This is an essay on the economic policies, development plans, governance initiatives and budgetary allocations of the Central Government of India.

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INITIATIVES OF GOVERNMENT OF INDIA
FOR
BOOSTING UP THE ECONOMY
Introduction
Our founding fathers envisioned India as a
welfare state. This is reflected in the Preamble of the
Constitution of India, which enshrines the promise of
“EQUALITY of status and of opportunity” to all. The
egalitarian nature of our Constitution imposes a duty
on government to strive for inclusive growth and
equitable distribution of wealth.
In May 2014, the BJP-led NDA government
assumed office after securing a mammoth majority in
the parliamentary polls. The landslide victory aside, it
inherited a sluggish, in-the-doldrums economy, which
had stuttered and stammered during the run up to the
elections. The new central dispensation came to
power in an environment riddled with inter alia
endemic corruption, double-digit inflation, inept
governance, poor delivery of welfare schemes and
policy paralysis. On top, it was saddled with a
credibility crisis and pessimistic sentiment all around.
With its massive mandate, the new
government assumed power amidst great
expectations. Used extensively during the election
campaign, the “Acche-din Slogan” had symbolised
prosperity and the PM’s promise of inclusive growth
and equitable development. Economic revival
through reforms for restoring macroeconomic
stability; eradicating poverty; creating conducive
conditions for sustainable job creation; and, attaining
durable double-digit growth was paramount.
Prevalent Economic Scenario
The macroeconomic outlook was bleak given
the scenario of dwindling capital inflows,
strengthening hard currencies, volatility in crude oil
prices, and signs of global retreat from globalisation
and recourse towards protectionism. Encashing on
the demographic dividend courtesy a young country
with 65% of the population being below 35 years
presented a Catch-22 situation, for it was predicated
on the existence of a vibrant economy creating jobs
sustainably.
Tactically speaking, a roadmap for accelerating
growth, enhancing investment and emancipating the
poor & down-trodden had to be chalked out in all
sectors, activities and services. Systemic fixes and
structural changes were needed for battling the
bottlenecks of corruption and black money. The
leadership has subscribed to “doing the right thing
right” with scale, speed and a sense of purpose. The
transformation called for a quantum leap and not
incremental push towards fiscal consolidation and
institutional reform without compromising on public
investment needs.
In consonance with the PM’s mantra of
“Maximum Governance; Minimum Government”, the
administration has looked to be open and
accountable providing people-centric, policy-driven
and time-bound services for engendering wealth
creation, improving quality of life and eliminating
social inequality. Thus, the collective mission for India
is to foster a high-functioning economy focused
holistically on industry, innovation and
entrepreneurship; promotion of investor confidence;

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provision of employment opportunities and
development of infrastructure.
Shying away from populist policies and
unproductive subsidies, the leadership has embarked
on a regime of incentivizing savings; plugging
leakages; and, maintaining fiscal discipline. The thrust
of structural transformation has been on systemic and
targeted delivery mechanisms rather than
discretionary administration of policies without
objectivity and transparency. The aim has been to do
away with loose entitlements and move the informal
sector into mainstream, formal economy. Towards
this end, over 1500 central plan schemes have been
rationalised and restructured into 300 central sector
and 30 centrally-sponsored schemes. A medium to
long-term fiscal-policy framework has been
introduced, with a deficit ceiling of 3% of GDP (as in
the Maastricht Treaty) and a debt of less than 60% of
GDP.
Corruption & black money have bred a parallel
economy to the detriment of the poor and deprived.
This is contrary to public interest and unacceptable for
an inclusive society. To curb tax evasion, unjust
enrichment and illegal wealth accumulation, the
Special Investigation Team (SIT) on black money was
constituted. Bilateral agreements with other
countries for mutual cooperation in combating illegal
wealth have been signed. Legislations– like, the
Benami Transactions (Prohibition) Act, 2016,
Undisclosed Foreign Income & Assets (Imposition of
Tax) Act, 2015, and, amendment of the Foreign
Exchange Management Act, 1999– to impede black
wealth have been enacted. Mauritius-DTAA was re-
negotiated to plug long-standing loopholes for tax
evasion.
Government’s many programmes for
economic stimulation are based on the cornerstones
of smooth DELIVERY techniques; sensible
EMPOWERMENT schemes; sound FISCAL policies and
solid GOVERNANCE regulations. This “DEF-G” quartet
constitutes the bedrock on which healthy, balanced
and sustainable GDP growth, encompassing the
components of (private) consumption, investment,
government expenditure and net exports, can be
achieved.
Initiatives for Boosting the Indian Economy
Growth-spurring initiatives of government can
be examined within a “6E-6I Framework”. The 6E’s in
the paradigm are: Exports & Exchange
Earnings/Savings; Empowerment & Poverty
Eradication; Expenditure; Education; Employment;
and, Entrepreneurship. The 6I’s are:
Institutional/Industrial Reforms & Policy; Income
Levels; Investment; Inflation: Infrastructure; and,
Innovation. Details of the various plans, policies and
programmes follow.
1. Exports & Exchange Earnings/Savings:
Concerted efforts are underway to increase trade with
neighbors, besides conscious measures to create and
strengthen Brand India. The vast diaspora– a veritable
reservoir of NRIs, PIOs and Indian nationals abroad–
has been tapped to boost trade & commerce too.
Lower fossil-fuel dependence and slump in oil prices
have reduced Current Account Deficit (CAD) to about
0.3% of GDP in 2016-17– far less than 4.6% in FY2013.
This stellar performance has been accomplished by

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reducing the deficit in merchandise trade and
increasing the surplus on “invisibles”. The forex
inflows and realisations on the capital account (net of
errors & omissions) have offset the CAD, consequent
to which the Balance of Payments position is in an
uptrend phase. This is reflected in the handsome
growth of forex reserves, which have touched roughly
US$ 375 billion, which represents a cover for about
12-months of imports.
2. Empowerment & Poverty Eradication:
The leadership is keen on subsidy rationalisation and
reduction of systemic leakages. Poverty eradication
through a slew of targeted schemes is in focus. The
Aadhar framework is used for direct benefits transfers
(without misusing it to confer citizenship or domicile
rights) of subsidies and benefits. Mission Antyodaya is
aimed at bringing one crore households out of poverty
by 2019. The goal of Jan Dhan Yojna was financial
inclusion of the marginalised and under-privileged
through “zero-balance” bank accounts, almost 300
million of which have been opened. This enabled the
JAM Trinity (Jan-Dhan, Aadhar & Mobile) to be the de
facto mode for direct benefits transfer (DBT) of Rs.1.3
lakh crores over 3 years for beneficiaries (under PM
Awas Yojana) in a leakage-proof, targeted and
cashless manner. About fifty million Below-Poverty-
Line (BPL) families have benefited from clean cooking-
gas (LPG) connections under the PM Ujjwala Yojana.
Outlays in the “Beti Bachao, Beti Padhao Yojana” have
improved women safety and welfare services. Indeed
any elimination of inefficiencies in “social schemes” is
welcome, for it palliates the pain of the poor, even as
it helps counter fiscal deficit, black money and
inflation. Effective distribution of benefits improves
discretionary incomes of the deprived and elevates
them out of poverty. Besides, freed resources can be
deployed more effectively for other purposes.
3. Expenditure: The consumption-based
“Goods & Services Tax (GST)” regime is a tectonic
policy shift in indirect taxation. Subsuming all prior
indirect taxes and ensuring seamless transfer of goods
with setoffs, GST will bring down tax-rates and buoy
revenues. It is expected to spur growth &
competitiveness, besides ushering simplicity,
transparency and efficiency in tax collections.
Improved tax accruals will increase government
expenditure, with reduced fiscal deficits and interest
burden on the exchequer. GeM [Government e-
Marketplace]– an end-to-end digital platform for
efficient and transparent procurement of goods &
services– has been launched to eliminate corruption;
facilitate competitive bidding and enhance savings in
public spending. These moves have increased revenue
collections and ‘productive’ government expenditure
(thus creating more jobs), besides narrowing the gap
between the haves and the have-nots and facilitating
more equitable distribution of resources among
states.
4. Education: The Higher Education
Financing Agency (HEFA) has been setup with
government equity and CSR grants to stimulate and
harness human capital by financing civil infrastructure
and world-class laboratory projects in higher
education institutes. Scholarship and education loan
schemes have been launched, wherein disbursements
of over 25,000 crores have been made in three years.
Impetus has been given to the establishment of major
central institutes in every state. Massive Open Online
Courses (MOOC) & virtual classrooms– to circumvent

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poor infra problems– have been created through
public & private funds. Digital learning can be a
panacea for low-caliber education in the primary,
secondary, collegiate and university realms. The
short-term gain of economic growth, courtesy the
expenditure, is undisputed. The true prudence though
is in the long-term benefits to the economy from a
skilled, educated and more productive workforce.
5. Employment: India, with a large
working-age population, has a demographic
advantage. Economic growth has spiked the demand
for skilled manpower, even as its availability is
constrained. The National Policy for Skill Development
& Entrepreneurship was formulated to
consolidate/standardize skilling initiatives,
procedures & outcomes. National Skill Development
Corporation encourages private players to provide
viability-gap funding and conduct programmes for
training 500 million people by 2022 on mission-mode
basis. The flagship Pradhan Mantri Kaushal Vikas
Yojana (PMKVY) scheme envisions training and
certification of youth. Under the National
Apprenticeship Promotion Scheme, Rs. 10,000 crores
has been earmarked for subsidizing stipend and
academic cost of training 50 lakh apprentices.
Government has also set aside Rs. 1,000 crores for
NITI Aayog to build a techno-financial incubation and
facilitation approach, SETU (Self-Employment &
Talent Utilization) for strengthening startups & self-
employment initiatives. A major challenge facing the
country is the prospect of not only providing jobs to
the teeming millions of youth entering the
employment market month after month, but also
ensuring the supply of “employable” job-seekers. The
government’s emphasis on skills and employability is
indeed a desirable move, for it is bound to pave the
way for economic growth and progress in the future.
6. Entrepreneurship: To make the process
of “business startup” easy, efficient and effective, a
Government-to-Business (G2B) platform has been
launched. Owned by Department of Industrial Policy
and Productivity (DIPP) under Ministry of Commerce
and Industry, this “e-Biz Portal” integrates 14
regulatory permissions. Also announced are labour
reforms to boost employment and entrepreneurship.
Budgetary allocation for a legislative initiative to
replace existing “Multiple Permission Raj” with a “Pre-
defined Regulatory Mechanism” and “Single-window
system” (based on a hub-spoke clearance model of
clearance) has been made to streamline the start-up
process and boost FDI, particularly for spurring the
manufacturing sector.
The “Start-Up India, Stand-Up India”
programme promotes financing of ventures; and,
provides tax sops & incentives (e.g., “zero-tax” for first
3 years). Banks have been urged to lend to Dalit, tribal
and women entrepreneurs. Bharat Fund has been
launched to provide seed funding to Indian
entrepreneurs in priority sectors such as health,
agriculture, etc. Receivables realisation is a major
challenge for MSMEs in the country. An electronic
Trade Receivables Discounting System (TReDS) has
been established to improve liquidity for MSMEs by
financing trade receivables. In 2015, the reduction of
corporate tax rate from 30% to 25% over 4 years,
starting from 2015-16 had been announced, along
with the scrapping of various tax exemptions and
incentives for corporate taxpayers. E-filing of Income
Tax Returns helps in improving the ease of doing

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business. All these schemes will lead to greater
investment, higher growth and more jobs.
7. Institutional/Industrial Reforms &
Policy: When the previous government demitted
office, GDP growth rate stood at 4.7%. But, that
sluggishness has been replaced by high GDP growth,
which has soared remarkably to over 7%. In fact, it has
the potential to reach almost 9% p.a., given
amendments to the RBI Act for inflation targeting.
Plans are afoot to facilitate the quick resolution of
commercial disputes by setting up “exclusive
commercial divisions” in various courts based on
recommendations of the 253rd Law Commission
Report. With BIFR having failed, the new insolvency &
bankruptcy code was needed, despite uncertainties of
its impact on labour laws.
Allowing 100% FDI in food-processing will
increase demand for produce & earnings of farmers.
A unified National Agricultural Market for efficient,
online procurement of agro-produce is in place.
Clusters of food-processing and storage systems are
being set up. Many job-creation-linked sops have
been announced for the textile & apparel sector,
which is expected to spur exports by US$ 30 billion
over 3 years. Manufacturing hubs for electronic
hardware/equipment are in the pipeline. Legislative
changes have enabled the 24x7 operation of retail
outlets like shops, malls, banks & restaurants.
Statutory provisions made for the safety & security of
women working in night shifts is likely to grow jobs by
10% in retail, IT & services sectors. Allocations in the
health and social sectors will uplift economic activity.
So also, technology transfer approvals and R&D
outlays for developing indigenous technologies in
defence. A travel insurance scheme with cover of up
to Rs.10L for a premium of just Re.0.92 has been
launched. E-Tourist visa facility has been extended to
150 countries. New schemes, like Swadesh Darshan
(theme-based tourist circuits) and PRASAD
(Pilgrimage Rejuvenation and Spiritual Augmentation
Drive), have been launched and existing schemes
revamped to spur the sector. The ministry is
improving facilities and beautifying pilgrimage sites to
enhance attractiveness of tourist destinations.
Cultural and heritage value of these spots have been
promoted too. Government has taken steps to use
energy & other resources efficiently. Encouraging the
private sector to invest in sustainable technologies
and environmental safeguards has boosted growth.
Primacy accorded to alternate energy sources has
lowered our oil imports bill. Ambitious initiatives such
as the roof-top solar energy, with projected capacity
growth from 500 to 40,000 MW in 6 years, ensure
national energy security. UJALA, a green initiative, is
aimed at energy & carbon-emission savings and
cleaner environment by distributing subsidised LEDs.
Another thrust area has been electrification of the
18,000 villages that had no power supply when the
new government took over. The added impetus has
made India a power generation surplus nation.
Demonetisation too has led to the spread of
formal economy; increased digital transaction
volumes and greater immunity to counterfeiting &
money-laundering. Less ‘currency-in-circulation’ and
fewer ‘cash transactions’ have increased money
velocity & improved liquidity. Surplus “vault cash”
helps banks deal resiliently with toxic NPAs; it lowers
bond yields & deficit financing costs. Reduced lending
rates and improved credit access will have “multiplier-

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effect” and boost consumption. The crackdown has
led to disclosure of undeclared income & tax
mobilisation, with the added mop-up of revenues
reducing fiscal deficit and spurring growth.
In short, various fiscal measures in conjunction
with institutional reforms have been sincere attempts
to crank up private investment, government spending
and job creation. It is desirable to step up pace in the
coming years though.
8. Income Levels: Implementation of 7th
Pay Commission recommendations and One-Rank-
One-Pay scheme has augmented discretionary
incomes of almost two-crore central government
employees, pensioners and retired armed forces
personnel. In the 2017-18 Budget, income tax rates
have been lowered from 10% to 5% in the lowest slab.
The ripple effect is that the savings and consumption
will surely go up. The direct tax regime has been
revamped to bring transparency and investments by
abolishing wealth tax and charging an additional 2%
surcharge instead on high-income-tax assessees.
Capital gains tax has been rationalised for real estate
investment trusts.
Agricultural incomes were under stress due to
repeated failures of monsoons. Innovative initiatives,
like “Crop Insurance” and “Soil Health Card” aimed at
mitigating risk of crop failure, have transformed the
farmers’ lives by assuring them of income regardless
of vagaries of nature.
The government has consistently made major
budgetary allocations to revitalise the rural economy
(through infra projects & skill development), including
execution of micro- and major irrigation projects;
enhanced remittances to rural banks; record outlays
for rural credit finance; allocations to the Rural
Infrastructure Development Fund (RIDF), etc.
Schemes have focused on disbursing hassle-free, low-
interest (4-7%) agro-credit to small & marginal
farmers. The 2017-18 budget earmarked Rs.1.87 lakh
crores (24% more than in FY2016-17) for rural,
agricultural & allied sectors. MGNREGA & gram
panchayat outlays have risen steeply too. A Dairy
Processing Infra Fund has been created with a Rs.
8,000 crore corpus. All these social security benefits
and measures have alleviated the pain and suffering
of poor and needy families, if not elevated them out
of poverty. In the long haul though, only investment-
driven employment and not government expenditure
can eliminate poverty.
9. Investment: India needs domestic and
foreign investment to achieve its potential, besides an
efficient capital market to allocate it wisely. Myriad
steps have been taken to improve “ease-of-doing-
business”– a driver for FDI and prime objective of
government– over the last three years. The
government has consciously pushed through policies
to liberalise financial markets. It scrapped the Foreign
Investment Promotion Board (FIPB), a bottleneck for
FDI. A Rs. 10‚000 crore fund was set up to accelerate
“equity, quasi-equity, soft loans and other risk capital”
investment into startups and MSME sector. Rs.20,000
crore has been allocated to Micro Units Development
Refinance Agency (MUDRA) Bank for extending credit
facility to boost the growth of SMEs and marginal
manufacturers. Over seventy million collateral-free
loans have been given under the scheme for
improving cashflows of small businesses.

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Given weak PPP investments due to banking
asset toxicity, FDI and public finance have been
tapped to catalyse execution of infra projects.
Concerted efforts to attract investors and enhance
“ease of doing business” have resulted in sharp 36%
Y-o-Y increase in FDI inflows to a record US$60.1
billion in FY2016-17. FDI norms has been relaxed in 25
focus sectors like defence, civil aviation,
infrastructure, etc. 100% FDI is allowed in all sectors
except Space, Defense and News Media. Further, to
tap productively the vast stocks of over 22,000 tonnes
of gold, sovereign gold bonds and monetisation
schemes have been launched.
10. Inflation: Under the inflation-targeting
framework, government has successfully conquered
inflation and kept it within the RBI-mandated range of
2–6% (Y-o-Y). This has brought down lending rates. CPI
has declined to less than 3% (in April 2017) as
compared to the average 9% in the 2006-2013 period
(with a peak of 11.2% in Nov.2012). Anti-hoarding
measures; buffer stock creation; proactive
agricultural planning and suitable minimum support
have stabilized prices. The taming of inflation has led
to RBI adopting an expansionary monetary policy with
“bank rates” having been reduced from 9% to 6.5%.
This has revived growth despite the dampening effect
of high non-performing assets in the banking sector.
11. Infrastructure: Infra development has
been a priority for the government. The PPP model
has been revisited & revitalised with risk rebalancing.
Initiatives include: the “Sagar Mala” project for
stringing together all ports; “Setu Bharatam” project
for eliminating railway crossings across national
highways; “PM Grameen Sadak Yojana” for laying
100,000 km. of rural roads; creation of freight &
industrial corridors (like Delhi-Mumbai-Industrial-
Corridor); port corporatisation; and, feasibility-driven
river-interlinking & irrigation projects. Capex in the
railroad sector has improved capacity; reduced traffic
congestion & enhanced service. National highway
(specifically, border & coastal highways) & inter-
connectivity projects have been expedited to enable
safe, fast & all-weather traffic movement.
Smart City Mission was launched with an
outlay of US$ 7.2 billion for building 100 model cities
by 2019. These cities will be modernized and
developed with satellite townships. This funding will
translate into job creation and sectoral growth, raising
the profile of respective Indian states as ideal business
and investment destinations. The Shyama Prasad
Mukherjee National Rurban Mission is aimed at
developing smart villages to stem the trend of
migration. The Atal Mission for Rejuvenation & Urban
Development (AMRUT) Yojana was launched to
develop infra in 500 towns/cities by 2020 for reducing
migration of people to metros. Under the scheme,
cities will benefit from assured/efficient water &
electric supply; sanitation & waste management;
urban mobility & public transport; IT connectivity; e-
governance; and, public safety & security. In June
2016, UDAN, the National Civil Aviation Policy, was
launched with the goal of connecting 50 small cities
and making air travel affordable. The “Housing for All”
Mission aims to provide housing for the estimated
1.77 million homeless people and rehabilitate 65
million slum-dwellers. US$ 181 billion is being
invested for building 20 million affordable homes for
the poor by 2022 through credit-linked subsidy via a
public-private-partnership (PPP) model. Additional

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tax sops on home loans have encouraged home-
buying and stimulated the construction sector.
India currently exhibits a pronounced digital
divide. This imbalance is being fixed through the
“Digital India” mission, which has three core areas–
creation of digital infrastructure, delivery of e-
governance services, and spreading digital literacy.
Open, participative & responsive G2C (Government-
to-Citizen) services bridge the digital chasm by making
on-demand services available electronically in real-
time via online & mobile platforms. Under the
mission, US$ 75 billion has been invested on National
Optical Fibre Network Programme (NOFNP) to lay
750,000 km. of cables for networking all 250,000
villages. These “digital-highways”, or “info-ways (I-
ways)”, a core utility for citizens, will facilitate high-
speed “anywhere-anytime-anyhow” Internet access,
thus uniting, connecting and empowering all citizens.
For collective progress and inclusive growth,
benefits must percolate to the grassroots level. The
massive infrastructure spend (primarily of
government) has generated employment, despite a
corporate sector reeling under tight lending norms.
12. Innovation: Innovation is the fuel that
empowers people. In India, besides government,
innovators and entrepreneurs too must create jobs
and develop ideas by setting up new ventures
(perhaps the “Invisible Hand” Adam Smith talked
about), which “creatively destroy” (as Schumpeter
expounded) status quo. The Atal Innovation Mission
(AIM) platform has been set up “to promote
innovative ideas of academics, researchers and
entrepreneurs; and, to foster a culture of innovation,
research and product development.” AIM will
promote a network of world-class innovation hubs for
boosting and bootstrapping startups.
“Make/Design in India” is an initiative
launched for creating opportunities in discrete
manufacturing and allied sectors to boost investment
and industrial production and to increase the share of
manufacturing from the current 16% to 25% in GDP.
Key emphasis is placed on improving the ease of doing
business in these sectors– faster clearances,
transparency for permits and financing, as well as
efficient e-governance mechanisms.
While the impact of these plans and policies
has been marginal, they are likely to become bedrocks
fostering innovation in the long run. Nevertheless,
there is still a lot of grassroots work that needs to be
done in education and entrepreneurship before India
can truly leverage its true potential as an innovation
powerhouse driving the global economy.
Conclusions
Prime Minister Narendra Modi swung the
BJP's electoral fortune in the general elections. He has
been successful in ensuring political stability and
providing decisive leadership. A number of global
reports and assessments, have shown that India has
improved its economic policies, practices and profile
through reforms and regulatory mechanisms.
Thus, the environment of “gloom and doom”
inherited from the previous government has been
transformed into an economy of “boom and zoom”
Indeed, “acche din” are here to stay!