Big Ideas for India Contest: Question 5: Which are the key economic reforms India needs to pursue?

India’s first-generation of economic reforms started in 1991 and continued for much of the next decade under different governments. But over the past few years, for a variety of reasons, they have stopped. Even as the economy chugs along powered by the private sector, there are clear limits to how fast it can grow and how far it will go.

What India needs is the next-generation of economic reforms. These have been promised many times, but not yet materialised. From labour to the judiciary, from police to the administration, from FDI in retail to reforms in the insurance sector, there is a lot of unfinished work in India to ensure that economic growth can exceed 10% on a sustained basis.

Which are the most important economic reforms that the government should focus on?

Contest Overview.

9 thoughts on “Big Ideas for India Contest: Question 5: Which are the key economic reforms India needs to pursue?

  1. Development of a competitive free market in Internet broadband.
    1. Define nation wide RoW rules for laying fiber to be followed by all states/municipalities without any local discretionary powers. Defining of transfer price over local loop available to all players regardless of size.
    2. Removal of discretionary powers from technologically challenged incompetent babus to define arbitrary rules to level the playing field with International players.
    3. In other countries Lawful Interception equipment and onus lies with the governments and not ISPs. Why should Indian ISPs pay for LIM equipment and arbitrary censorship requests.
    4. Hosting the content of the atleast the APAC part of the world would result in seriously huge number jobs created but to do that we need to create confidence that we are neither China nor Saudi-Arabia. KYC is pointless, useless and needless in this day and age of cloud computing brokered by an hour. By imposing massive costs of administration we are keeping ourselves backward.
    5. ISP license should be altogether abolished, the government can very well intercept nearly all of the traffic at NIXIs if it needs to. Let a million small 2 subscriber ISPs bloom, let apartment buildings, cafes, office complexes becomes mini-ISPs.
    6. Biggest deficit hidden in our budget numbers is the oil pool account, reducing daily commute by investing into fiber is a holy duty of the government. Providing work for home tax benefits to everyone who can afford to work from home would cut down daily commute significantly. Ofcourse significantly un-shackling the Internet in India is required see (1-5) first for this to happen.

  2. 1. We need electoral reforms first, then you can continue with the economic reforms. This will solve 90% of the problems
    2. Bidding should be made mandatory for mining/oil/telecom resources
    3. Real estate records need to be digitized
    4. Law and order should be strengthened to ensure muscle power is not used to intimidate business rivals
    5. Huge rewards for whistle-blowers of corruption
    6. Removal of black-money from real estate sector and business transactions.
    I have some ideas in this.

    Suppose, a person buys a house for 1 crore , but registers it for 20 lakhs. Government should have the power to acquire the same property for say 21 lakhs. This will discourage the property buyers from declaring the price lower than the actual price. Or some other scheme should be used where the misquoting of the price penalizes the property buyer.

    Also, whenever a buyer buys an item, he should demand a receipt. To incentivize the buyer to receive the receipt, each receipt should have a number which is entered into a lottery.

  3. RBI should invest in small things like replacing VISA and MasterCard with an Indian Entity (Rupay ??)

    Domestic banks paid around Rs500 crore last year as fees to these global card firms for processing debit and credit card payments, 90% of which were domestic deals.

  4. An economy transitions from agriculture to large-scale manufacturing, and finally to services and innovation. There has been no other way, nor can there be. To facilitate smooth navigation on this trajectory, we need the basics:

    1) Property rights – Make them secure thru Constitutional Amendment – on par with free speech and assembly.
    Corollary: Farmers must be given full title to their land, and allowed to sell to any and all concerns (No State Agricultural Committees)

    2) Labor Laws – Liberalize labor law – abolish the steep effective marginal tax that steps in @ 100 employees. Allow hiring and firing at will. No compulsory unions or dues collection.

    3) Judicial Reforms – Re-jig the judicial system – create thousands of district courts, and tens of thousands of municipal courts. Digitize court records, and introduce IT. Abolish and repeal all unnecessary criminal and civil statutes that give discretionary power to law enforcement.

    4) Educational reforms – Allow open foreign investment in education, and allow for profit education.

    5) Financial reforms – liberalize the financial sector – allow easy IPOs, focus SEBI on being a fair watchdog, not a constant meddler or approver of private decisions. Allow foreign investment and enlistment on indian exchanges.

  5. 1. “Track and Tax Every Transaction” – this will solve tonnes of issues – if there is one silver bullet that will kill ALL of India’s problems in one shot, this is it. This sounds impossible, but it is actually not so. There are multiple ways to incentivise everyone and get this done.

    2. Financial – Implement recommendations of Mumbai as International Financial Center (MIFC Report is already done)

    3. Education, Legal and Electoral Reforms.

  6. I agree to Rakesh’s proposal, but no need to establish a separate government department to acquire property. Every person who submits an anuual self-appraisal of their property is accepting that is the price he is willing to sell. Now, any buyer approaching him with a higher price can submit an affidavit if he is not getting the property at the appraised price.

  7. In my perspective, a survey of entrepreneurs should be conducted and everything that they mention as obstacles to creation of enterprises should be done away with starting with the regulation with the least relevance.

  8. India needs economic reforms in almost every field, but the 2 major ones in my opinion are infrastructure and agriculture.

    Infrastructure: It encompasses everything from roads to railways to ports. A lot of India’s productivity is restricted by these.
    Avg speeds in a lot of countries for locomotives is about 3 times our speeds.
    eg: An individual reaching work faster and less hassled is way more productive. Goods and services reaching destinations faster will result in less losses etc.

    Agriculture: India still is an agricultural country. Just the sheer number of people that are dependent on this directly or indirectly is astounding. So for India to really progress this sector needs to be brought to the forefront.

  9. 1. Deregulation of business sector. Starting a business in India should be made easy. This will generate employement opprtunities for the small & medium businesses.
    2. Taxation should be made simple and uniform throughout the country. Few taxes should be imposed instead of a number of taxes.
    3. Subsidies should be abolished, including those on Petro products.
    4. Loss making PSU should be sold.
    5. Flat tax rate should be applied.
    6. Tax rates should be cut.