Post-2014 Economic Reforms

Overview

Post-2014 economic reforms represent a critical shift in India's economic policy framework, focusing on ease of doing business, structural transformation, and formalisation of the economy. For UPSSSC PET, this topic tests your understanding of landmark policy changes including GST, IBC, demonetisation, farm laws, labour code reforms, and flagship schemes like Make in India. Questions typically ask about objectives, implementation timelines, benefits, and criticisms of these reforms.

This topic is inherently current-affairs driven but demands conceptual clarity. Expect 3–5 direct questions testing dates, full forms, key features, and impacts of these reforms. Understanding the "why" behind each reform — whether it's unifying tax structure (GST), resolving bad loans (IBC), or formalising cash economy (demonetisation) — will help you tackle both factual and analytical questions.

Given the recency of these reforms, they frequently appear in General Awareness and Indian Economy sections. Familiarity with abbreviations, implementation years, and basic outcomes is non-negotiable for scoring well.

Key Concepts

• **Goods and Services Tax (GST)**: Unified indirect tax system replacing multiple central and state taxes, implemented from 1 July 2017. Four-tier rate structure (5%, 12%, 18%, 28%) plus exemptions and special rates.

• **Insolvency and Bankruptcy Code (IBC) 2016**: Time-bound framework for resolving corporate insolvency within 330 days, replacing fragmented laws. Establishes NCLT as adjudicating authority and prioritises creditor rights.

• **Demonetisation (8 November 2016)**: Sudden withdrawal of ₹500 and ₹1000 notes, affecting 86% of currency in circulation. Aimed at curbing black money, fake notes, and terror financing while pushing digital payments.

• **Farm Laws 2020 (repealed 2021)**: Three laws aimed at liberalising agricultural markets — removal of APMC monopoly, contract farming, and deregulation of essential commodities. Faced massive farmer protests and were repealed in November 2021.

• **Labour Code Reforms**: Four codes consolidating 29 central labour laws — Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020, and Occupational Safety Code 2020. Aim to simplify compliance and improve industrial relations.

• **Make in India (launched 25 September 2014)**: Flagship initiative to boost manufacturing, create jobs, and increase FDI. Focuses on 27 sectors including automobiles, textiles, defence, electronics, and pharmaceuticals.

• **Digital India and JAM Trinity**: Leveraging Jan Dhan accounts, Aadhaar linkage, and Mobile connectivity to enable direct benefit transfer (DBT) and financial inclusion.

• **Atmanirbhar Bharat (May 2020)**: Self-reliant India package announced during COVID-19, emphasising local manufacturing, reduced import dependence, and structural reforms worth ₹20 lakh crore.

Formulas / Key Facts

• **GST Council composition**: Chaired by Union Finance Minister; members include Union Minister of State (Finance) and state Finance Ministers. Decisions require 75% weighted majority (Centre has 1/3rd vote, states collectively 2/3rd).

• **GST implementation date**: 1 July 2017 (101st Constitutional Amendment Act 2016 enabled it).

• **Demonetisation date**: 8 November 2016 at 8 PM announcement by PM Modi.

• **IBC enactment**: 28 May 2016; operationalised from 1 December 2016.

• **Make in India launch**: 25 September 2014; logo is Lion made of cogs representing manufacturing.

• **Farm Laws passed**: September 2020; repealed in Parliament November 2021 after year-long protests.

• **Labour Codes**: Four codes passed 2019-2020; implementation pending as of 2024 due to state rules formulation.

• **NCLT**: National Company Law Tribunal — quasi-judicial body for corporate disputes and IBC cases, established under Companies Act 2013.

• **NITI Aayog replacement**: Replaced Planning Commission on 1 January 2015 as policy think tank.

• **DBT savings**: Direct Benefit Transfer eliminated over 9.14 crore fake beneficiaries, saving ₹2.23 lakh crore by 2021.

Worked Examples

**Example 1: GST Rate Identification** *Question*: Under GST, which items fall under 5% tax slab? *Solution*: The 5% slab includes essential goods like edible oil, sugar, tea, coffee, coal, and packaged food items. Necessities are taxed at lower rates to keep inflation in check. Items like cereals, fresh milk, eggs remain exempt (0%). Higher slabs (12%, 18%, 28%) cover processed foods, consumer goods, and luxury items respectively.

**Example 2: IBC Timeline Calculation** *Question*: If insolvency proceedings start on 1 January 2023, by when should resolution be completed? *Solution*: IBC mandates 180 days for Corporate Insolvency Resolution Process (CIRP), extendable by 90 days. Maximum allowed is 330 days including litigation time. From 1 January 2023, initial deadline is 30 June 2023 (180 days), maximum deadline is 27 November 2023 (330 days). Beyond this, liquidation begins.

**Example 3: Make in India Sectoral Coverage** *Question*: Name five priority sectors under Make in India. *Solution*: (1) Automobiles — boosting domestic car and component manufacturing, (2) Defence Manufacturing — reducing import dependence, opening FDI up to 74% automatic route, (3) Textiles — leveraging cotton production for apparel exports, (4) Electronics — mobile phone production incentive schemes, (5) Pharmaceuticals — API production, generic drug manufacturing. Total 27 sectors identified.

Common Mistakes

• **Confusing GST rates with pre-GST taxes**: Students often mix VAT rates with GST slabs. Remember GST replaced excise, service tax, VAT, etc. The four GST slabs (5, 12, 18, 28%) are distinct from old multiple-tax regimes.

• **Assuming farm laws are still in force**: Farm laws were repealed in November 2021. Answer questions in past tense or as "repealed laws." Don't state current agricultural market structure as per those laws.

• **Mixing IBC with NCLT establishment date**: IBC was enacted in 2016; NCLT was established in 2016 under Companies Act 2013. NCLT handles IBC cases but existed before IBC for company law matters.

• **Overstating demonetisation success**: Exams may ask about "intended objectives" vs "actual outcomes." Intended: curb black money, fake notes; Actual: short-term GDP slowdown, long-term digitisation boost. Avoid one-sided answers.

• **Confusing labour codes with implementation**: All four labour codes are passed but not yet implemented nationwide as of 2024. States need to frame rules. Don't claim they are fully operational.

Quick Reference

• **GST**: 1 July 2017; "One Nation, One Tax"; four slabs (5, 12, 18, 28%); GST Council has Centre 1/3rd vote.
• **IBC 2016**: 330-day resolution; NCLT is adjudicator; favours creditors over promoters.
• **Demonetisation**: 8 Nov 2016; ₹500/1000 withdrawn; 86% currency demonetised overnight.
• **Make in India**: 25 Sept 2014; Lion logo; 27 sectors; FDI liberalisation; "Minimum Government, Maximum Governance."
• **Farm Laws**: Passed Sept 2020; repealed Nov 2021; aimed to dismantle APMC monopoly.
• **Labour Codes**: Four codes (Wages, IR, SS, OSH) consolidate 29 laws; passed 2019–2020; implementation pending.