Name: Abhishek Mathur

Batch: 2013 15
Email id:
abhishekmathur13@micamail.in
Mob: 9687479028

New government, New era, New hopes -The Indian Market and Economy in
the upcoming years
India is at the cusp of economy recovery. Last few years have seen Indian economy sighing and
gasping with low growth levels and spiraling inflation. Amidst such turbulence, political
environment also underwent a change and today we find a new ruling party at the helm of the
affairs. Reforms and their efficient implementation seem to be the only answers to arrest any
further decline of the economy and usher an environment of certainty and stability. The new
government has reignited hope across the nation which has given birth to questions of the kind:
Will our economy be put back on track? Will doing business in India be made any easier? Will a
normal citizen be relieved of paying higher taxes? Will jobs be created for everybody? And will a
transparent system be put in place to ensure better administration and operational efficiencies?
The government has made a promising start in the first 100 days of its rule at the center.
Execution and implementation have been revitalized to new standards, clearances and approvals
of projects have been digitized, an inclusive financial scheme, Pradhan Mantri Jan Dhan Yojna
has been launched to remove financial untouchability in the country by promoting opening of
bank accounts (with accidental and life insurance cover) for all. Bold decisions such as the
introduction of FDI in railways, defence and insurance sectors, merging of ministry portfolios to
expedite decisions and reduce sparring, refocus on highways and road transport, emphasis on
manufacturing exports, prioritization of job creation, infrastructure rollout through ports and
cutting of bureaucratic red tapism have been taken to instill confidence, attract investment and
propel the flagging economy.
In order to further improve business sentiments in the country the government needs to reverse
the spate of measures that have spooked investors out of India. Business sentiments have
remained at an all-time low since 2012 when the Income Tax Act of 1961 was amended with
retrospective effect. The biggest victim of such a step has been the British telecom major,
Vodafone, slapped with a capital gains tax of Rs.20000 crore retrospectively after its acquisition
of Hutch-Essar in 2007. The suggested course of action is to do away with the legislative
amendment done in the Finance Act, 2012 which deals with retrospective taxation and assure
investors that starting this year all taxation would be done prospectively only.
Though the Finance Minister has accepted the challenge of keeping fiscal deficit at 4.1% of the
GDP this fiscal, still it remains at unmanageable levels and requires immediate attention. For
reining it in, it is imperative that the current form of FRBM (Fiscal Responsibility and Budget
Management) is provided with more teeth. Additionally, the Central government needs to work
with the state governments regarding GST implementation in the country, address concerns
regarding revenue loss to their states and bring them on a common platform. A value added tax
like GST will ensure that all goods and services are taxed at the same rate meaning lower taxes
for the people, significant jump in the number of assesses, more revenues for the government and
cheaper goods for the consumers.
Many problems plaguing Indian economy and businesses find their common source in the
existing tax and expenditure sector of our country. Tax rules need to be simplified and regulatory
framework eased for the entrepreneurs, startups and angel investors in the country to make the

environment more conducive for them to flourish. Further, tax breaks originally envisioned for
SEZs should be restored. This calls for revoking Dividend Distribution Tax and Minimum
Alternate Tax and exempting SEZs from the labor laws.
Subsidy programs also need to be revamped because people no longer need doles, they need
jobs! Price hike on the lines of monthly diesel price hike should be adopted for other
commodities such as fertilizers and LPG. This will produce the desired effect of linking fuel
prices to the market rates and freeing it from government control in the near future. Moreover,
supply side issues should be looked into to give a fillip to the manufacturing sector in the country
and boost growth prospects. This calls for pushing the idea of denationalization of coal to
address power woes by throwing open the gates to commercial mining by private players.
According to one estimate from the World Bank, India witnesses a loss of almost 2.5% of GDP,
primarily due to poor intake of nutrition (leading to poor work productivity). Existing welfare
schemes such as midday meals and ICDS (Integrated Child Development Services) must be
overhauled and nutrition metrics developed and timely tracked so that malnutrition in the country
is simultaneously checked with any loss in economic value.
In the times ahead, such actions would bear fruit and help India stamp its authority on the global
map. Further, it could lead to millions of Indians being pulled out of poverty, lakhs of jobs being
created and a more transparent system being put in place. Steps like these also mean that soon
India could be giving stiff competition to China in the manufacturing sector and the largest
democracy in the world would move to an inclusive double digit growth from the sub 5% level
witnessed in the last two years.

References
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