Modi 2.0: Major challenges ahead for the new government

Currently, the markets are going through major issues in the context of liquidity and credit risk. The inter-bank market is experiencing chronic liquidity deficit.

The markets and investors would expect the new government to retain and enhance its hallmark – decisiveness in many key issues that came up, during the last term. Decisiveness infuses greater confidence into business and industries and facilitates easy conversion of intentions and ideas into reality.

While so many archaic laws and rules have been already scrapped, we are still quite low on the ranking for ease of doing business. We need to work on this as a priority as it can enthuse people from abroad to come to India and set up businesses without much loss of time.

It will also be critical in job creation as well as progressive access to export markets. Apart from this, there is scope for more reforms in areas like land and labour. These reforms are basic, although significant from the economic and business facilitation angle.

Currently, the markets are going through major issues in the context of liquidity and credit risk. The inter-bank market is experiencing chronic liquidity deficit. Credit-related issues have accelerated after the recent defaults and downgrades.

We need to bring the position to surplus for economic activity to get back on track, and this requires an unconventional approach to liquidity channelling to the sectors of the economy which require support and lower cost of borrowing.

The unfinished agenda from NDA-1 is the cleaning up and re-organisation of the banking system. To a large extent, this task was accomplished in the last five years. The upcoming five years should ideally see a consolidation of the gains made so far and a definitive turnaround for the sector.

The full-fledged budget, which the new government will present soon, is anticipated for a new direction to the economy, and for the proposals that it may have for rejuvenation of the rural economy as well as the stimulation of retail demand.

The approach of the government to employment generation programs and minimum income programs will be of consequence to the broader economy and retail demand. It is also relevant from the social development perspective.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management.

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