To make India a $52 trillion economy by 2047, it is important for experts to emphasize the need for key reforms needed to drive higher growth of Indian economy. Highlighting the significance of privatisation as well as public sector reforms at FICCI event recently, Chairman of 16th Finance Commission, Arvind Panagariya however spoke up about it.
Bank Privatization Needed
Breaking Non-Performing Assets (NPA) Cycle
According to Panagariya, bank privatization is crucial in breaking the cycle of non-performing assets (NPAs) and recapitalisation efforts. There have been two cycles of NPA clean-up in India and there is need for government to adopt new perspective.
Main Elements Encouraging Bank Privatization
- Lessen NPAs on PSBs’ shoulder
- Improve economic efficiency and productivity
- Promote competition and innovation in banking industry
- Revamping Public Sector Enterprises
Improving Efficiency in Economy
Panagariya stressed that most of the economic activities remain in the public sector where capital is not allocated efficiently. He therefore called for divestment that would increase economic efficiency and promote private sector participation.
Critical Areas for Overhauling
- Strategic Disinvestment of Public Sector Undertakings
- Encouragement of Private Investment into Strategic Sectors
- Strengthening Governance Frameworks within Public Sector Institutions
Liberalizing India’s Labor Market
Making Use Of Labour Productively
In an interesting point, Panagariya noted that India has failed to utilize its huge resource labor properly as it has concentrated mainly on heavy industries/ machinery. This calls for comprehensive factor market reform according to him.
Key Labour Market Reforms
- Promoting Labor Intensive Industries And Services
- Strengthening The Education System And Skills Development Programs
- Improving Labor Market Flexibility And Mobility
Land Reforms Challenges
A Critical and Tough Task
While Panagariya admitted the difficulties in implementing land reforms, he stressed that this is a basic element of comprehensive economic reform.
Conclusion
In conclusion, India’s path to economic growth requires prioritizing privatization and public sector reforms. By addressing the challenges of NPAs, enhancing economic efficiency, unlocking labour potential, and implementing land reforms, India can achieve its vision of becoming a $52 trillion economy by 2047.
