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2020: The Year of Structural Reforms

Benefits may fructify after a few years

Almost a month ago, we had released a detailed note listing the five areas of improvement or the structural changes required in the Indian economy to move from the current growth rate of 4–5% to 8–9%. In this note, we delve into the details of four key structural reforms – The Farm Bills, The Labour Codes, New Education Policy, and the distribution of property cards under the Survey of Villages and Mapping with Improvised Technology in Village Areas (SVAMITVA) scheme – implemented by the central government in 2020.

* “No crisis should be wasted.” The Government of India (GoI) seems to have taken this advice very seriously in 2020. Although the fiscal support to the economy is deemed highly insufficient, the GoI has shown unusual ability to implement several bold structural reforms.

* Of these four areas, farm laws have attracted attention due to the ongoing protests over the past few months. However, other reforms are also important from an economic perspective. These are broadly aimed at addressing the obstacles to competency in the country’s various economic and social indicators. However, as always, execution holds the key.

* These reforms may not have any major impact in the near term, and the true benefits may materialize only after a few years. Nevertheless, the beauty of such reforms is that they disturb the existing ecosystem and nudge the present beneficiaries to compete with new players. As a result, they would almost certainly bring about efficiency and productivity improvements over time.

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