After two terms of absolute majority, the Indian electorate has given a fractured mandate to the Narendra Modi-led BJP. The era of coalition politics is back with a bang. Does that also mean an end to the promise of big-ticket reforms? Mint explains.

Will green energy reforms continue?

Renewables and electric mobility are two of the biggest focus areas of the Centre, and irrespective of politics, this will likely continue. In his post-election speech, Modi referred to green energy several times. In its 2nd term, the government rolled out production- linked incentive (PLI) schemes to boost local manufacturing of EVs and lithium cell batteries among other things. This scheme will see more sector-specific incentives being formulated. The third phase of the Faster Adoption and Manufacturing of Electric vehicles (FAME) scheme could be among the first to be announced by the new government.


What about reforms on labour and land?

India’s prickly labour laws and difficulties in acquiring land are two of the biggest challenges for industry. Though governments have tried to address these in the past, they have had to face a backlash. The NDA government also wanted to usher in reforms in these two areas. However, the compulsion of taking its allies into confidence means wholesale changes are now unlikely. In 2019-20, labour laws were consolidated into four codes but these are yet to be notified pending legislation in the states. Reforms such as digitization of land records will continue but an overhaul is almost certainly out.


Will farm laws make a comeback?

Unlikely. Since the prolonged protests and rollback of the farm bill, little has changed on the ground. Farmers have stuck to their demand of price guarantee while the government remains non-committal. With a brute majority, there was a chance of a watered-down version being implemented but with a fractured verdict, it is too risky a political gamble.

What other reforms may get stalled?

Privatization may lose momentum. The Centre was also hoping to launch two other big reforms—uniform civil code and synchronized elections. Both may be shelved as building consensus may be difficult. Then, there are other smaller reforms—like bringing petroleum products under GST. This one is unlikely as states depend on oil for offsetting any revenue shortfall. The delimitation exercise, which would have skewed the balance of power towards northern states, is also likely to face resistance.

What might still get done?

History shows reforms do happen in coalitions. It may be possible for the new government to rationalize direct and indirect taxes, some experts feel. Buoyancy in the economy and strong GST revenue have offered enough elbow room to the government to tweak personal income tax slabs. There will likely be no opposition to restarting the stalled GST rationalization plan to overcome the problem of embedded taxes especially in exempted sectors like healthcare where taxes paid on inputs cannot be offset.

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