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Reforms in the Indian society have remained incremental in nature, rather than being glamorous after a period of two years, surpassed by the Modi government in power. Modi has not been the radical liberalizer the markets wished since taking the helms two years ago. However, the disappointment stems from sky-high expectations to begin with, Commerzbank reported.
The lack of majority in the Upper House hampers progress in three key areas, namely land acquisition, labour, and taxation. Nevertheless, continued compromise to push through the Goods and Services Tax is likely to send a strong signal of progress.
Moreover, success in the 'JAM Trinity' initiative on efficient subsidy disbursement will also be a big positive. Economic vulnerability has fallen in the past two years and continued growth will remain imperative for further incremental progress on reforms.
Looking back, Narendra Damodardas Modi came to power, after marking an impressive track record as the Chief Minister of Gujarat, referred to as the Jewel of Western India. Despite accounting for just 5 percent of India’s workforce, Gujarat accounts for 7.6 percent of India’s gross domestic product and 22 percent of the total exports in 2015.
Given sky-high expectations, it is not surprising that some are disappointed with the progress on reforms to date. Critics highlight the lack of big bang announcements or a major overhaul. It is worthy to acknowledge that the reform momentum has probably waned in recent months, including the failure to push through the high profile GST this year. However, expectations are on for passing the GST bill in the ongoing monsoon session of the Indian Parliament.
"Continued economic growth will be essential to maintain the reform momentum," Commerzbank commented in its report.
Meanwhile, it is mention worthy that so far the Narendra Modi-led government has not faced n any major government scandals or corruption cases to date. This is turn, reflects increased public sector accountability and a positive development in the near future.
