View: India can’t get by without a big bang
The Indian economy continues to slow. The monthly Index of Industrial Production fell to an eight-year low in the month of September, contracting by over 4%. According to India’s central bank, growth in bank credit to industries in the same month fell to 2.7%, the lowest in a year. While the numbers for services are a little better, even they stand at a two-year low.
Economists have little faith that things will turn around on their own. The go nment desperately needs to revive investment. The only way to do so is to embrace something it’s avoided thus far: a true reform “big bang.”
Officials can honestly say that they’ve implemented plenty of reforms since Prime Minister Narendra Modi first came to power in 2014. In his first term, the go nment inaugurated a new bankruptcy code and a nationwide goods-and-services tax. It’s recapitalized and consolidated state-owned banks. In September, it slashed corporate tax rates from 30% to 22% for existing companies and to just 15% for new companies; that finally makes India competitive with the rest of Asia. The go nment also announced relief measures for the stressed real estate sector and unveiled new rebates for exporters.
Modi clearly prefers an incremental approach to reform, one that lessens the chances of a political backlash. He has to fear supporters as much as, if not more than the radically weakened opposition. Influential voices within the ruling Bharatiya Janata Party and its affiliates strongly oppose sweeping trade deals such as the Regional Comprehensive Economic Partnership (RCEP) and the privatization of state-owned companies.
Investors, including Indians who have more options now because of considerable capital account liberalization, may find it more profitable to invest elsewhere in Asia. This is particularly true of manufacturing but also of services: Even in areas such as information technology, where India was once a world-beater, rising wages have made it a less attractive place to do business.
Of course, there are multiple dimensions to this challenge. The problem of stifling corporate taxes has been addressed. But unless the cost of capital, cost of labour and cost of land come down, the overall competitiveness of the economy won’t improve enough to stimulate the interest of investors. Equally, the coddling of subpar go nment companies compromises the efficiency of entire sectors of the Indian economy.
The reforms required to address these problems are well-known by now. The market for capital has to be overhauled by privatizing at least two of the largest state-owned banks. The market for labour requires more flexible laws that would persuade companies to use India’s cheap and abundant workers instead of scarce and expensive capital.
Right now, despite recent pro-business measures, the go nment is sending mixed signals. Its decision to stay out of RCEP will look defensive and in favour of the status quo unless it is followed by a spate of domestic reforms. That impression could undermine the reforms already undertaken, deter foreign investors in particular and reinforce the vicious cycle which is dragging growth down.
A big bang package of reforms is more possible than nervous ministers may believe. They can spend the next two months before the next budget developing credible plans in consultation with business, civil society and the state go nments. And once unveiled, the changes don’t all need to be implemented at once. A calibrated approach over 12 to 18 months would suffice; the important thing is to signal to the market that the go nment is serious and ambitious. By then, too, the BJP should have a clear majority in the upper house of Parliament, which will making passing bills easier.
Modi remains massively popular and can claim to have fulfilled most of the BJP’s social agenda already. But for his go nment to be considered truly transformative, it must revive economic growth and put it on a higher trajectory for the next two decades. There are no longer any excuses for delay.
译文来源：阿巴森 http://www.abaripsen.com/48805.html 译者：Joyceliu
When Modi was elected he gave many Jumalas and promises but after 6 years where does the nation stand.The Law and Order situation is so bad that even Indian investors are going abroad to invest but Modi is too busy to control booth houses of Parliament see the downward so any bill can be passed without any opposition.meetings around the world and unable to see the downturn but only politics.Where is any agenda of development ?
BJP supporters should not apply too much brain, because they don''t have one...
India has reached at a stage big bang is must lynching elements have got hold of arms of Govt and crony capitalist shave got hold of iNdustry. The system needs a shock treatment.
As far as these foolish land acquisition and labor laws remain the same no industry can be competitive in India. those cosmetic changes are like dabbing amrutanjan for cancer!
Dear financial experts, please don''t give any big bang reform ideas to our govt anymore, they will twist and make rubbish of the original concept and bang the ordinary people.
Hari Krishna Johri
Like notebandi & implementation of GST .
No more reforms by these uneducated-fanatic morons,
we need second wave of BIG BANG reforms like DeMo, GST again..then, indian economy will be super fast!!!..hehehehe
yes wait for reforms led by Rahul gandhi
We saw Rahul Gandhi's congress reforms already bhakt..India grew with 8% with them...with your tea vendor's reforms, India growing at sub-5% and poised to grow southwards more..Bol jai shree ram!
Unless robust legal framework and quick Justice is delivered, everything else is futile
You have stated the problem succinctly.
I think we need more of Demonetization type of reforms and GST type of reforms. This current govt lacks the brain power to do anything else. Let''s protect our motherland from these incompetent nincompoops.
Nand Lal Chogal
Very simple. Revive the strangled real estate. Construction activity will move the stranded economy. Reduce registration fee drastically as is in western countries. Results would be visible in 3 months. FM must not follow the rusted 10 years old economic polities.
No solution without 1. Free Japanese condoms to control population 2. End Marwadi business dominance India and allow Fortune 500 to freely operate in India and take over India enterprise 3. Massive spending on bottom of the pyramid needs like toilets, water, nuclear power and energy, roads, bridges, housing etc.... Need new leadership for this, a visionary not tea sellers, spiritual gurus and or Harvard educated fools or corrupt educated lungis.
如果没有以下措施，就没有解决方案：1. 免费日本避孕套，控制人口；2. 终结印度玛瓦迪企业的统治地位，允许财富500强企业在印度自由运营，接管印度企业；3. 金字塔底层需要大量的投入，如厕所、水、核能和能源、道路、桥梁、住房等。为此需要新的领导，一个有远见的人，而不是茶贩子、精神导师、受过哈佛教育的傻瓜，或是附败的受过教育的笨蛋。
R D Vohra
No difference between a marwadi and a jew when it comes to business
It is going to be WORST in another 6/8 months.... my comment is after reading various Financial Experts, Indian outsiders..
8 months is far away .. experts are BCOM failed who float on top because mentally they are light weight
Highly anti national to not believe the Govt''s handouts.
I AM SSK
Those criticising Modi here that he is incapable for doing these reforms need to make them aware of Article 370 again.For fake liberals opposing Modi and abusing him is only option.They talk as if Congress changed India and brought it as par China in 70 years.
feku can do only jumlas not reforms... dont expect miracles from a nincompoop
Reform means big booties like corporate tax cut and relief from legitimate dues ???? Politicians and and big businesses are ruining the country !!!!
At least do a small bang. Kick Nirmala out, Bring someone at least has credibility and explain policies to people.
Reforms are urgent need. All that is done so far, though not in small measures, continues to be insufficient to improve the situation now. It is the current situation that demands more to be done. Never before, the economy has decelerated like now, in spite of efforts to improve. What was good yesterday is not good enough now.