On road to Eco revival, Modi Govt aims to push drastic reforms in Budget 2020

New Delhi, Dec 27 Charting out new road map for economic revival in the next few months, the ruling BJP-led dispensation is unsure of undertaking drastic and sweeping reform strategy like privatisation.

Closer interaction with party leaders suggest there is a lobby which would continue to press for protectionist trade policies and conservatism.

The new Budget 2020-21 to be presented early next year will thus have to overcome the hurdles from Hindutva trade unions and small business lobbies which have over the years stuck with the BJP.However, BJP insiders say there have been immense improvement in infrastructure front including the enhanced electricity grid. India has also climbed 65 places up the World Bank’s Ease of Doing Business Index and pulled in record hauls of foreign investment.

But, deeper structural reforms have always been 'compromised' when it came to deal with risking the  political capital.

How much of that can be done when the government faces CAA and NPR controversies remain to be seen.

Sources admit, labour laws continue to make hiring and firing too expensive and there are laws which only make it hard for companies to acquire land.

These are harming growth of manufacturing base despite Prime Minister Narendra Modi's push for 'Made In India' campaign. Apparently, disappointing its admirers and those who wish to see economic reforms, the Modi government has avoided taking calls on privatisation front and instead forced some state-owned firms to swallow sick ones.

Pessimism about reforms has come to stay not without good reason as more often the government finds itself facing the wrath of organisations such as Bharatiya Mazdoor Sangh (BMS), the powerful trade union affiliated to the RSS. The new Industrial Relations Code, 2019 presented in Parliament has already come under attack from the BMS.

The Bill, according to government, proposes to make it easier for an employer to engage and disengage workers based on requirement. This would also make the process of hiring and firing smoother.

Similarly, earlier this month the Swadeshi Jagran Manch, another RSS affiliated body, after their meet in Haridwar issued a strong statement slamming the PSU disinvestment programme of the government.

The SJM also has been critical of government's intent for the sale of Bharat Petroleum Corporation Limited (BPCL) and said Saudi Aramco was eyeing its assets.

Property created with national sentiments and hard work should not be handed over to foreign oil companies, it said.

Lok Sabha Speaker Om Birla on specific demands from members has referred two bills the Industrial Relations Code, 2019 bill and the Code on Social Security, 2019 -- to the standing committee on Labour.The panel is expected to submit its report within three months.

Biju Janata Dal lawmaker Bhartruhari Mahtab heads the panel on Labour which also has members such as Varun Gandhi from BJP and Oscar Fernandes of Congress.

In terms of economic management, the government is under pressure to bring changes in labour laws and also ensure boost for low-value labour-intensive exports.

India has not done well on this front while high-value skill oriented exports have done well. In fact, those in the know of things say in certain key sectors, there has been drop in exports figures.

In agriculture and allied products, the exports peaked at 43 billion USD in FY14, but it came down to 38.5 billion USD in 2018-19.

The exports of leather and leather manufacturers peaked at 6.2 billion USD in 2014-2015 but by FY19  they were at 5.3 billion USD. The exports of ready-made garments also came down to 16 billion USD in 2019 from the peak of 17.4 billion USD in 2016-2017.

Sources say another area of concern is public sector banks. Now, Finance Minister Nirmala Sitharaman is set to meet the CEOs of state-owned banks.

The meeting is also expected to take up discussion on non-performing asset recovery through both National Company Law Tribunal and non-NCLT means.

Banks have recovered Rs 4,01,393 crore over the previous four financial years, including a record recovery of Rs 1,56,702 crore during fiscal 2018-19.

The government sources maintain there is need to take steps to fix the unorganised sector as this front was hit hard since the demonetisation in 2016 and GST in 2017.