abhishreshthaa
Abhijeet S
REMEDIAL STEPS
India needs to immediately set right this situation and give primacy to manufacturing as China has done.In the process, the following steps may have to be taken:
1. REDUCE INTEREST RATES: At real interest rates of 7 or 8 per cent, manufacturing companies will never be able to compete globally because these interest costs, as a percentage of total cost, become high.
2. ENSURE MOBILITY OF LABOUR. There has to be the will to put through a modern labour policy, which will ensure that industry has the right to move labour in and out. The only way employment will increase in the manufacturing sector is if we give the comfort to the owner that his labour is a variable cost.
3. TAX CUTS:. The indirect taxes are way too high and need to be brought down to international levels. By having high excise duties, we are killing domestic demand, the key component of our growth.
4. REDUCE RED TAPE: Indian Government must free the Indian entrepreneur from the shackles of state and federal bureaucracy and release the savings through lower direct and indirect taxes.
5. ENCOURAGE COMPETITION: The government must make "competition" India's national password and allow the Indian flair for invention and application to take root.
6. SECTOR REGULATOR: Develop infrastructure regulatory bodies funded from outside the government budget. Establish multi-sector regulatory agencies at the state level.
7. DEVELOP LONG TERM DEBT MARKET: Mobilise long term insurance money in the sector andInstitute pension reforms. Establish a fully funded pension scheme to increase national savings and the demand for long term debt, making more funds available for infrastructure.
8. CONTRACTING PROJECTS TO PRIVATE SECTOR: Establish a single body for contracting, clearances and interacting with private developers and investors. India should have one public sector agency undertake the project design and contracting, negotiation and documentation on the reasons why award decisions were made.
9. PORTS: Develop a new institutional structure for the sector by separating policy, regulatory and commercial functions.
10. AIRPORTS: The focus of the airport authority of India has to be shifted from operations to policy planning and statutory functions. A separate independent authority needs to be created to handle economic regulation for the sector such as the leases and concessions.
11. ROADS: The money collected from petrol and diesel must be used only for road development. Monitor and gradually reduce public support for private road projects.
12. RAILWAYS: Corporatise Indian railways into indian railways corporation and focus on the core business and spin off the rest. Railways must get separate instituions for policy regulation and management.
India needs to immediately set right this situation and give primacy to manufacturing as China has done.In the process, the following steps may have to be taken:
1. REDUCE INTEREST RATES: At real interest rates of 7 or 8 per cent, manufacturing companies will never be able to compete globally because these interest costs, as a percentage of total cost, become high.
2. ENSURE MOBILITY OF LABOUR. There has to be the will to put through a modern labour policy, which will ensure that industry has the right to move labour in and out. The only way employment will increase in the manufacturing sector is if we give the comfort to the owner that his labour is a variable cost.
3. TAX CUTS:. The indirect taxes are way too high and need to be brought down to international levels. By having high excise duties, we are killing domestic demand, the key component of our growth.
4. REDUCE RED TAPE: Indian Government must free the Indian entrepreneur from the shackles of state and federal bureaucracy and release the savings through lower direct and indirect taxes.
5. ENCOURAGE COMPETITION: The government must make "competition" India's national password and allow the Indian flair for invention and application to take root.
6. SECTOR REGULATOR: Develop infrastructure regulatory bodies funded from outside the government budget. Establish multi-sector regulatory agencies at the state level.
7. DEVELOP LONG TERM DEBT MARKET: Mobilise long term insurance money in the sector andInstitute pension reforms. Establish a fully funded pension scheme to increase national savings and the demand for long term debt, making more funds available for infrastructure.
8. CONTRACTING PROJECTS TO PRIVATE SECTOR: Establish a single body for contracting, clearances and interacting with private developers and investors. India should have one public sector agency undertake the project design and contracting, negotiation and documentation on the reasons why award decisions were made.
9. PORTS: Develop a new institutional structure for the sector by separating policy, regulatory and commercial functions.
10. AIRPORTS: The focus of the airport authority of India has to be shifted from operations to policy planning and statutory functions. A separate independent authority needs to be created to handle economic regulation for the sector such as the leases and concessions.
11. ROADS: The money collected from petrol and diesel must be used only for road development. Monitor and gradually reduce public support for private road projects.
12. RAILWAYS: Corporatise Indian railways into indian railways corporation and focus on the core business and spin off the rest. Railways must get separate instituions for policy regulation and management.