Ahmedabad: Business-friendly govt should also be market-friendly, says TERI governing council chairman

Ahmedabad: Delivering the first Y K Alagh Memorial Lecture in Ahmedabad on Friday, Nitin Desai, chairman of the governing council of The Energy and Resources Institute (TERI) said that while India has a business-friendly govt, the need is to have a market-friendly govt. He was speaking on “Policy Priorities in a Changing World” at Ahmedabad Management Association (AMA).

“We have a business-friendly govt, but we do not have a market-friendly govt. And we need to have a market-friendly govt if we want manufacturing to grow fast,” the economist and known voice on public policy said.

Promoting manufacturing is widely viewed as reflecting a close relationship between the govt and the corporate sector, Desai said, adding that in China, smaller, newer businesses drive manufacturing growth. “In China, the huge growth in manufacturing came entirely from newcomers. Their exports account for 20% of the GDP while ours are just 2%. I believe govt assistance must be focused strongly on the new companies,” he said.

He said, “Manufacturing’s share of GDP has declined from 17% a decade ago to 14%. The problem is that we have ended up with a sector that is excessively dependent on the govt,” he said.

Commenting on agriculture, Desai said that decades ago, the govt came up with a very good policy of introducing support pricing for paddy and wheat. “But that is not our problem today. We have a surplus of paddy and wheat. Rice and wheat make up 14% of the total agricultural production. We have an effective policy for 14% of agricultural production, but what about the remaining 86%?” he asked.