If I were the Finance Minister…….
Corporate India seeks a clear set of rules and guidelines, relevant to today’s digital and borderless economies that allow us to move rapidly in the pursuit of opportunities.
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At the outset, I must mention that I am glad that I am not the Finance Minister of India under the current challenging global conditions. With trade wars, Mid-East uncertainty and a monsoon that is currently playing truant, the FM has an unenviable task ahead of her. However, having read about various interactions, she had with chambers and key stakeholders, I am also confident that she will be able to deliver the best possible outcome under the present circumstances.
Since this is an exercise in wishful thinking, I can certainly hope for a healthy dismantling of artificial controls and restrictions on the corporate world. When the British ruled India, their objective was not to grow the Indian economy, but rather to extract and exploit it, just as any colonial power would do. Unfortunately, that essential framework of rules and regulations has remained post-independence and to further compound matters a socialist overlay was introduced into an already misguided system. Since then corporate India has suffered from an excess of control that has little relevance in today’s environment.
Over the years various governments have attempted to call upon the ‘animal spirits’ of Indian entrepreneurs. However, the fundamental control structure has not really been altered. The Indian Companies Act, 2013 held out hope when it was being debated and introduced. However. it too largely takes from the Companies Act, 1956 and does not really offer any meaningful easing of the constraints that corporate India faces.
When the great John Maynard Keynes wrote in 1936 about ‘animal spirits’ he was pointing out the ‘spontaneous urge to action rather than inaction’ that even today drives the entrepreneur. By no means do I intend to suggest that there should be no framework of regulations. However, we look forward to a framework that enables growth, drives initiative and supports good governance.
Yes, today India is the world’s fastest-growing major economy. Given the size of our population and the domestic consumption that it generates, even an absence of significant policy action will not affect the core growth. However, imagine what could be possible with well thought out and efficiently executed interventions. This growth can sky-rocket, bringing millions more out of poverty and unleashing the same vicious cycle of growth that China enjoyed for so many years. It is indeed sad to note that in 1980, India actually had a higher per capita income than China, which has turned around to five times higher per capita income for China.
From a macro-economic perspective, India’s GDP growth is often followed by higher inflation, which then forces regulatory action of higher interest rates and consequent slow-downs. The reason we remain stuck in this vicious cycle is because our inflation is driven by supply constraints and no prizes for guessing what is the only long-term solution for this. We need to make it easier to start and do business so that more capacities are created, more jobs are created and more wealth is created. We need a willingness for action across the political spectrum, for the lifting of artificial constraints, and the removal of discretion from the system.
Corporate India seeks a clear set of rules and guidelines, relevant to today’s digital and borderless economies that allow us to move rapidly in the pursuit of opportunities. We seek the freedom to play within these rules in a competitive manner, without fear or favour. We hope rules are framed prospectively and not retrospectively. We have great confidence and hope in the new government and I am sure that given the right encouragement, the returns delivered to the government and the country as a whole will be manifold and help fuel further growth, development, and social interventions.
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