Raghuram Rajan’s 7 mantras to make India business-friendly

India needs to be “more open to business” to boost investments and speed up growth, according to Chief Economic Advisor Raghuram Rajan.

He proposed a seven-point agenda, including improved infrastructure and lower transaction costs, to improve the environment for doing business in India.

Rajan’s remarks came in the backdrop of a World Bank report,

Doing Business 2013 , which ranked India 132 in the list of 185 countries. Even countries such as Sri Lanka (ranked 81), Pakistan (107), Nepal (108) and Bangladesh (129) were placed higher than India. However, India has been consistently disputing the methodology used in the report. Rajan’s agenda included better infrastructure with lower transaction cost, streamlining of procedures, understanding labour laws to make them industry friendly, easy access to finance especially for small and medium businesses, a strong competition authority, better partnership and easier access. There was “nothing wrong” in adopting best practices prevalent in some of the States, he said.

Later, he said that although it was too early to describe the softening of inflation as an economic turnaround, there was little chance of any deterioration from here. “I think it’s too early to say the economy has turned the corner, but I would be surprised if there is more deterioration from here,” Rajan said

He also said that though there could be some rise in the inflation numbers now, they should start easing from January because of the high base effect. “What the RBI has been saying is that because of the base effect they expect inflation to be lower in the early part of the year. There may be a blip up now but as we go into the next year some quietening of inflation is to be expected.”

Little headroom

He said there is little headroom for the Government to get back onto the fiscal path and as such it needs to create an enabling environment to do business. “The hope is that the beginning of the announcements creates the environment for business to start investment,” he said, adding that business houses are sitting on a lot of cash that needs to be invested.

shishir.sinha@thehindu.co.in