Challenges For Suresh Prabhu, New Commerce And Industry Minister

In the recent cabinet reshuffle of the Modi government, Mr. Suresh Prabhu became the new Commerce and Industry minister. His entry in the ministry is marked by a critical time when India is entangled with issues of FDI, lower exports, stagnant negotiations on Free Trade agreement (FTA), sluggish rate of reforms to achieve an optimistic ease of doing business ranking.

THE WTO CONUNDRUM

The Bali summit in 2013 was earmarked by a consensus on ‘peace clause’ which stated that even if a country breaches the limit set out by WTO about the food security program, it shall not be penalized. The peace clause was expected to be in force till 2017 and it was expected that the countries would find a solution in this period of four years. But soon after the Bali summit it became largely visible that permanent solution was not possible by 2017.

India runs a lot of food security programs. In July 2014, Indian government strongly argued that it would sign the Trade Facilitation Agreement only if the peace clause would remain in force till a permanent solution is devised. This saved India from possible scrutiny of its Food security programs and subsequent penalization. The new minister is expected to take strong stand to safeguard India’s interest at the international forum.

THE HALF BAKED FOOD

India had set ambitious target of improving its ranking in Ease of Doing Business. It intended to achieve 90^th rank by 2017-18 and 30^th rank by 2020. However, with its present rank of 130, there remains a mammoth task to be accomplished by the new minister. The centre is required to work with the states more proactively for implementing the reform measures to boost the global ranking.

Exports saw a sharp decline from $468 billion in 2014-15 to $437 billion in 2016-17. Even though the exports have gradually picked up, but the ministry would have to take strategic steps, more so in the event of recent currency strengthening. Further liberalization of FDI regime and impetus to Make in India Program would help strengthen the economic scenario.

Suresh Prabhu being expert in Financial management can use his qualification and skill set to perform at his best to excel Indian industry suffering with back to back hits of Operation Clean Money of the government. He has a tough challenge as the time available to him is limited.