Economics, India

The next biggest reform since 1991.

1991 – the year that changed the way we think, work, buy and sell once and for all . Scrapping up of the license raj and opening up of the economy was all spearheaded and executed by the duo – Manmohan Singh and  Narasimha Rao. But still MMS has been regarded as the God father of reforms and was called as the Deng Xiaoping of India. Today the Prime Minister MMS has been through a tough time and has been criticized across the spectrum. But he has silently scripted out a revolution that would change India once and for all – Direct Cash Transfer and Aadhar.

Aadhar and Direct cash transfer will create a new cash less economy in India. A new way of transaction is all set to be unleashed.  Aadhar which is linked to a bank account would help people to do transaction through their mobile phones itself. This would unleash a new unfound opportunities. There are huge number of people who are inaccessible,  after aadhar all those people would become available in touch of a button. This would create new opportunities, new business models would come up creating more jobs so on and so forth.

Along with it, FDI in retail has been passed through. And am so sorry for all the communists who have equated FDI in retail == Walmart. Well, they are missing the whole bus. With Aadhar and mobile,  e-commerce and m-commerce is going become more easier than ever before. This would throw in whole a lot of opportunities for companies like Amazon, Flip Kart and dozen other e-commerce firms. More over now they got the opportunity to raise funds from the foreign banks, foreign equity players et al. This would set up the tone for building cold chains, refrigerated vans, modern warehouses in India.

Second, there is a FDI in Pension and Insurance. Today the insurance companies face lot of challenges to reach the consumer. They have to do it, through lot of middle men who erode their margin and reaching the end user has been cumbersome. Now once your bottom of the pyramid people get empowered with Mobile+Aadhar it would  become easy for them to subscribe themselves to insurance and pension plans of their choice. With FDI allowed in it, you could now expect whole a lot of competitions in this segment which would open up new choices for the people.

And then today subsidies are given to the companies for selling their products under price especially in oil. This under pricing of a commodity seriously restricts people from innovating new products. Say if a litre of petrol is cost around Rs100 but because of subsidy it gets sold at Rs50 and you have a new bio diesel that costs only Rs70 but just because petrol is getting subsidy it would not get sold. So innovation gets hampered. More over, with DCT it would become possible to target people who are in need of subsidy rather than providing it to all creating a hollow in current account deficit.

More importantly Aadhar could give out tacit information about people in bottom of the pyramid like things they buy, when they get insurance and when they will get their harvest all based on their cash flow . This tacit information would give out the data using which analysis can be done for prediction etc.

And then the new National Investment Board which has been constituted for clearing big ticket investments is a reform in itself. This would help clear up the business proposals in quick way and thus help to make India a business friendly nation and an attractive investment destination.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s