ECONOMIC REFORMS IN A COALITION GOVT.
In terms of economic governance, the one aspect that distinguished the past two Lok Sabhas was the fact that it was the first time since the start of economic reforms that a single party — the Bharatiya Janata Party (BJP) — enjoyed a majority mandate.
This was supposed to have a salutary effect on the trajectory of economic reforms in India.
But was the impact salutary?
CAN A COALITION GOVT DERAIL INDIA’S REFORM TRAJECTORY?
Not necessarily. There are two ways to look at it.
- The past decade under PM Narendra Modi was supposed to sort out that weakness and provide confidence to investors — both local and foreign — about policy stability, and a concerted push towards economic reforms. That did not happen as envisaged.
- If one looks back at India’s economic history since 1991, it becomes clear that coalition governments have undertaken some of the boldest and most visionary reforms that laid the foundation for India’s resurgence.
THE HITS AND MISSES FROM 2014 TO 2024
THE HITS:
While Modi’s first two terms saw several reforms such as
- The introduction of the Goods and Services Tax (GST) and
- The creation of the Insolvency and Bankruptcy Code.
THE MISSES:
- The Modi government failed to bring about reform of land acquisition.
- During the second term, the Modi government could not convince farmers about the farm reforms and was forced to repeal them.
- The announcement of the demonetisation with disastrous consequences injected a deep sense of uncertainty among all economic agents.
NOTABLE REFORMS BY PREVIOUS COALITION GOVTS
- LPG Reforms of 1991 under PV Narasimha Rao led govt.
- Fiscal Responsibility & Budgetary Management Act of 2003 under NDA government.
- Disinvestment of PSUs under the NDA govt.
- Right to Education Act under UPA govt.
- Several reforms were undertaken under the ‘Rights Based Approach’:
- MGNREGA, 2005
- RTI, 2005
- National Food Security Act, 2013.
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