By Vritti Gandhi
Edited by Namrata Caleb
The holiday season is over. No more staying wrapped in quilts, a steaming cup of hot chocolate in our hands, embracing ourselves for yet another movie marathon. Instead, we are snapped back into our daily routines of work, college, et al.
2014 passed by in a rush, nevertheless being a year full of surprising (and some not-so surprising) ups and downs. The downfall of Congress, the rise of Modi, Swachh Bharat Abhiyan taking the whole of India by storm, no actual progress on the women safety issue, the Jan Dhan Scheme, I could go on adding to the list.
However, what is it that could make us look forward to 2015?
Before we dash back into our routines, here is a look at the two big things that 2015 has to offer for India.
MAKE IN INDIA
With the website http://www.makeinindia.com already up and about, this is certainly the next big thing for India.
The objective of this initiative is to make India the global manufacturing hub, thereby fostering investment, generating employment opportunities and fully utilizing its human resource. This could drive a major increase in the per capita income and give the much-needed boost to the Indian economy growth.
The debates on the issue do persist. RBI Governor, Dr. Raghuram Rajan has a different take. According to him, the very concept of Make in India assumes an export-led growth path similar to that of China, which would not be as effective as it was for the Middle Kingdom.
However, the Finance Minister says that the initiative holds for manufacturing of quality products at low cost, regardless of where the products are sold.
The news that India ranks 142nd out of 189 countries on the World Bank’s ‘ease of doing business’ category has spread like wildfire. This poor ranking is on the grounds of the country’s bad performances in categories involving taxes, construction permits, etc. Thus, for the aforementioned scheme to be a success, aggressive reforms in these categories, which would encourage foreign investments, are required.
Moreover, there are questions regarding using labor intensive techniques of production in a technology-driven world, high interest rates which would lead to high costs and thus high prices thereby shifting the demand from domestically produced goods and nullifying the effect of Make in India, and infrastructural problems.
Whether or not ‘Make in India’ will deliver is what is yet to be witnessed in 2015.
GOODS AND SERVICES TAX
GST is a value-added unified tax, that will create a common national market. This is being touted as the biggest indirect tax reform since independence. With a 1-year period being granted to states to implement the provisions of this tax, the benefits it offers are multifold.
Firstly, the increase in costs of the final product due to tax differential in states will be reduced.
Secondly, according to the National Council of Applied Economic Research, the implementation of GST could enhance India’s GDP as the current multiple tax system was leading to production inefficiencies.
States, however, have been expressing their concerns over revenue sharing between them and the Centre and have said that there would be significant revenue loss. As of now, the issue has been addressed by the Centre offering compensation to the states for a period of five years.
Apart from this concern, the creation of a single national market due to GST has significant advantages.
With a whole year lying ahead of us, the way ‘Make in India’ and GST will unfold will be a topic of constant analysis and discussion among the economists and policy-makers in 2015!
Vritti Gandhi is a second year Economics student at the Shri Ram College of Commerce. She enjoys being her eccentric self, astrology is her first love, and F.R.I.E.N.D.S is her way of life. Having co-founded a chapter of an NGO in her college, she strongly wills to highlight the importanceof self-sustenance. She is presently looking for her passion, hoping to light up others’ lives and leaving her own mark in this world.