Economic growth has been declining in the recent times.
Structural reforms in ease of doing business will help address the issue.
What are the reasons of declining growth?
The slowdown in the Indian economy is caused by structural factors related to very high transaction costs in the business environment.
There are no quick fixes to achieving high growth since the problems are structural in nature.
The problems of trading across borders continue to daunt India.
Such poor institutional and business environment has failed to attract investments to boost the economy.
What are the concerns of India’s business structure?
India continues to perform poorly in global indicators of business environment and governance.
The country also fares poorly in terms of quality of its bureaucracy which is a good indicator of the efficacy of overall governance.
The business approval process in India is still time consuming and cargo dwell time is in weeks as against hours in successful emerging countries.
There is no provision of fully automated clearance process with minimal face to face contacts, this encourages corruption.
There is no monitoring of the ground-level implementation of legislations to ensure business friendly environment.
As the result transaction costs of doing business in India is continue to remain high and it prevents the flow of private investment, and regaining the lost export momentum.
What structural reforms are needed to boost economy?
The problems related to dealing with several layers of bureaucracy and procedures for trading across borders needs to be addressed.
Reforms on getting several types of approvals and licenses for starting and running a business, paying taxes must be made.
Getting access to critical infrastructure like energy and water need to be ensured.
There needs to be a mechanism for monitoring such micro-level issues related to business environment at the highest level of government.
Comprehensive move to improve governance through the use of technology must be ensure by concerted effort of the central and state governments, and the private sector.
There is a need for continuous monitoring of interface between regulators and businesses and entrepreneurs on the ground.
What is the way forward?
High growth is a necessity for achieving inclusive growth and having the status as an Upper Middle Income country.
India will need at a minimum 10 per cent growth to catch up with Malaysia and Thailand by 2025.
Policy discussions on serious economic and institutional reforms will put India on a sustained high growth trajectory.
