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Unfortunately the sharp focus on these considerations has fallen by the wayside, as India has been gripped by crony
capitalism, divisive politics, and back door regulations. Today populism inhibits sound decision making on the part of the
government. Schemes meant ostensibly for the betterment of the masses - like the MNREGA, The Indira Awaas Yojana,
etc. have degenerated - to an extent that the huge burden of expenditure on the government is made worse by large
amount of leakage. It has been impossible for the powers that be, to exorcize the ghost of socialist era interference in
economic decision making. Entrenched bureaucracy is unwilling to allow economic power to be regulated by market
forces, and by truly independent regulatory bodies.
The need of the hour is to speedily install supply side reforms, to ensure strong economic growth.
a) Fiscal reforms - particularly introduction of GST. The second wave of reform, at state level regulation - relating to
taxes, land acquisition, transport, farm economy, etc. are not emphasised, barring exceptions.
b) Labour reforms - to focus on increase in skill development opportunities, increase in employment opportunities,
rather than socialist era protection to only those who are already unionised, at the cost of millions who are unemployed
/ unorganised. The entire unionised workforce of India is less than 1 per cent of population.
c) Infrastructure development. Similar to the national highways, new funds need to be created for various infrastructure
activities at state levels. It is important to prevent diversion of tax revenues into populist measures (which politicians
are more interested in, for quick political gains), than to put into assets which enhance employment potential and
productivity.
This is a tall order, it calls for consensus by the ruling polity of India, on both policy and on governance. The steadily
escalating bitterness in the debate on governance, on transparency, on accountability, as seen in the Lokpal
movement - does not auger well for creating a sound consensus. India's problem is “governance”, above all. A
historic opportunity for economic growth is in danger being compromised, due to policy paralysis and parochial
priorities.
Trade and commerce, in terms of wholesale and retail business in commodities, in consumer goods including durables
and non-durables, in automobiles and farm inputs - has seen growth year on year, due to the opening up and greater
gradual integration of the rural economy of India into the mainstream. Policy measures to remove the debt burden of
farmers has had a significant beneficial effect in this regard. The modern farmer has become a creditworthy entity. Yet
investments in infrastructure for agriculture are woefully short. India has improved its food stocks, only to find abysmal
storage capacities and horrific waste. Investment in management of the food chain, simplification of the supply chain
from farmer to the consuming citizens, speeding up the logistics and improving the phyto sanitary conditions in this
regard, has to be a priority. This is a very significant area of opportunity for business, for industry and of course very
important for the country's economy. Multi-brand FDI in retail, if relevant, has to be seen in this light.
Policy correction in regard to agricultural produce support needs a relook. Milk, pulses, egg, vegetables need to spurt in
output. It is these items which contribute to inflation in prices, and not cereals. That the demand for non-cereal
component of food is rising indicates that the standard of living is rising. This is wonderful – but needs a policy response
to sustain.
At the current rate of growth of around 6 per cent per annum in GDP, actually speaking India is standing still. China is
growing at over 10 per cent per annum, the gap between the Indian and the Chinese economy in the last twenty years has
increased rather than decreased. India today is 40 years behind China. China consumes 450 kilos of steel per person per
year, the West (Europe and USA) consume 400 kg per person per year, whereas India consumes 40 kg. China lays 40
kilometers of roads per day, India lays 10 kilometres per day. This clearly shows that we need to focus on economic
achievements, rather than on parochial or emotive political issues.
Water availability for agriculture is still a constraint, in spite of significant improvement in water conservation through
dams, percolation tanks, irrigation canals, etc. The use of water in India is extremely wasteful. We pride ourselves on
export of rice, without consciously knowing that each kilo of rice that we export consumes 4000 litres of water to
produce. Crop selection therefore is as important, as active measures for water conservation.
India stands at an important juncture. The next few years will show whether this, once in a few hundred years opportunity,
is handled wisely by India or not.
On the state of Maharashtra's economic scenario, a number of major concerns remain. Maharashtra has had the proud
privilege of being the most respected state for the achievement of its industrial and business communities. Yet, the
growth of existing industries in Maharashtra, and the establishment of new industries in Maharashtra, now increasingly
face a number of constraints.
1) Land availability and price are very adverse. The FSI for industries in MIDC areas is one (100 %), whereas in non-MIDC
areas, it varies between 10 to 15 per cent.
Considering the improving infrastructure in cities and towns where MIDCs exist, the FSI within MIDC areas should be
raised from 1 to 2, and in non-MIDC areas should be raised to 1 on a blanket basis. This will reduce the cost of
setting up or growing industries. It will conserve agricultural land. It will improve industrial productivity, with
the beneficial effect on cost, and will counter-act the pressure on industries from high levels of taxation.
Above all it will help sustain the attraction of industries to Maharashtra – it can be achieved at no cost.
2) In several municipal corporations in Maharashtra we still have to live with the obnoxious, the
outdated and the most controversial tax - octroi. Not only octroi collection leads to high cost for
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