Credit: DH Illustration
A new government has been sworn in, with Narendra Modi taking charge as Prime Minister for the third time. Though his party has not been able to secure an absolute majority in the Lok Sabha, as on two previous occasions, it is still the single-largest party. So, after the last 10 years, India’s polity is reverting to a coalition configuration, which is a more common historic pattern. This should not be surprising for a country that exhibits incredible diversity in every conceivable dimension. In that sense, the national election to the Lok Sabha is not one, but 543 separate elections. And they are fought on issues which are mostly local. Of course, there is sometimes a national wave attributed to a charismatic or powerful personality, but more often than not the electoral victory determinant boils down to local issues, more than other factors.
The national government has responsibilities which are distinct from those of the state governments, as specified in the Seventh Schedule of the Constitution. Over time, the Union government has been creeping on to the turf of state governments. This has often been necessitated by need, to strengthen or accelerate development processes. So, programmes like the National Food Security Act of 2013 passed by the central government, address issues like food security, hunger and nutrition, which are squarely the domain of states. The same goes for employment (National Rural Employment Guarantee), education (Right to Education), health insurance (Ayushman Bharat), to name a few examples. Such national policy intervention is supposed to supplement or strengthen the states and not undermine their efforts. But the very nature of a nation-wide initiative is that it has the elements of a “uniform” approach, which tends to paper over regional differences.
With that background, let’s examine what are the pressing priorities of the new government, and what measures can be used to address them.
The most important issue is that of employment and livelihood. A recent report by the Institute of Human Development and International Labour Organisation said that 83% of the unemployed were youth below the age of 29. Thus, tackling youth unemployment is a very high priority.
This challenge is further aggravated by two factors. First, there is the threat of automation and artificial intelligence, which can wipe out present employment options. According to a McKinsey report, nearly 70% of manufacturing jobs in India are vulnerable to this phenomenon.
Second, there is a wide skills mismatch. We have a co-existence of jobs shortage and a skills shortage. We need skills and training programmes which make the youth ready for the jobs of tomorrow, which perhaps don’t even exist today.
Much of the skilling and enhancement of human capital happens on the job, via learning by doing. So, one measure that the new government could undertake is to push for a nationwide apprenticeship programme. This would consist of 6-9 months-long employment, with no obligation on the employer to make the worker “permanent”. The apprenticeship certificate so obtained should have the stamp of authenticity by a national authority and should be portable and acceptable across the nation. As such there are apprenticeship policies and programmes in place in many states, but this needs a national big push in a creative way.
Another smaller opportunity to enhance employment is to extend the Agniveer programme by another 3-4 years, because the current four years is too short. The officers’ Short Service Commission is for 10 years, so it makes sense for the non-commissioned ones, such as the Agniveer’s tenure to be extended. Their experience, training and discipline will increase their future employment opportunities in the private sector.
The second important area for the government to focus on is small entrepreneurs. There are an estimated 70 million enterprises, each employing 1-20 employees. These are sought to be brought into the formal sector via Udyam registrations and into the net of the Goods and Services Tax Network. The main challenges of small and tiny businesses are four: Access to credit and working capital, access to markets, access to technology, and financial and tax literacy. The first requires that their Udyam registration be linked to the GST Network, to ensure automatic enforcement of ‘no payment delay beyond 45 days’, as mandated by the MSME Act of 2006. In practice, the small suppliers are squeezed by their big customers, against whom the supplier has no recourse, because often that is the only one and repeat customer. Hence, we can use the digital technology to ensure payment discipline. The estimated
size of delayed payments in the country is close to Rs 10 lakh crore. It will provide a shot in the arm to the small entrepreneur if such a legislation and mechanism is implemented by the central government.
Access to markets can be enabled through e-commerce and initiatives like the Open Network for Digital Commerce. Credit flow to MSMEs can also be enhanced by allowing peer-to-peer lending, as well as allowing localised equity ownership. Details of these are available with the authorities, and it needs an implementation push. To help with technology, the government can sponsor the development of a free super app, a sort of enterprise management software, which takes care of everything from taxes, inventory planning, marketing to customer relationship. Just as BHIM is an app for digital cashless payment, which is available for free and is a government initiative, a tech product for micro enterprises can be freely distributed by the government.
The third suggestion relates to farmers, and assured prices. It is high time that the Minimum Support Price (MSP) mechanism is made into law. As such, the MSP for 22 crops kicks in only when the market prices fall below the threshold. This happens roughly half the time, statistically speaking. Hence, the net fiscal burden is not as high as feared. Besides when the government gets into procurement, that puts an upward pressure on prices, negating the need for an MSP guarantee. The MSP law is primarily a political decision at this stage but will earn the trust of farmers. Its time has come.
(The writer is a noted Pune-based economist) (Syndicate: The Billion Press)