Former NITI Aayog chairman Arvind Panagariya Former NITI Aayog chairman Arvind Panagariya Former NITI Aayog chairman Arvind Panagariya Former NITI Aayog chairman Arvind Panagariya on Tuesday said India can very quickly get to 8 per cent of economic growth if it implements labour laws, do some bit of privatisation, and work to reduce tax harassment. He said something needed to be done on land as it was incredibly expensive in India and that was the result of policies.
"If we implement the labor laws...something on land needs to be done...land is incredibly expensive in India and that is the result of policies. And then some bit of privatisation that has been on the agenda. I think that will suffice," the economist said while speaking to Business Today TV's Managing Editor Siddharth Zarabi.
Panagaria, who served as Niti Aayog VC from January 2015 to August 2017, said there was a need for some simplifications in taxes in states. "The larger entrepreneurs manage to deal with the tax system. But the smaller ones complain quite a bit. Tax harassment goes on, and that drives the smaller businesses out...you may have seen there was a story done by the Economist magazine, about how a lot of the businesses moved out to Dubai and all. That sort of thing should not be happening," he said.
"Even occasionally, I meet here in New York City some people, who have been running businesses in India, says:'we just have had it with the tax harassment. And so we are thinking of moving to the United States, or elsewhere'. So, I think that needs to be paid attention to, but we are at the cusp, we are almost there."
Panagariya said internationally, there does seem to be some bit of breakthrough as some enterprises and multinationals, which had been invested in China and were looking for alternative locations, now seem to be coming to India.
"It looks to me that we do have a breakthrough there with some of these major kinds of multinationals making their decisions, particularly Apple...this is very visible. And I think if we can capitalize on that, and a few more multinationals (like Apple). We can get very quickly to at least 8% range, and that then we can build on that," he said.
India is projected to grow at 5.9 per cent in 2023-24 and 6.3 per cent in 2024-25, according to the International Monetary Fund. While this makes India the fastest-growing large economy in the world, the forecast is significantly lower than the Reserve Bank of India's (RBI) projection of 6.5 per cent economic growth for FY24.
Panagariya said the states too have to carry out reforms like running 12 hours shifts and allowing women on the night shift. He said even a developing country has to allow these things and without it, the states can not expect investments from multinationals. "The global marketplace is incredibly competitive".
The economist said as per news reports, Chennai had promised to permit the 12-hour shift but the labor unions opposed that and it seemed Tamil Nadu will go back on that. "That sort of thing, we can't afford," he said, adding that most of the multinationals are going to come to the coastal states so they need to be on the frontier of this.
Panagaria said the multinationals are coming not for the domestic market, they are looking for the global marketplace. "And therefore, for them, the location on the coast is very important. And this is where I think, you know, the coastal states really have to be on the frontier of it, they have to be on the frontier of reforms," he said.
WATCH: India Has Potential To Grow At 9%, Says Former NITI Aayog VC Dr. Arvind Panagariya