13. Has the Indian governmental system responded adequately to the demands of Liberalization,Privatization and Globalization started in 1991? What can the government do to be responsive to this important change?(CSE Mains 2016)GS-II 2016

13. Has the Indian governmental system responded adequately to the demands of Liberalization,Privatization and Globalization started in 1991? What can the government do to be responsive to this important change?(CSE Mains 2016)GS-II 2016

The deregulation and rollback of government in the Indian economy and introduction of market oriented reforms undertaken at the behest of IMF in 1991 are called as a first generation reforms.

They enabled India to break away from the low rate of growth( referred to derogatorily as Hindu rate of growth).

Scholars have pointed out to the need for second generation reforms in India to achieve higher rate of growth.

• Tax reforms :

India has taken a huge step by passing the historic Goods and Service Tax Act. It will integrate Indian economy into one market and is expected to increase GDP by 1 %.

There is a also a need for a stable tax Regime. Tax terrorism and prolonged litigation has dented India's image as an investment decision.

• Banking reforms :

Non Performing Assets(NPA) have caused strain in the banking sector. Economic survey had suggested the establishment of Public Asset Reconstruction Agency(PARA) to deal with NPA.

Banks have been facing major challenges complying with the BASEL III norms. It has been alleged that government interference in public sector banks has caused in efficiency and stress. Government has plan to reduce its takes in the public sector banks

• Disinvestment and deregulation : Despite the rollback of Government, the public sector companies have not been completely disinvested . The government still owns majority stake in many of them
• Stable policy regime

Resource allocation : Government should take steps to enable rules based resource allocations. Scams in spectrum allocation and  mining licences has caused huge uncertainty these sectors.

• Labour reforms

Post opening up of Indian economy that has been an increasing trend towards contractualisation and  casualisation. A market friendly law which facilitates easy hire and fire with adequate safeguards is necessary.

• Infrastructure

India's logistics and back end infrastructure need a major overhaul. The bottlenecks in infrastructure and supply chain has inhibited Indian economy from growing but it's true potential.

WTO trade facilitation agreement has stipulated a framework  of time bound process.

• Red tapism

Standardization and clearly defined policy can enable faster and reliable decision making. Ambiguous rules leave room for discretion and cause inconvenience.

• Land acquisition

Land application has been one of the most challenging task in India. Implementation of Land Acquisition Rehabilitation and resettlement Act 2013 in letter and spirit would decrease the problems.

• Manufacturing

In order to make ‘Make in India’ a success we should open up more sectors and integrate in a positive manner with the global economy.

India ranks 130  in the Ease of doing business report published by World Bank. We should take more steps to boost growth and development and create a positive investment climate. These are logical steps that should be taken by the Indian government to meet the demands that  have arisen in economy post 1991 reforms.