up with international developments and national challenges.Pending issues like institutional reforms , computerization of land records and discrematory subsidy policy are essential dimensions of new agriculture policy.

At the same times,creation of irrigation facilities and regular supply of agricultural inputs at reasonable prices are also required. In the twenty first century what we need more than anything is to create warehousing facilities and regulated agricultural market so that benefits of agricultural development goes to the actual farmers and not to the middle men.
As regards to the Rural Development our old policy of employment generation also needs complete revamping as in most of the programs there is political interference which leads to corruption.MANREGA like program should be restructured and as independent agency should be appointed for distribution of resourced.

INFRASTRUCTURE sector is waiting for the long for its turn for reforms and modernization.In India we have too many control systems in the infrastructure sector like it is divided into Railways,Roadways and  Waterways.The question is do we need this division and if yes  then for what?For the three ministries and three centres of corruption and manipulation. An integrated infrastructure ministry with an autonomous board with all the power to take decisiond is what India needs today to deal with the problems and prospects of this sector.All the three sectors railways,roadways abd Waterways need huge amount for the modernization. Therefore it is not possible without foreign investment and technology.

EXTERNAL SECTOR AND FOREIGN TRADE :In the last ten years foreign trade abd performance of external sector is in doldrums.Lack of vision and political will have also damaged India chances of increasing its presence in the world trade.What are needed to boost this sector are introduction of new policy measures to increase exports and liberal foreign investment policy.In the last decades or so trade deficit is rising and causing great concerns for the economy.The government will have to find out and formulate a new EXIM Policy to control a whophing trade deficit of$ 88 billion .It can be done by three policy measures- consolidating Indian rupee against US dollor and other major foreign currencies, exports promotion and imports restrictions especially from China.

FISCAL AND MONETARY REFORMS:India is perhaps following old age taxation policy which emphasises more tax burden on the middle class which determines market sentiments and expansion of the economy.But this class is now awakened and will demabd its due share in economic growth and cannot be nade fool for any longer.Therefore NarsimhamCommittee recomendations should be implemented in the true spirit and a new commission should be appointed to examine tax issues.No doubt tax resources are essential for the performance of the government,but it cannot be done at the cost of the middle class.For this the maximum income tax rate should not be more than 20%and minimum tax rebate income should be raised to five lacs.
As regards to rising fiscal deficit the govt. has to do a lot of homework.It has to stop many popular programs.Subsidy policy should be discretionary and no free subsidy should be given to the rich class as in the case of LPG and fertilizer.
I donot agree with RBI tactics of controlling inflation by curbing demand side factors as in the long run they will bring stagflation.Therefore monetary policy should be more liberal and growth oriented than to squeezing money supply.In India we need cheaper capital so that industrial sector gets a boost.If supply imprives there is no question of inflation and even if there is any inflation it can be dealt with other fiscal measures.

THE ISSUE OF EMPLOYMENT GENERATION: There is no denial to the fact that the Congress government has lost its direction and interest as regards to emploment creation.What India needs today is creation of ten millions jobs per year.Youth of today cannot wait any more for lack of job opportunies as it is not only wastage of human resouece but politically volatile.Both rural and urban sectors are stagnating on job creation.It requires invetment in the the manufacturing sector,agriculture and rural development sector.What the new government rquires is to redirect fund from subsidies distribution to job creation.
As regards to employment generation it is important to note that the regime of UPA government has neglected condtruction sector.As a result it has also killed the opportunities of providing employment to migratory population.During NDA rule when rste of interest was below 8% this sector had experienced a boom but reasons unknown to the common man ,suddenly the rate of interest has gone up to 11% causing great damage to the prospects of employment generation.

INFLATION ISSUE: The new government will face a serious problem of controlling rising prices of both consumer and capital goods.Since previous government failed badly on the inflation issue therefore the new government has to fight this issue on both demabd and supply sides.As regards to demand side of policy management the government has to control unnecessary expansion of demand due to prevelance of untaxed money or black money.On the supply side we need to enhance production capacity as well as possibilities.Without increasing production in the agricultural and industrial sectors it is not possible to check inflation.
As regards to food inflation the government has to control black marketing and hoarding.Mostly food inflation arises due to failure of State government to adopt corrective measures at appropriate time.There is another aspect of price rise overlooked by most of the governments since independence ie fixation of price of a product.In the case of goods there is a word  MRP but there is no process of how this MRP will be decided.As the government gets tax on the cost of production but there is a huge gap between MRP charged and actual cost of production.Therefore the new government has to decide how this big gap between MRP and actual cost.Once we are able to develop a transparent mechanism to fix a reasonable price concidering normal profit then a big proportion of inflation will be automatically controlled.The concept of manufacturer price,dealer price and seller price needs to be addressed on the urgent basis to save consuners from the burden of over charged prices.


CORRUPTION ISSUES: The issue of corruption will certainly be a central and critical matter before the new government as in the last ten years the growth of political and administrative corruption has gained Frankenstein face. Nothing more is important than towipe out ccorruption from public life.There will be great pressure on the new government to do something wonderful and fantastic act to check corruption in India and if not then political parties like AAP will develop great social and political pressure on the government.Therefore Jan Lok Pal as a nodal agency will need to be impowered to deak with issues of corruption.Transparency in the administration is another issue that will require more attention. At the same time criminalization of polity will also require great political will .

THE USSUE OF BLACKMONEY: The election of 2014 is being contested on many issues but black money is one if the most burning topic.It is estimated that total black money deposited in Swiss Bank is approximately$ 1456 billion.The UPA Government has done nothing ti address this issue and even after reminders from the Supreme Court it failed to constitute SIT on blackmoney.Billions of Indian assests are being used by other nations while India is suffering.India has to use its influence to bring back her assests from abroad.It may be wise enough to liberalise tax rules so that individuals and firms are ready to invest their income for the development of nation rather than sending them out.

FOREIGN POLICY AND RELATIONSHIP WITH NEIGHOURVING COUNTRIES :As regards to the foreign policy matters the new government will face tough challenges in developing relationship with both Pakistan and China.Pakistan will continue its terror sponsored policy and is not going to give its military  guided foreign policy.The new government needs both strong postures and diplomatic manipulation to keep Pakistan in check.Along with this military preparation requre greater attention abd vision.We need to be militarily so strong that Pakistan thinks twice before taking any adventurism. As regards to China this country will be a real challenge for India.It has both economic and military power more than India.Therefore our foreign policy should be China centered.Therefore the time hss come when India has to leave its decade long  foreign policy for a dynamic abd diplomaticaly agressive policy.Since China has big economic interest in India therfore it can be handled economically.

Now foreign policy and India's relationship with US will have to be redefined and structured in the light of changing international scenario.US being adversed to Modi will not work as it has great things at the stake.We can see departure of Nancy Powell the US ambassador in India as the beginning.The international equations are going to change since Russian interference in neighbouring countries is increasing.Therefore what India needs is a proper east west balanced foreign policy.

CHALLANGES OF POVERTY: Among a  few problems India needs to address the issue of poverty on urgent basis It is estimated that more than 268.8million people are still below the poverty line in 2011-12.Without poverty being eradicated market economy cannot grow at the desired pace.Since poverty has social and economic dimensions therefore its solutions can be found at the earliest.Till now the issue of poverty has been dealt on the superficial grounds and without proper documentation ,therefore policy prescriptions need to be changed.In this regards creation of social assets and income generating opportunities are very essential.The new government has to examine efficacy of employment generation programs in this respect and overhauling of approach may help to remove corruption from poverty eradication programs.

GOOD GOVERNANCE: This issue was a hot matter of debate in the initial stage of electionsbut of late it has lost its relevance.But without addressing this question ,It is not possible to proceed further.If we are not able to provide good governance to the people of India then our future is in danger. Youth of today is not going to compromise on this issue.What had happened in the last sixty seven years of rule is centralisation of power and capital in the hands if a few through corrupt practices and anti people policies.Therefore the great responsibility of the new government is to make administration accountable to the people .For better administration input output analysis should be used.Another bigger question will be how to make adminitration corruption free and answerable to the people.

CENTRE- STATE RELATIONSHIP: Another serious issue will be centre and state relationship.In recent years resouce generation capacity of States is weakened as a result most if the States are dependent on Central assistance.The issue of transfer of subsidy to the State account needs to be examined so that more resources are available for development.The new government will have to appoint a commission for distribution of tax resources as Sarkaria Commission recomendations may prove outdated.

EDUCATION AND HEALTH SECTOR REFORMS: It is a well known fact that without overhauling education sector ,economy cannot face challenges of 21st century.There is huge gap between rural and urban education.Rural schools are being run as  if we are living in the 18th century.This is creating inter sectoral discontent.In the long run we need an education system fully equiped with modern methodology and educational infrastructure.It is often said that those who cannot find jobs any where join education sector.There should be a national commission like UPSC to recruit teachers so that quality of education improves.

Health sector in India is completely jeopardised and God knows how are the lives of the poor people saved. Despite grand progress made by Indian economy, the doctor people ratio is very low. Therefore medical facilities and infrastructure need to expanded.Hospitals in rural areas are the first need and no doctor should be allowed to work any where without serving five years in rural areas hospitals.Free medical facilities to poor people should be given.

RESOURCE GENERATION: Now question arises from where the government will generate that much resources for meeting the needs of the economy?The government must implement Goods and Service Tax without any delay.Secondly after reducing tax rates,more people should be grought under tax net.It is surprising that in India only 2% people pay direct taxes.This can be easily done by restructuring tax rates and tax base.What is more important that service class needs a relief from both inflation and high tax burden.The policy of disinvestment should be reformulated or reoganised to generate resources for the government.In this direction sale of government holdings in commercial banks will be a good step as it will not only generate resources but will also relieve fromm the pressure of increasing NPA in these banks.
As reported in many newspapers from time to time there is massive under collection of State revenue due corruption and faulty revenue system.Going by the normal practice coolection of sales tax and excise duty is highly dissatisfactory and it causes huge revenue loss to the state.Now the new government will have to undertake revamping of tax collection department to generate enough revenue.