Strategic road map for business reforms in the future.

In the last over 1½ decades, a large number of business reforms have been introduced by the Central Government as well as by various State Governments. This has produced economic dividends by way of higher growth rate in India’s GDP, rapid rise in India’s import and export trade, Indian industry becoming more competitive to produce goods and services and most importantly stiff competition among various State governments for investment in industries and services sectors has produced an openness in environment and businesses not being treated as parasites, as was the thinking earlier. These are healthy symptoms of the vibrant economy.

The current ‘Made in US’ economic melt down has however challenged our policy makers to evolve suitable strategies to maintain the growth tempo. It is also an opportunity to evaluate the overall direction for business reforms for the future.

The question of future business reforms must be enmeshed with overall direction we are seeking for the nation as a whole. A very important question that must be addressed is how should India evolve in the next 30 to 40 years, so that it s a win-win situation is created for all Indians.

Objectives for future business reforms

At this stage, we as a nation must set certain objectives for next thirty to forty years and we wish to highlight these objectives as follows:-

First of all, the focus of growth must shift from a select few to the largest number of Indians, so that the entire mass of people can be uplifted to bring them into the mainstream of middle class. In this connection, Gandhi’s Talisman as given below is very relevant.

“Whenever you are in doubt or when the self becomes too much with you, apply the following test: Recall the face of the poorest or weakest man whom you may have seen and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny? In other words, will it lead to Swaraj for the hungry and spiritually starving million? You will find your doubts and your self melting away”.

Therefore, we suggest that the benefits of economic policy reforms must percolate to the largest number of people unlike the rapid rise in the number of Indian billionaires reported by the international media in the last four to five years.

The second objective is for India to become an economically advanced country which can join the ranks of countries in the OECD club. Lowest per capita income in the OECD Club is for Turkey at US$ 7700 as per 2005 report. We must make an attempt to reach the average per capital figure of US$ 10,000 (at current prices) by 2040, if we want to achieve the objective of joining the rank of OECD club. With this objective, the next level strategies for GDP growth rate or distribution of the fruits economic growth will fall in place automatically.

The third objective of future reforms should be focused on making India as a whole, a competitive country. For this purpose, Indian manufacturing and services sector as well as Indian agriculture will have to become internationally competitive and the focus should shift to international bench marking. For this purpose, various international indices like ‘world competitiveness ranking’ (by IMD Switzerland) ‘Economic freedom index’, ‘Doing business in 2009’ (a world bank report) and ‘Quality of life’ index are very important and relevant. Similarly, the ‘Corruption perception index’ issued by Transparency International, Germany is useful for judging the business environment in the country concerned.

The focus should now be to look at the specific parameters in these reports, which determine the ranking of a country in a particular index. Then suitable policy changes will have to be initiated in order to enhance the ranking of India as a nation according to those parameters. A target should be set with India as a country getting into the first 25% of all countries listed in these reports. Subsequently, the target must be upgraded from 25% to 20% then to 15%, 10% and finally getting into the list of top ten countries, in a time bound manner.

If we trudge this strategic path for reforming India’s business sector, a sea change in the approach towards reforms will be seen. Reforms will become more focused, people oriented and will have a sensible direction.

We hope that our policy makers would adopt a different approach to reach the destination of India becoming an advanced economic super power.