Reformatted reforms giving great returns

Speaking at the ET World Leaders Forum on Saturday, the PM shared GoI's 2-pronged approach to economic reforms. It pushed through measures such as GST that had, by and large, overcome political opposition but were long in the making. Where Narendra Modi's government ran into strong political opposition, for instance, over land acquisition, farm produce marketing or privatisation, it sided with prudence over valour. NDA can claim credit for choosing its battles carefully. Except for a few setbacks, it has established its credentials as a liberalising regime. In the bargain, the Modi years have seen an improvement in government finances, which has improved capital mobility that keeps the economy on its growth trajectory. This has had a favourable effect on sectors like banking, infrastructure and defence production, which have undergone turnarounds over the last decade. Health of the public sector that dominates these industries has improved vastly.

Where NDA's approach to liberalisation diverges from that of its predecessors is its receptivity to tech change and its desire to ride the next wave. Communications, energy, logistics and manufacturing fall into this category through which GoI is pushing its agenda to restructure the economy. These sectors have a higher preponderance of sunrise industries that have received adequate policy support. There is potential for outsized returns on public investment in transformative technologies, and they, too, face little to no political opposition. And it pushes out India's reforms horizon and draws in foreign capital.

The idea is to make the economy more market-friendly where possible, and to nudge it into areas that will be market-oriented from the outset. Modi has brought his signature speedy decision-making into this mix, taking India's liberalisation out of stealth mode. This ought to serve as a template for successor reformers: tech pathways are as vital for India's economic development as market transformation. It keeps Modi's reforms agenda strong even in his third term.