Coalition government and challenges of reforms

Economic growth has been rapid in the last three years, with the government’s massive investment in infrastructure playing a key role.

The Modi government has been successful in many reforms. For example, the monetary policy system targeting inflation with the help of the Reserve Bank of India, implementing a GST for the whole country, establishing a regulatory system for the real estate sector and a digital system to provide various services to the citizens are included in these.

The Modi government also made efforts to reform land laws, labor laws and agricultural laws. However, there was strong political opposition to the government’s initiatives regarding land and agriculture sector reforms. Due to this, the then Modi majority government also had to step back. Parliament passed four acts in labor law reforms. But the central government could not get these acts passed from all the states.

To reach the target of these investment related schemes, the Modi government will need the support of those who are pushing land and labor reforms in its third term. Apart from this, they should implement the Labor Code as soon as possible and take advantage of the new reforms in taxation rules.

It cannot be denied that such reforms will be important for the country’s economy. In the coming years, economic growth will remain at high levels only when investment from the private sector increases. The economic reforms undertaken to make business easier will certainly help in increasing investment from the private sector.

One advantage of the private sector stepping forward will be that the amount of money the government is spending on infrastructure will reduce. This will prevent the government from borrowing more from the market and the fiscal deficit will also remain under control. It will also become cheaper for the private sector to raise funds.

Will a coalition government take enough interest in pushing these reforms forward? The hope is that the coalition government will be able to pay more attention to the views of others, which will have great implications for the Indian economy.

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