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31/5/2014 Five cheers common man can expect from Narendra Modi government - The Economic Times

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By ECONOMICTIMES.COM | 31 May, 2014, 01.17PM IST Post a Comment
Fresh indications from the new cabinet and market experts
lead us to believe that the 'acche din' promised by Modi may
be round the corner.
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Five cheers common man can expect from Narendra Modi
government
NEW DELHI: Prime Minister Narendra Modi-led NDA government has come to power riding on
the high expectations of the youth, middle-class and lower-income groups. Bogged down by
high inflation, uncertain job prospects and shrinking purchasing power, common man is looking
to the new government to offer respite from these multiple problems.
The BJP manifesto and fresh indications from the new cabinet and market experts lead us to
believe that the 'acche din' promised by Narendra Modi may be round the corner. We take a
look at five things that common man can expect from the Narendra Modi-led government:
1) Affordable housing: With a focus on providing every family a house of their own, the NDA
government expected to work towards low-cost housing but also lowering home loan interest
rates in order to encourage home buyers.
Low-cost housing, which found several mentions in BJP's 2014 election manifesto, is likely to
get infrastructure status, making it easier for real-estate developers to get finance from banks
and for longer tenures, and eventually increasing the supply of houses. According to
government definition, low-cost houses are those with an area of up to 40 sq metres.
Recently, Venkaiah Naidu, the new minister for urban development, housing and urban poverty
alleviation said he will push for reducing home loan rates. "Housing should be a priority area for
banks and I will be taking this up with my colleague finance minister," Naidu said.
The previous BJP-led government under Atal Bihari Vajpayee had given top priority to housing by reducing interest rates, he said. "The interest
rates that were around 11% were brought down to around 7.5%. Today, again interest rate for housing has gone up above 10%. That is one
critical area if you want to achieve housing for all. You need to have interest reduction.
2) Tax sops: While the government is facing constraints on the fiscal front, some tax sops are likely to make way to the common man in the
Budget. Burdened by high inflation, that some measures may be announced to provide relief to the tax-payer.
The tax experts and the industry are hoping that the BJP will keep its manifesto promise of providing a non-adversarial tax regime. Experts
believe that the tax outgo of lower and middle income earners may come down this year. "Given the current economic situation, there is not
really much scope for the government to cut taxes. But the public is reeling under high inflation and some relief might be on cards for lower and
middle income groups," says Kuldip Kumar, executive director, PwC India.
"Taxpayers can expect widening of tax slabs, rationalization of certain exemption limits and raising the deduction limit under Section 80C,"
says Divya Baweja, partner, Deloitte Haskins & Sells. "The tax deduction under Section 80C should be raised to Rs 2 lakh," says Sudhir
Kaushik, CFO and cofounder of e-filing portal Taxspanner.com. He suggests the additional Rs 1 lakh investment be specifically reserved for
infrastructure bonds and retirement products.
3) Faster redressal of grievances: With Narendra Modi pitching for use of modern technology to stay in connect with the public, bureaucrats
have been instructed top leverage technology in order to ensure faster redressal of grievances.
In its manifesto, BJP has emphasized the need for e-Governance, as a major tool to help deal better with complaints and queries of the
citizens. Recently, Narendra Modi held his first formal meeting with officials in the Prime Minister's Office, where he urged them to focus on
resolving people's grievances, using technology to spruce up governance.

31/5/2014 Five cheers common man can expect from Narendra Modi government - The Economic Times
http://economictimes.indiatimes.com/news/economy/indicators/five-cheers-common-man-can-expect-from-narendra-modi-government/articleshow/35833075… 2/2
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4) Opening up of job market: The mere fact of Narendra Modi's emphatic victory in the elections is enough for sentiment to have changed
dramatically in the job market.
ET reported that leading recruitment and search firms, including Korn/Ferry International, ABC Consultants, Ikya Human Capital Solutions,
EMA Partners, Transearch India and RGF Executive Search, said the general mood has turned bullish almost overnight in a job market that
has been on a roller coaster for the past 8-10 quarters amid a prolonged economic slump.
While the new government may take a while to start making policy changes, job market momentum is going to build in three to six months. "We
see an unprecedented job market from here on," said Atul Vohra, managing partner, Transearch India. RGF Executive Search predicts a
steady growth in the next six months and a big surge in the job market around October. The job market upturn is expected to cover most of the
sectors in six months.
5) Measures to tackle inflation: The biggest pocket-pincher for the common man has been a stubbornly high inflation. Despite indications of
inflation having peaked out, the ground reality is that the purchasing power has taken a severe hit. Most economists expect the new
government to introduce structural reforms to address the supply-side bottlenecks that are preventing inflation from easing down.
Finance Minister Arun Jaitley has also said that inflation remains a top priority for the new government. According to Ashok Gulati, Chair
Professor for Agriculture at ICRIER, the goal of bringing food inflation below 5% can be achieved.
"Firstly, liquidate at least 15-20 million tonnes of foodgrain stocks in the open market from Food Corporation of India godowns, which are
overflowing without serving any purpose. Second, import duties on fruits and vegetables, dairy products and meat (poultry) must be reduced en
bloc to about 5-10%, down from current rates of 30% and above, to augment domestic supplies," Gulati says.
"Third, contain and rationalise food and fertiliser subsidies and MGNREGA expenditures, all of which together cost the country roughly
between Rs 2,50,000 crore to Rs 3,00,000 crore (including roughly Rs 80,000 crore of unpaid bills for food and fertiliser subsidies). There are
high leakages (around 35-40%) in these ill-conceived and poorly implemented programmes," he advocates.
Fresh indications from the new cabinet and market experts lead us to believe that the 'acche din' promised by Modi may be round the corner.