Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

Has the economy improved in the NDA’s second term?


From UPSC perspective, the following things are important :

Prelims level : unresolved GST issues

Mains level : insights into the economic performance of the government

Central Idea:

The discussion between D.K. Srivastava and G. Vijay analyzes the economic performance of the BJP-led government in its second term, focusing on policy prescriptions, the impact of major reforms such as GST and corporate income tax changes, and the recovery from the COVID-19 pandemic. The conversation delves into the challenges faced by the GST Council, the government’s emphasis on infrastructure development, and the performance of the agricultural sector over the past five years.

Key Highlights:

  • The Indian economy faced challenges in 2019 due to GST implementation issues and corporate income tax reforms, leading to a weak fiscal situation.
  • The COVID-19 pandemic caused a sharp contraction, followed by a rapid recovery with GDP growth rates exceeding expectations.
  • Recovery was K-shaped, impacting contact-intensive sectors and large service sectors, resulting in a focus on infrastructure expansion for long-term growth.
  • The digitization of the economy through the UPI platform was highlighted as a positive outcome, especially for small-scale industries in the informal sector.
  • The GST story was deemed incomplete, with concerns about revenue autonomy for State governments and challenges in GST reform.
  • The government’s capital expenditure increase in the last budget aimed at income generation and employment growth, but concerns were raised about the quality of employment generated.
  • The agricultural sector performed well in terms of growth, except for the current year, but challenges such as supply chain shocks and inflation in key food items were discussed.

Key Challenges:

  • Unresolved issues in GST reform, including revenue neutrality and loss of revenue autonomy for State governments.
  • Quality of employment generated by capital-intensive infrastructure projects and the persistently high unemployment rate.
  • Inconsistent policies in the agricultural sector, with challenges like bans on exports and uncertainties affecting production decisions.

Key Terms:

  • GST (Goods and Services Tax)
  • UPI (Unified Payments Interface)

Key Phrases:

  • “K-shaped recovery”
  • “Last mile delivery”
  • “Jobless growth”
  • “Centre-State relations”
  • “Capital stimulus”
  • “Job creation elasticities”
  • “Unprotected informal sector employment”

Key Quotes:

  • “Between 2014 and 19, we provided a rejuvenated Centre-State dynamic, cooperative federalism, GST Council, and a strident commitment to fiscal discipline.”
  • “The government stood out as a performing government, a government whose signature was in the last mile delivery.”

Key Statements:

  • Recovery from the economic challenges post-2019 was marked by robust GDP growth, particularly in FY22 and FY23.
  • The GST Council faced criticism for incomplete reform, loss of revenue autonomy for State governments, and politicization of resource distribution.

Key Examples and References:

  • Demonetization in 2016 and its long-term impact on economic contraction.
  • The increase in capital expenditure in the last budget and its purported aim of income generation and employment growth.

Critical Analysis:

The discussion highlights the positive aspects of economic recovery, infrastructure development, and agriculture sector growth. However, challenges such as the quality of employment, unresolved GST issues, and inconsistent policies in agriculture are critically analyzed. The impact of global challenges, supply-side issues, and the need for a balanced approach between capital stimulus and consumption stimulation are emphasized.

Way Forward:

  • Address GST reform issues to ensure revenue autonomy for State governments.
  • Evaluate the employment impact of infrastructure projects and focus on generating quality employment.
  • Maintain a balance between capital stimulus and consumption stimulation to address external sector challenges.
  • Implement consistent and supportive policies in the agricultural sector to address supply chain shocks and inflation.
  • Continue efforts to digitize the economy for inclusive growth and last-mile delivery.

This comprehensive analysis provides insights into the economic performance of the BJP-led government, covering various dimensions and offering suggestions for future considerations.

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