COVID-19 has changed the political dynamics of the country. While the BJP led NDA won the 2019 elections by a thumping majority riding on the waves of Hindutva and nationalism, the recent pandemic has caused them to put brakes on their Hindutva agenda. Whether we see a third consecutive term for the BJP, will now be decided by their handling of the Corona crisis, healthcare reforms and revival of the Indian economy.
Although the Modi government has announced a Rs 20 trillion package for the crisis, it is a mere sedative to ease the pain. Many experts and organisations such as Goldman Sachs have predicted that the GDP growth will be at -5 % at the end of the year.
The crisis gives a unique opportunity to the government to push through various reforms. Modi as a leader is known for taking bold decisions - the need for economic reforms coupled with no ability of the opposition to stop him provides just what the Prime Minister needs to play his cards.
The first thing in the governments minds’, is the privatisation of PSUs. Although efforts in this direction have been made for the past few months, there was a lot of opposition from other parties as well as from within the BJP. The government has announced that they will notify a list of industries in which a maximum of four PSUs will coexist with their private competitors. As a result of this, all the public sector banks will be clubbed and four big banks will be formed. PSUs for a long time, have done nothing but drained out the taxpayer’s money. Although the idea to privatise them deserves applause, it will be important for the government to ensure that the conditions for privatization are not too harsh. At times, the government might also need to clear off the debt and allow new owners to reduce the workforce.
Labour laws is another area where strong reforms are needed. Many investors are exiting China and changes in labour laws will provide a huge incentive to them to invest in India. Giving salary to laid off workers for a month or two can also be looked at. Further, making it easier for the corporations to hire and fire workers without much government intervention can theoretically attract more investment and cut down unemployment. Although states such as UP have taken bold measures in this area, they need to make sure these do not lead to the exploitation of already poor and suffering workers.
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