Modi's moment: The reforms India needs to tackle

India Infoline News Service | Mumbai |

Stuck in the rough, India needs a hefty jolt of economic reforms to raise growth, HSBC Global Research says

India's Prime Minister Narendra Modi is certainly not short of advice about what to do about the economy. So here is a guide to the top 10 things needed to get India's economy going again. If fully implemented, these could raise growth to 9% or even double digits over the next five years, HSBC Global Research says in its report Macro India Economics.

Enticing prospects. However, the hitch lies with the proviso "if fully implemented". There are more obstacles ahead than many seem to believe.

True, the BJP-led NDA coalition has won a thumping victory. It now has complete control of the lower house of parliament. However, it still lacks a majority in the upper house and runs only eight out of 29 states. The latter matters, especially because many of the proposed reforms fall under the joint jurisdiction with local governments. Also the upper house has to approve many initiatives, although by calling a joint session - a legal if blunt manoeuvre - PM Modi can bypass that particular hurdle.

So implementation will likely take time and deft negotiations by leaders in New Delhi. We expect the main policy push to materialise only next year once the administration is firmly established and has dealt with near-term challenges such as poor rains. Once adopted, it will also take some time before the reforms yield their expected growth dividend. Take the issue of land acquisition. To accelerate spending on infrastructure, an easing of rules is essential. However, states have their say on the matter and the political hurdles are numerous. Often, the promise of extra funds to affected communities can smooth the path of reforms. But India's coffers are dry, rendering the need for consensus building a lot more pressing.
 

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