Deepavali is the time to look at the brighter side of life and spread cheer. So, silver linings rather than the dark clouds that hover over us beckon a look. It is not easy to see many silver linings but worth a try in this festive season.
Top among the somewhat cheerful developments of recent days is the more resolute or, rather, the less hapless stand of the government on reduction of wasteful expenditure and cutting the fiscal deficit. The advent of Chidambaram in the finance ministry has led to more realistic appraisal of the challenges the economy faces. A suitable communication of these has led the ruling party to back the reforms openly. The Union Cabinet has been rejigged to give a relatively fresh façade and it appears the futility of inaction as the preferred option has been realised at the very top. The prospects of a determined push towards higher growth look brighter now than in the past four years.
Tax reforms by way of a simpler Direct Taxes Code and a Goods and Services Tax, besides notable moves on legislative changes to economic laws such as the Companies Act of 1956, the Competition Act of 2002, pension, insurance and initiatives such as the moves to restructure the finances of state electricity boards actually look like going forward. The chances of stalled infrastructure and other major projects moving forward look better with the proposed National Investment Board.
The top echelons of the government and ruling party seem to realise that merely throwing money on the pretext of greater inclusion without adequate economic growth cannot work in the long or even the medium run. The limitations of populism seem to be dawning even on the opposition, non-government bodies and the media. There is greater appreciation now than a few months earlier that more focus is required to improve governance, processes and efficiency than mere agitations and allegations. Serious debates have started on the current state of affairs and to how change can be brought about. Greater attention on implementation issues and cleaner, more transparent, processes look likelier.
Foreign investors seem to now find India a better place than other BRIC countries to put their money in. The worries of a downgrade have receded somewhat. Inflows have helped cope with the widening trade and current account deficits and helped the currency move towards more realistic levels. At the global level, the worst days of Europe seem to be behind and the re-election of Obama promises enough liquidity to grease the wheels of global trade. Despite significant slowing in global trade and economic growth since 2008, the trade barriers have not increased but, in fact, have marginally declined. At present, the prospects for the coming year look better for global trade volumes.
For exporters and importers, the introduction of self-assessment in the Customs law, extension of electronic data interchange-enabled Customs clearance at more ports, introduction of 24x7 Customs clearance at select ports and introduction of e-BRC (electronic bank realisation certificate) promise to lower transaction costs. The initiatives of the commerce ministry have helped exporters diversify destinations and product mix.
Does it mean all is well? No. It just means: “Have a great Deepavali and hope for better times ahead”.