India needs to attain, and sustain, a gross domestic product (GDP) growth rate of at least 9%, with manufacturing growing at 13% a year, in order to create adequate employment opportunities, generate resources to deal with poverty and to ensure social stability. The government should declare these targets as priority number one, and a national objective. All political parties should be persuaded to accept this objective. All policies and governmental decisions, at the Centre and in the states, should be consistent with attaining this goal.
It would not be possible to either reach 9% growth or accelerate manufacturing to 13% a year unless the ability of the government to implement projects and policies is drastically improved. Along with this, laws, regulations and processes that add to the cost of doing business need to be reviewed and simplified, so as to increase Indian competitiveness.
The central and state governments make up a large part of the national investment in infrastructure, including education and health. Due to implementation and operational shortcomings, infrastructure is a major reason for reducing the competitiveness of Indian industry. The systems and processes in government, basically designed by the British to provide checks and balances, have become an impediment to progress because of the climate of distrust. Most officers give overriding priority to ensuring that processes are followed, irrespective of the impact on results.
Clearly, systems need to be modified. We need to introduce accountability for results, give incentives for performance and delegate powers so that decision-making is quick.
At the same time, some provisions of the Prevention of Corruption Act need to be changed so that officers are not afraid to take decisions. The audit has to become more commercial and should also attach value to time.
Experience of the last two decades has shown that citizens benefit most when there is competition. Many public sector industries, functioning in important areas, are quasi or full monopolies.
The government supports public sector units (PSUs) in many ways. In reality, this is at the expense of the citizens and of growth. PSUs should be made to face genuine competition. Obstacles to PSUs functioning commercially should be removed. If any PSU is still unable to compete and be profitable, it should be sold.
The goods and services tax should be introduced in 2013. Its benefits are so large and apparent that agreement should be speedily possible, if the national objective of growth and job creation is accepted. A huge amount of litigation in tax law implementation could be avoided, and costs saved for industry and business, if officers were willing to take responsibility for decisions, and were confident that they would not come to harm for bona fide actions.
The education system needs to be modernized to meet present-day needs. Institutions offering good education are scarce. Good teachers are even more scarce. There needs to be large infusion of private capital in education to supplement governmental efforts. Technology needs to be extensively used to maximize the reach of good teachers and professors.
All impediments to the flow of private capital to education need to be removed.
RC Bhargava is chairman at Maruti Suzuki