In an era characterised by swift and often unexpected changes, careful navigation through stormy waters internationally is essential for India to ensure its place as the third biggest economy in the world by 2028, not just in Purchasing Power Parity terms but US dollar terms. It is to the credit of the Reserve Bank of India under the leadership of Shaktikanta Das that the rupee has not breached the 100 rupees to a dollar mark that short sellers in the rupee were aiming at over a year ago. Each rise in the value of the US dollar when exchanged for rupees makes the situation more difficult for the economic managers to ensure the high rates of growth needed to ensure that the ever growing cohort of youth that enter the job market every year get gainful employment. Providing such growth is essential for both societal stability and national security. Commerce Minister Piyush Goyal, who is now well into a decade in his tenure as Commerce Minister, will need all that experience to ensure that exports rise substantially so that the annual trade deficit is substantially brought down by 2029. Being an election year, it is important that the Modi government get a fourth term in office to complete the job of making the economy the third superpower alongside the US and China by 2034. A verdict is needed in the 2029 Lok Sabha polls such as would ensure a stable government of like-minded parties headed by the BJP under Prime Minister Narendra Modi, a government determined to carry forward the 2014-2019 legacy of high growth and reform.
A fractured verdict and a shaky coalition of several parties with competing or confused agendas would set back India by a generation, rather than set it firmly on the road to superpower status. In the meantime, the process of reform of taxes such as GST needs to be carried forward. A suggestion would be to have differential GST rates for taxable incomes up to Rs 50 lakhs as well as Rs 100 lakhs annually. The GST rate of 18% could be levied only on incomes that cross the Rs 100 lakhs annual limit, and incomes below that figure would attract lower rates. It may seem to be contra-intuitive, but lower and progressive tax rates would increase rather than lower overall GST collections. Several who are presently keeping out of the GST system would come on board, while evasion would reduce substantially. Former Head of State Pranab Kumar Mukherjee had many intellectual qualities but fiscal policy was not among them. He is still remembered for the 97.25% marginal rate of Income Tax that he introduced, and which led to an explosive growth of unaccounted income and consequent insufficient tax resources. He is also known for the introduction of Retrospective Tax, which drove away intending investors from India, both domestic and foreign. Fortunately, that era is long past. Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman know that a stable and progressive tax system with rates that are reasonable to the taxpayer promotes rather than reduces revenue. A suggestion could be to have no income tax on all incomes up to Rs 10 lakhs annually, with rates increasing in a progressive manner on higher and higher slabs of taxable income. Such a measure would be welcome to small and medium businesses, and encourage more to start up rather than fold up. SMEs and MSMEs are of immense significance in creating the jobs that Young Indians need, and would flourish once such reforms get carried out during Modi 3.0. In foreign policy, the wisdom of the policy of not adopting stances designed to drive Moscow closer to Beijing has been accepted by the US under the Trump administration. Overall, PM Modi has set an ambitious but achievable agenda for Modi 3.0, which needs to continue to be followed until 2034 for the transformation of India into Bharat to be completed.