MVIRDC World Trade Center Mumbai has proposed a comprehensive policy strategy to the new government to kickstart domestic economic growth, at a time when India has lost its position as the fastest growing economy to our neighbor China. India’s economic growth has slowed to 5.8% in the Jan-Mar quarter of 2019 and it is the lowest growth rate recorded in the last more than 20 quarters. With this, India lost its crown of being the fastest growing large economy to China, which grew at more than 6.0% during the quarter.

The strategy paper calls for a multi-pronged approach, ranging from improving ease of doing business, addressing agrarian distress, strengthening the financial sector, especially the NBFC segment, simplifying land and labour laws and revitalizing exports to unleash the growth potential in the economy.

The government must revive private investment by inspiring investor confidence by reinforcing its commitment to reforms and avoiding arbitrary policy actions.

The strategy paper has called for fine-tuning some of the path-breaking reforms carried out by NDA–I, such as Goods and Services Tax (GST) and Insolvency and Bankruptcy Code to make them more effective.

The new government must steadfastly implement the USD 1.4 trillion infrastructure investment, as announced in the NDA alliance’s election manifesto. In order to stimulate investment, the government must rationalize GST rates, reduce corporate tax rate for large companies to 25%, as was promised by this government.

The paper emphasizes on the adoption of the principle of ‘minimum government, maximum governance’ by removing complex procedures for statutory approvals, abolishing outdated laws and rules, avoiding unnecessary inspections, introducing single-window clearance system and allowing self-certification, wherever possible.

Unveiling the strategy paper, Mr. Vijay Kalantri, Vice Chairman, MVIRDC World Trade Center Mumbai remarked, “India’s dynamic entrepreneurial spirit and vibrant youth population can unleash untapped economic growth potential, if they are empowered with conducive policy environment. We need supportive policy measures to realize the 100 billion FDI target as set out by the government in the next two years and also to double the country’s exports by 2022.”

Mr. Kalantri further added, “MSMEs are the backbone of the economy as they contribute 40% to manufacturing and 45% to exports. The government must ease labour laws, promote flow of credit and set up MSME clinic to revive sick units.”

In order to address the agrarian distress, the strategic paper calls for effective implementation of the Dr. Swaminathan Committee report, reforming agriculture marketing laws, relaxing norms on agricultural exports, abolishing Essential Commodities Act and legalising land leasing.

Identifying start-up as a strategic sector to position India as an innovation capital of the world, the strategic paper recommends easing of norms for filing patents, reducing tax litigations and improving their access to risk capital.

E-commerce has emerged as a potential platform to connect MSMEs to the global market. The strategic paper has proposed key measures to encourage foreign direct investment into the sector, while also protecting the legitimate interest of the local retailers.

In the financial sector, the government must continue its efforts to recapitalize weak banks and introduce a special window to infuse liquidity to the NBFC sector. NBFCs are the major drivers of consumption in the economy as they offer loans to consumer loans in sectors such as automobiles, home appliances, real estate etc. The current crisis in the NBFC sector, if left unattended, could grow into a full blown financial crisis as mutual funds and banks have exposure to the many NBFCs.