2012: TOP 5 ECONOMIC REFORMS IN INDIA

The year 2012 was a tale of two halves. It began with a struggling economy and a damaging budget, but the second half saw the government push through some important structural reforms.

Here are the top five economic reforms of 2012:

1. FDI in multi-brand retail and aviation: The most contentious reform of 2012 was a hike in the FDI limit in multi-brand retail. The decision pushed the government to the political brink and forced it to seek a vote in both houses of Parliament. The government prevailed and an enabling provision allowing 51 per cent FDI in multi-brand retail was finally approved, opening the doors for the likes of Wal-Mart and Carrefour to set up shop in India. A simultaneous but far less contentious decision to allow foreign carriers to pick up 49 per cent stake in India's domestic airlines was also cleared, paving the way for domestic carriers like Kingfisher and Jet to potential draw in funds and reduce their debt burden. 
2. Insurance, Pension and Banking Amendment Bill: The government approved a hike in the FDI limit in insurance to 49 per cent. The FDI limit in the pension sector was also tied in to the FDI limit in insurance. Some uncertainty remains on when the government would be able to push this through Parliament but attempts to revive the insurance and pension sector was a definite positive this year. The Banking Amendment Bill lays the foundation for new bank licences.
3. Direct Cash Transfer Scheme: There were no major moves towards cutting down the government's bulging subsidy bill, but an important move attempting to better target subsidies was announced late in the year. The Direct Cash Transfer Scheme will be rolled out across 51 districts starting January 1 using the Aadhaar cards. Initially only 29 schemes will be covered under it and major subsidies like food, fertilizer and oil subsidies will not be covered, but the hope is that a roll-out with help reduce leakages and allow the government to eventually expand the scheme.
4. Cabinet Committee on Investments: The investment slowdown in India has pulled down growth and led to fears of sub-par growth. To kick start the investment cycle, the government approved the setting up of cabinet committee on investments to be headed by the Prime Minister. The committee will try to fast track projects above Rs. 1,000 crore by expediting clearances and setting clear time lines for approval. Like all other initiatives, this one too faced opposition this time from within with the environment and tribal affairs ministry worrying that this will impede on their jurisdiction. But the committee was eventually cleared leading to hopes to larger industrial projects will face fewer delays in the years ahead.
5. Land Acquisition Bill: The complex Bill was cleared after much debate and many adjustments. In its final form, the Bill asks private projects to get consent from 80 per cent of the land owners before acquisition while the consent clause of public projects was pegged lower at 70 per cent. The Bill sets compensation at 2-times market value in urban areas and 4-times market value in rural areas. The legislation may raise the cost of land for industry substantially but is seen an important legislation to ensure fair and equitable land laws in the country.