2015 for Prime Minister Narendra Modi has been an annus horribilis. Compounded by Bharatiya Janata Party’s humiliating loss in Delhi elections, their momentous debacle in Bihar elections has actually slammed the national party to the ground.
1. The country cannot afford more controversies like retrospective taxation
A powerful Prime Minister, who was still relishing the glow of his sweeping victory of 2014, locked horns with a charismatic but fallible Chief Minister of a Hindi heartland state but somehow the tide didn’t turn in the former’s favor.
Modi should now go home and stay home for a while and the Centre must rein in tax bureaucracy which does tend to inch towards harassment mode regardless of the noises that political leadership makes.
Taxpayers including non-resident companies felt cheated and let down with the retrospective tax in place because what they did at any point of time was in accordance with law of that time. But one day the company wakes up to questioning and interrogation for an action which was purely legal at one point in time in the past.
2. The government needs to keep a sharp eye on the state of public finances and ensure that fiscal deficit targets are met
This is one situation that rating agencies will be watching closely. The sovereign ratings can be questioned but there’s not getting away from the fact that what they say matters to foreign investors.
The focus on infrastructure will need to gain momentum and should be fortified in future. These projects have a pivotal and a snowballing effect on multiple industries and it would inadvertently affect job generation in a positive light. The best part is that opposition can’t do much about it. Since Central projects are herculean in nature and they might take some time to go up and about when it comes to producing results, it is best to encourage and assist states so that they can venture into infrastructure projects.
As a whole and towards the end, Modi government needs to move even more intensely on the agenda of ‘ease of doing businesses’. Paying taxes is an area in which India slipped from 2014 and the Centre is in possession of key to its betterment.
No more falling back on the idea of spending on unwise and untargeted subsidies in the wake of Bihar defeat. In the upcoming assembly elections, especially the one in Uttar Pradesh, Populism is a card that truly needs to be downplayed and belittled for the upcoming battlegrounds.