Spring 2019 Update

The BJP Modi Government has commenced its second term of government in India, with expectations for continued economic growth and hope that with an increased majority it will address important economic reforms. The return of the Modi Government will mean continuity for its flagship economic development policies and the opportunity to continue to lead economic reforms. After a busy election period in India over the first half of this year, now is the time to act on opportunities to engage with India.

This regional insights update looks at the priorities for the returning Modi Government across sectors included in Victoria’s India Strategy, outcomes from Victoria’s Liveability Trade mission to India and other recent success stories.

Victoria-India success stories
Economic agenda for 2019-2024 sets ambitious growth targets

The returning Modi Government has outlined it priorities for its second term in government, placing economic growth at the top of its priorities.

Over the last five years, India increased its World Bank ‘Ease of Doing Business’ rank by 65 places, moving from 142 in 2014, to 77 in 2019. India also introduce a national GST – transforming it into a single market place for first time – and a new Insolvency and Bankruptcy Code to create a single law to provide clearer recourses for businesses and help address the issue of non-performing assets holding the economy back1.  The Government acknowledges it has a long way to go and has now set a new goal to be in the top 50 countries of the world in ease of doing business.

In his second term, Modi wants to nearly double the size of India’s economy to $5 trillion by 2024. This will be hard to achieve. India’s GDP, while still growing at 6.8 per cent in 2018-19, has dropped to a five-year low and unemployment rates are also rising2. But this target does demonstrate the Government’s desire to push for economic growth, which it understands it will need to achieve through domestic reform and working with international partners and investors.

To achieve this, the Government will continue its focus on flagship initiatives including for example Digital India, Make in India, Clean India and Smart Cities.

1.http://www.forbesindia.com/blog/economy-policy/insolvency-and-bankruptcy-code-whats-all-the-noise-about/
2. https://www.nytimes.com/2019/06/20/world/asia/india-modi-economy.html

Union Budget 2019/20 promises significant investment in transport infrastructure

The Modi Government has focused on fiscal stimuli via spending on infrastructure and support payments to farmers. It aims to construct 35,000 kilometres of national highways and all-weather roads to every village by June 2022. It has promised to build 20 million new affordable homes over three years. And it has pledged to provide $359 billion in aid to farmers over an undefined period, primarily through direct cash payments.

To deliver this, the Indian Government will expand its use of public private partnership, which the likes of Macquarie Bank in Australia are already investing in.

The Government is taking steps towards economic reforms – but challenges remain

The main challenges for economic growth remain in agricultural reforms, banking sector reforms, labour laws and land acquisition. The returning government is taking some steps towards this:

  • Modi has announced a high-level task force to report on structural reforms needed in the agriculture sector at the NITI Aayog governance committee meeting.
  • The government proposes to create land banks which it will designate for industrial development and foreign investment.
  • It plans to introduce a new labour law bill to Parliament in 2019, through which it aims to combine 44 central labour laws in four codes: wages, industrial realism, social security and occupations safety.
Digital India, startups and innovation remain high on India’s agenda

The Indian Government will continue to encourage the take up of digital solutions across the economy and in government service deliver, acknowledging that there still challenges to work through on this regard. Nevertheless, India already has over 800 million mobile phone users and has potential as a major ‘data economy’.

The first Union budget includes initiates to increase digital literacy and the BaratNet program to install fibre optic to rural India.

Victoria’s urban development and smart cities trade mission to India May 2019 highlighted growing opportunities in the sector

Global Victoria and Liveability Victoria International partnered to deliver a tailed program of business meetings and attendance at India’s Smart Cities Expo liveability. The business mission has provided critical insight into  opportunities for Victorian companies in India, as well as market entry and expansion models.

Opportunities for Victorian companies continue to emerge across water management, transport, urban design and smart energy with success through private, and state and local government contracts.

Water management will continue to be a priority for India. The droughts across India are bringing to a head the need for water conservation and management solutions. States have asked the Central Government to upgrade water distribution infrastructure and for a fresh river waters tribunal to address the disputes where water systems run across multiple states.

India: an overview and insights
Read our powerpoint presentation of India: an overview and insights PDF, 1.5 MB taken from our inaugural Export Summit, GVx held in October 2019

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