Modi govt needs to review manufacturing, private sector investment

Economy News

Voters have reaffirmed faith in the leadership of Narendra Modi. His Bharatiya Janata Party (BJP) won an absolute majority on its own in the Lok Sabha. So, a stable regime will govern the country through the next few years.
The main task before the next government must be to revive the economy. Modi campaigned on the issue of national security, which cannot be ensured without a strong economy. It is now evident that domestic consumption is slowing and farm distress is real. The manufacturing sector is not growing rapidly and export growth has been tepid for five years.
Private sector investment, especially in new manufacturing projects, has been uninspiring. Corporate earnings have been rather weak, although the stock markets are booming. The flow of foreign money into equity markets has strengthened the rupee. The global trading environment is not too encouraging.
For reviving of export growth, given the context and challenges, the new government must first restore the commerce ministry’s primacy in making the new Foreign Trade Policy (FTP). In the run-up to introduction of the Goods and Services Tax (GST) and during its implementation, this ministry was completely ignored. The finance ministry focused mainly on securing consensus in the GST Council and then on re-working of the laws to address the problems thrown up during implementation. The representations of exporters were initially dismissed summarily and later heard partially. Untold misery was inflicted on a large number of exporters by the finance ministry. An ineffective and voiceless commerce ministry was a spectator.

 Now, the latter should not hesitate to take responsibility for export promotion. It should look at the opportunities the US-China trade war throws up and strive to make peace with the United States on trade issues.