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Lok Sabha TV Insights: Global Competitiveness Index and India
World Economic forum (WEF) has released its Global Competitiveness Index, according to which India’s ranking has improved 16 positions and now ranks at 55th position.
WEF said that the most problematic factors for doing business in India include corruption, policy instability, inflation and access to finance.
What factors led India to improve?
- Political stability
- Positive sentiments to do business
- Global scenario is bad, investors see India as Bright spot
- Economic governance is improving
- Decentralization of finance
- Doing business is going to states now
- Macroeconomic conditions have improved as yesterday’s RBI decision to cut repo rate reflects
- Fiscal policy and monetary policy are mostly on same lines
- Sectors are opening up for investors like defense, railways. Technologies will come, which do have spillover effect, as in case of IT and its benefits in various sectors.
What about Macroeconomic policy?
- Core industries growth is increasing
- IIP has improved
- But at ground level things are slow, though numbers are showing improvement
- Many taxation reforms and structural reforms are pending, which needs political convergence.
How industries are seeing it?
- Things are happening very slow as they were expecting policy rate cut by RBI long back, but it has happened now
- But perception is very good and they are optimistic
- Policy reforms are needed in the direction of labor reform, technology, acquisition, etc.
- Infrastructure needs quality investment
- With respect to policy reforms industry is seeing the present leadership with zeal
How big launches will help?
Present government has launched big programs like Skill India, Make in India, Digital India, etc. All the programs have potential to change the face of India.
Make in India will improve domestic manufacturing sector and will improve our export and will make us independent. For that Skill India and digital India will provide human resource and the convergence of all three would be favorable for timely harvest of demographic dividend.
But, to reap the full benefit, opposition parties need to cooperate for awaiting reforms like GST, Labor reform, Land acquisition, etc.
At the same time, to realize the potential of cooperative federalism and also to utilize the benefits of financial devolution given to states according to the recommendations of Fourteenth finance commission, State level reforms are very important.
There is widespread regional disparities and since many such subjects come under state list, the state level reforms and their integration will central level plans becomes very crucial. For example, APMC reforms cannot be avoided at all, but no action or convergence has been seen.
Model of Economic governance
With the spirit of cooperative federalism, the action and performance of the states in economy growth of the country becomes the prime moving force. The current way of working, needs to be changed. States need to change their duty structure, to attract investors.
Team India Approach of NITI Aayog will play as push factor for above mentioned actions. But, one major concern at this point of time is of ‘capacity building of states’. Because, earlier this task was taken care by planning commission of India.