News Brief
Will Modi 3.0 Go Slow On Reforms Because Of Coalition Politics? Here's What Chief Economic Advisor V Anantha Nageswaran Has To Say
CEA Dr V Anantha Nageswaran.
As the third consecutive NDA government under Prime Minister Narendra Modi took office at the Centre, questions are arising about its ability to pursue substantial reforms amid a reduced mandate and coalition politics.
However, Chief Economic Advisor V Anantha Nageswaran remains optimistic, suggesting that this political landscape might actually facilitate incremental yet crucial reforms through increased dialogue.
“This actually makes some of the difficult reforms more feasible incrementally because it opens up space for dialogue,” Nageswaran was quoted as saying by The Indian Express.
His comments come amidst concerns from ratings agencies like Fitch and Moody’s, which anticipate broad policy continuity but recognise the challenges posed by coalition politics and a weakened mandate.
In its previous terms, the NDA government faced obstacles in implementing major reforms due to a lack of consensus.
During its previous tenures, land reforms were pushed back to the states early on, and labour reforms stalled due to insufficient state-level support. Farm reforms, too, encountered resistance, resulting in protests and eventual repeal.
Fitch Ratings noted that while the government is expected to continue prioritising infrastructure investment, improvements to the business environment, and gradual fiscal consolidation, the ambitious reform agenda could face hurdles due to coalition dynamics.
Meanwhile, Moody’s Ratings expects policy continuity, particularly in infrastructure spending and boosting domestic manufacturing.
Despite these challenges, government officials remain hopeful about land and labour reforms, which they believe can be pushed with the help from states.
"The answers to the current employment and growth situation lie in tightening nuts and bolts, of which many lie in the domain of states," an official was quoted as saying by IE.
Labour reforms, a concurrent subject requiring both central and state legislation, have seen some progress but remain incomplete.
Although Parliament passed four labour codes between 2019 and 2020, many states have yet to finalise their implementation. Internal discussions within the government in 2022 considered a phased rollout of these codes, but this approach has not yet materialised.
The government's previous attempt at land reform involved an ordinance to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
However, despite its passage in the Lok Sabha in April 2015, the ordinance was held back in Rajya Sabha.
Then, the ordinance was re-promulgated in April 2015 since it could not be passed in the first leg of the Budget session.
The ordinance was re-promulgated on 30 May 2015, but protests gathered momentum and eventually Prime Minister Narendra Modi announced in August that the ordinance would not be re-issued and was allowed to lapse.
Farm reforms introduced during the Covid-19 pandemic faced similar resistance.
The three farm laws, aimed at liberalising agricultural markets, were met with widespread protests, particularly in Punjab.
Despite being passed by both houses of Parliament, the laws were repealed in November 2021 following prolonged farmer protests.
