[op-ed snap] Leaping from a strong foundation

2016- Year of unprecedented tectonic shifts in the global and domestic socio-economic landscape

  1. Key institutional reforms included the passage of GST, the Bankruptcy Code and constitution of the Monetary Policy Committee
  2. They resulted in strong foundations for significant growth being laid down
  3. Demonetization being the first large-scale inclusive behavioural reform ever introduced in the world
  4. Use of cash alternatives like debit/credit cards, cheques, mobile/internet banking, e-wallets, have zoomed since November

Achievements:

  1. Reduction in retail inflation and compression of the twin deficits are critical macro accomplishments
  2. Government is continuously trying not only high-impact micro reforms, but also critical structural reforms that have begun to redesign our macro frameworks and institutions

Global rankings:

  1. India’s ranking in the Global Competitiveness Index for 2016-17, released by the World Economic Forum, improved 16 places to 39, the fastest improvement among 138 countries surveyed

Demonetization, the highlight of 2016:

  1. Demonetisation will help usher in a new transactional era for India that will create multiplier effects through the financial sector channel
  2. Even as the overall domestic macro situation improved in 2016, the banking sector continued to face challenges due to lack of recovery in asset quality, capital constraints and sluggish profitability
  3. Demonetisation will incentivise financial inclusion
  4. A moderation of the currency in circulation will help lower the cost of handling cash
  5. Bankruptcy framework will help ensure a quicker resolution of stressed assets

Demonetisation along with GST:

  1. In conjunction with GST, it will help in establishing a transparent financial trail for economic transactions, thereby benefiting the government’s fiscal position
  2. GST framework will further the formalisation of the economy while stimulating consumption and investment

What to expect in 2017?

  1. The year 2017 will be important as the introduction of new IFRS accounting norms will kick in
  2. While this may lead to some tightening in capital provisioning, the overall system is expected to gain with better disclosures, transparency and robustness
  3. It will pose requirements for re-platforming of PSU banks and exploring out-of-the-box ideas for monetisation of idle PSU assets
  4. With a policy thrust on programmes like Digitisation and Start Up India, we are witnessing an entrepreneurial economy characterised by DICE
  5. DICE —Design, Innovation & Creativity-led Entrepreneurship
  6. The technological penetration of the banking and finance sector will improve further in 2017 in order to support this new-age commercial requirement
  7. The advent of the JAM (Jan Dhan, Aadhar and Mobile) Trinity is a silent revolution that will transform India
  8. It will generate basic digital intelligence, with the market for e-finance providing one of the biggest opportunities for the banking and financial system

Note4Students:

With 2016 laying the foundation for critical reforms in the country, we are at the cusp of transformational shifts in the future. The op-ed lays down the advantages of Demonetisation, indicating upward trajectory of the economy. Make a note of the various advantages and disadvantages that we list down in our op-eds for your Mains answer for a comparative study.

Such op-eds are good opportunities to consolidate your learnings from the past.

Highest Rated App. Over 3 lakh users. Click to Download!!!