Will Modi 2.0 bite the bullet?

The historic mandate won by the BJP-led National Democratic Alliance has raised hopes that the incoming government will launch the long-overdue, painful reforms that are required to take India to the next level of economic development. The low-hanging fruit have been plucked, the government now faces tough choices as it tries to put the economy on a higher growth path. ET lists some of the challenges:

LABOUR REFORMS

• Antiquated labour laws are seen to be discouraging job creation.

• Where possible, businesses prefer to deploy capital instead of labour.

• Can the government allow a liberal hire and fire policy at all enterprises?

LAND LAW

• The current land acquisition law is seen as cumbersome, leading to delays.

• It has also made land acquisition expensive.

• The Modi govt had unsuccessfully tried to make changes in its first term.

• Can it rework the land law to make more investment friendly?

CORPORATE TAX RATE AT 25% OR LESS

• Pledged in the first term, this has still not been fully implemented.

• 7,000 of the country’s biggest companies are still not included.

• Will revenue concerns prevail or will the rate be slashed to 25% or even 20% across all companies?

SELL AIR INDIA AND OTHER NON-STRATEGIC PSUs

• Loss-making entities such as Air India are a big drag on the budget.

• Selling profit-making noncore PSUs can raise funds for investment.

• Will the new government try bolder strategic sales?

SIMPLIFY GST RATE STRUCTURE

• Multiple-rate GST helped manage inflation when the levy was rolled out.

• It needs to be simplified to fewer rates.

• Can there be two or even a one-rate GST soon?

OPEN UP MULTI -BRAND RETAIL & ECOMMERCE

• The restrictive policy has discouraged FDI in multibrand retail.

• Can the govt open up the sector to encourage investment & jobs creation?

• By extension, can ecommconfined to the marketplace model — be allowed into inventory-based retail?

BANK MERGERS, CAPITALISATION & CLEANUP

• Give more capital to banks through bonds.

• Clean up books by writing off all stressed assets.

• Merge state-run banks into just 4-5 big banks.