The year 2014 is going to be very important for India. That is when the General Elections will take place. The prospects are for a hung Parliament after the elections. The BJP may emerge as the single largest party but fall short of winning a majority. With the type of leadership the party has, at present, it will find it difficult to find allies to support it. The chances for a Congress-led government will be even worse. The likelihood is that we will see a Third Front government at the centre after the 2014 elections. Such a government will have the outside support of the Congress party to muster majority.
There are two leaders in the Third Front who have the most chances of emerging as the most suitable PM candidate. One is the present Tamil Nadu CM, Jayalalitha and the other is the Orissa CM, Naveen Patnaik. Both of them can be considered to be among the least controversial leaders of the Third Front. Jayalalitha could have been a popular choice among the rank and file of Third Front. But if the Congress Party is providing support to the government it may oppose the idea of Jayalalitha becoming PM. This makes Naveen Patnaik a very likely choice for the PM post.
One of the first tasks for the new government will be to present a budget. Along with the budget the Direct Tax Code will have to be got approved if the UPA II fails to get it cleared during its time. The GST has been hanging fire for several years now. Perhaps the duty of getting this through Parliament will be fulfilled by the next government.
The Kirit Parikh Committee had recommended increase in diesel price by Rs 5/L immediately. The UPA II will be reluctant to get this recommendation approved for fear of losing votes in the general elections. But with the Congress anyway unlikely to return to power after the elections they will be well advised to complete the left over reform agenda like decontrol of diesel prices before they remit office. The government will then be remembered for the reforms it carried out. In case the UPA II does not fulfill this agenda, the responsibility for the same will fall on the next government.
If the next government continues with the policy of the present government to increase diesel price by 50 paise every month diesel price in the country will soon touch limits which will bring it on par with international market prices. This will be the opportune moment to decontrol diesel prices and link it with global prices.
Early in 2014 the RBI will issue bank licenses to a new list of players. This will be an eagerly awaited list and major economic agents in the country will have a great deal to comment on the same.
The food security bill has already been adopted by the Parliament. But it will be interesting to watch how the new government will go about implementing it. There is the possibility that the implementation of the food security bill will be tied up with direct cash transfers, food coupons and so on. Both direct cash transfers as well as food coupons will eliminate the need for maintaining huge food stocks by the government. Under direct cash transfer, cash will be distributed instead of food and under food coupons the public can buy food grains from the open market instead of from PDS. Even without a link with food security AADHAR based cash transfer will be a matter the new government will have to reckon with. This is a scheme which will lead to elimination of corruption and leakage under government schemes to a very large extent.
Many states in the country have been demanding special category status. The new government will have to deal with this demand in the light of the Raghuram Rajan Committee recommendations.
The Lokpal Bill, Women’s Reservation Bill and Communal Violence Bill will be areas on which the new government will have to take action whether it want to deal with them or not.
The Finance Minister has indicated that the fiscal deficit for the current year will be contained at 4.8% of GDP. We will have to watch whether this objective will be achieved and how it is done. The problem with the Current Account Deficit has almost been tackled. It will be interesting to watch at what level the CAD will be finally contained.
It will also be interesting to watch whether the growth rate achieved during the current fiscal will be closer to 4, 5 or 6 per cent per annum. How will the final figures of inflation turn out to be will also be a matter closely watched by the economists. Whether the election results will lead to an upturn or crash in stock market will also be a matter for speculation to the market watchers.
Starting with the bank licenses and the budget and proceeding through the election campaigning and the process of government formation, the year 2014 is all set to throw up many surprises that could be path-breaking and leading to the future course of development of the country.
