Get ready for an era of growth-fuelling reforms: Arvind Panagariya, Chairman, 16th Finance Commission

Unlike 2019, when the dominant view was that the BJP would fall short of a clear majority, predicting the contrary outcome required superior foresight. But this time around, with the opinion already overwhelmingly in favour of a massive BJP victory, a similar prediction would amount to nothing more than stating the obvious. Therefore, the challenge is in forecasting something less certain.

Accordingly, I would go out on my limb and predict that 2024 will turn out to be the year in which India introduces reforms that will propel it into a growth trajectory exceeding 8%. First and foremost, we must expect the third Narendra Modi government to implement the new labour codes fully. It may be recalled that in 2019, Parliament enacted four labour codes to replace 29 disparate and employmentun friendly central labour laws. Implementation of these four codes, especially the Code on Industrial Relations, will go some distance towards making Indian labour markets flexible. The flexibility, in turn, will encourage firms to turn to more employment-intensive sectors and technologies.

The second important area in which action may be expected is the privatisation of publicsector enterprises and banks. Once again, under the New Public Sector Enterprise (PSE) Policy for Atmanirbhar Bharat, issued in February 2021, the government had committed to exiting commercial activity in all but four broadly defined strategic sectors through either privatisation or, in the absence of potential buyers, closure. Even in the strategic sectors, the policy commits to minimal presence with the PSEs held in a holding company. With a fresh mandate in May 2024, we can expect the government to begin implementing this policy in earnest.


Similarly, in 2024, we must also see action on the privatisation of a few public-sector banks. In 2021, the government had announced its intention to privatise two such banks. Once elections are behind it, the government will likely make good on its promise.

Finally, with the recognition growing that import substitution through increased tariffs and production subsidies has not been able to produce a significant dent in the overall share of manufacturing in the gross domestic product, we may also see a return to trade liberalisation, including some important free trade agreements, which would give a level playing field to exportable products.