Saturday, January 23, 2021

Five steps India must take to restore global confidence

Reading Time: 3 minutesRAHUL SINGH suggests some macro-level actions to reverse the depressing escalation
The recent Global Competitiveness Report 2013-14, ranking India at No. 60, leaves no doubt that these are exceptionally dire times for the Indian economy. This World Economic Forum report of Sep 4 puts India 31 places below its emerging market peer China and barely ahead of Russia; it is India’s lowest rank in this survey.
Concerns on India’s lack of transport, information and communications technology (ICT) and energy infrastructure are “largely insufficient and ill-adapted to the needs of the economy”. This is truly a reflection on India’s lack of commitment to economic development.
The report highlights serious concerns voiced by Tata Sons Chairman Emeritus Ratan Tata last month, when he said: “We have lost the confidence of the world. We have been slow to recognise that in the government.”
The current economic scenario is no less grave than the 1991 crisis. The government is in a state of policy paralysis. A trust deficit irks foreign companies in India. Economic growth tests a new low every month. Independent studies talk of rampant corruption.
The government in an Ostrich-like approach refuses to address serious threats, terming these as a momentary phase that shall pass soon. Economists and business groups call it a policy paralysis and leaderless politics.
The political will is at its lowest in the last few decades, operational efficiency of the government is analogous to the pre-liberalization era and there is visible negotiation for development between inclusive growth and economic growth. However, they ought to go parallel. Since India cannot remain impervious in this globalised and integrated economic eco-system, it has no option but to change and be dynamic in its performance.
The government cannot function on a low performance index for long; it has to be accountable to deliver and be responsible for inaction. The extremely poor Balanced Score Card of Indian government performance demands drastic change before India loses to lowest, if it is still in offering amongst emerging markets.
Here are a few macro-level actions to fix the situation, to arrest the fall and to reverse the depressing escalation:
* First, policies and institutions for restoring global business confidence in India and ensuring ease of operations for business are a must. While it is good to have the attention of the opposition on issues of corruption, social security, and inclusion, it is equally obligatory on its part to extend cooperation to create a dynamic economic eco-system that can speed up growth.
A Business Advisory Council comprising business leaders, management experts and economists is needed urgently to work on policy issues only along the lines of National Advisory Council.
* Second, reforms for doing business and sustaining business are needed on a continuous basis to balance foreign investments. A focussed annual reform plan needs to be introduced. This will help in introducing reforms and managing the developments in the domain. Infrastructure, manufacturing and the supply chain should have an annual execution plan to create a great eco-system. A piecemeal approach does not work and builds no resilience.
* Third, India needs to get started on the path of economic diplomacy besides focussing on the diplomacy of terrorism and security. The fact is developed markets have influence today, but emerging markets will influence tomorrow; so we need to better our relationship with emerging markets. The US diplomatic corps in India is bigger than the Indian diplomatic corps globally. India’s diplomatic capability is disproportionate to its responsibility.
* Fourth, the government should give bigger responsibility to chambers of commerce and the chambers need to share their research and opinions with the government as a bridge between the government and industry. They also have to take up larger responsibility in marketing the nation on behalf of the government and building Brand India.
* Fifth, India needs to introduce single window entry solution policy like few other countries. Countries with a growth risk are looking towards a 25-year plan while India is not even looking at the next five years. India needs to change this and move forward if it wishes to be a significant player in the economic history of the 21st Century.

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