Election results 2019: Modi 2.0 faces the tough task of fixing the economy
For the PM, his key task during the second term would be to boost sentiment - both for private sector investment and for private consumption
- May 23, 2019,
- Updated May 23, 2019 9:07 PM IST
Prime Minister Narendra Modi had no doubts that he would win a second term. This was the reason he had asked his bureaucrats to start working on an agenda, for things to do in the major economic ministries, in the first 100 days after forming the new government. And there are plenty of things to do. Despite its high GDP growth - which even after slowing is still expected to clock 7 per cent this year - the number of worries about different segments is growing. Agricultural and rural distress is high across the country. For the Prime Minister, who has promised to double farm incomes by 2022, this is going to be one of the biggest challenges this year. One, because of the already existing distress; Two, because this year, the monsoon predictions are not particularly good and too much of Indian agriculture is still dependent on the monsoons. The issue with agriculture is that short term solutions will not work, and while a quick response to drought, like expanding coverage of PM Kisan could help, long term structural reforms need to be carried out before farmers see any increase in their incomes.
The other problem that the Prime Minister and his Finance Minister and Industries Minister need to try and tackle immediately is the lack of appetite for fresh project investment in the private sector. For the last five years, the government investments in infrastructure and spending on social sector schemes have been largely driving economic growth - along with private consumption. Trade and private sector investment have been laggards. Ideally, both these need to do well for the growth story to continue.
Prime Minister Narendra Modi had no doubts that he would win a second term. This was the reason he had asked his bureaucrats to start working on an agenda, for things to do in the major economic ministries, in the first 100 days after forming the new government. And there are plenty of things to do. Despite its high GDP growth - which even after slowing is still expected to clock 7 per cent this year - the number of worries about different segments is growing. Agricultural and rural distress is high across the country. For the Prime Minister, who has promised to double farm incomes by 2022, this is going to be one of the biggest challenges this year. One, because of the already existing distress; Two, because this year, the monsoon predictions are not particularly good and too much of Indian agriculture is still dependent on the monsoons. The issue with agriculture is that short term solutions will not work, and while a quick response to drought, like expanding coverage of PM Kisan could help, long term structural reforms need to be carried out before farmers see any increase in their incomes.
The other problem that the Prime Minister and his Finance Minister and Industries Minister need to try and tackle immediately is the lack of appetite for fresh project investment in the private sector. For the last five years, the government investments in infrastructure and spending on social sector schemes have been largely driving economic growth - along with private consumption. Trade and private sector investment have been laggards. Ideally, both these need to do well for the growth story to continue.