How will the government carry forward its reform plan in 2022?

The long-awaited sale of Air India to Tata Group in October, the Modi government’s first privatisation deal in seven years, had sparked hope that the present regime was going strong on its reform agenda. 

Several other legislations, from the three farm laws to the four labour codes to the privatization of state-owned banks were lined up.

However, after the end of 2021, the government and its proponents can only write home about the Air India sale, for everything else has been stalled. 

The farm laws were withdrawn as the Modi government gave in to the year-long farmers’ agitation. The lesson from the entire saga seems to be that any attempt at reform in agriculture, no matter how noble and well-intentioned, cannot be taken without the consent of farmers. 

Now, fearing a similar backlash from trade unions, the Modi government seems to have delayed the implementation of the four labour codes until the state elections.

Despite the sale of Air India, the government will likely miss its disinvestment target of Rs 1.75 trillion for FY22, since the bid to privatise Bharat Petroleum Corporation Limited (BPCL) hasn’t advanced yet. 

The privatisation of state-owned banks was another no-show, with the government yet to even announce the names of the two Public Sector Banks that will be privatised. Media reports suggest that here too, the government was anticipating protests by bank unions. Hence, the the Banking Laws (Amendment) Bill, 2021 was not brought in the recently-concluded Parliament session. The Bill to regulate cryptocurrencies was also held up. 

Hopefully, the government will learn from the farm laws episode. Sound economic agenda and reforms that appear good at least on paper still need the backing of all the stakeholders involved in a democracy like India. If it takes this lesson to heart, it will have a better chance of enacting its economic agenda this year.

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