Modi government may focus on economic revival for now

NEW DELHI: With Delhi elections barely a few months away and the washout Parliament session behind, the government is expected to get down to budget for FY16 and the business of reviving the economy. It looks lot more difficult for the seven months old new government.

Prime Minister Narendra Modi is expected to review the performance of the finance ministry at the end of the month, setting the tone for the most anticipated budget in recent years.

The only political distraction for the NDA government for the next 12 months before the crucial Bihar polls is the Delhi elections which are couple of months away.

The term of the Bihar assembly ends on November 29, 2015.

The government has not been able to manage much in the Parliament session that concluded on Thursday, with the combined opposition in Rajya Sabha, where the NDA is in a minority, stalling the proceedings.

“Mend and repair work will continue that does not require legislative action. Two things that they need to be pushed in 2015 are GST and revival of mining activity. These two are very critical. Infrastructure sector needs a huge facelift. The government will also have to begin the process for rationalising LPG and kerosene," said DK Joshi, chief economist, CRISIL.

The government has to now get its executive machinery going in order to revive the economy that seems to be struggling again after a brief spark at the beginning of current financial year.

Indian economy expanded 5.3% in July-September quarter, lower than 5.7% recorded in the previous quarter, and the 4.2% contraction in industrial production in October does not suggest things looking up.

The government had lined up an ambitious legislative agenda for the just concluded Parliament session, but it did not make much headway because of its lack of strength in the Rajya Sabha. It is now likely to opt for the ordinance route to take some of that forward ­ insurance and coal.

It will also need to speed up disinvestment so that large reduction in expenditure is not needed to reach the fiscal deficit target of 4.1% of GDP.

The Union budget is expected to provide a big push forward in terms of drawing up framework for key policy reforms that the government is proposing to get the economy back on track.

Clamour for big bang reforms has only grown in the business community and the budget would be keenly watched for delivering on some of them.

DK Pant, chief economist, India Ratings feels there is lot that the government can do without the hard measures that needs legislative approval.

“The government needs to push through subsidy reforms.Power sector reforms need to be taken up. Drastic administrative reforms are needed not just at the central level but also at the state government level,“ he said. Pant also said the government also has a need to bring down opaqueness in the policy while ensuring stability.