Economists on Thursday expressed the view that India needed to do reforms in the judiciary, labour, and regulations to induce the private sector to step up investment.

       Besides, the education sector, particularly at primary level, requires overhauling to realise the dream of making India a developed nation by 2047, they said at a panel discussion on India’s economic reset amid a new world order.

       Laveesh Bhandari, president at the Centre for Social and Economic Progress (CSEP), said he was not bothered about economic growth going up or coming down a bit but about medium- to long-term growth.

       The gross domestic product numbers for the quarter are scheduled to come on Friday.

       “The most important thing is that you have to be internally strong,” Bhandari said, emphasising the need for addressing judicial delays, which hamper contractual agreements.

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       Crisil Chief Economist D K Joshi estimated the annual average economic growth rate at 6.7 per cent till 2030-31 but he was of the view that the growth rate could be higher if the private sector was not averse to investment.

       “The only part which is lagging behind and which, in a way, has the strongest capability to spend is the corporate sector. The financial flexibility of the corporate sector is today the highest in the past 10 years. Yet they are not investing,” he said.

       He laid emphasis on reforms to bring these players back to spur the economy.

       Joshi also talked about corporations’ fears about Chinese goods flooding India.

       “If China has excess capacity, it’s going to suffer deflation and that is going to flood the markets in Asia, including India .For a company that uses steel as a product, it’s good news, but for a company that manufactures steel, it may not be good news,” he said.

       Talking about regulatory reforms Bhandari said deregulation could not happen without industry being honest about the kind of challenges it was facing.

       He said the problem arose as most of the regulators were manned by the government sector.

       “We rarely bring people from outside. We don’t bring international people into our regulatory setups. It is difficult to have real deregulation because no one in government trusts industry,” he said.

       He said regulatory entities did not have enough capacity to understand the problems faced by the private sector and the needs of the economy in the long run.

       Besides, these bodies do not talk to one another, Bhandari said.

       “You will need regulators to talk to one another. Even if you don’t coordinate, at least transfer information from one entity to another within regulatory setups,” he said.

       Tushar Vikram, chief executive officer (CEO) and country head, Mashreq, however, said the Reserve Bank of India (RBI) was connected with the players in its purview.

       Vikram, who has experience in the financial sector in the United States, Europe, and West Asia, said the RBI was more open in its communication with the players than other financial-sector regulators.

       However, he said the number of clearances companies required to set up businesses was much more than in other countries because of a multitude of regulators.

       “While we are deregulating, we need to move much faster to catch up with the world,” he said.

       Sundeep Sikka, CEO and executive director of Nippon Mutual Fund, said

       the Securities and Exchange Board of India (Sebi) and the regulated players worked closely.

       The Association of Mutual Funds in India (Amfi) provides another layer between mutual funds and Sebi, he pointed out.

       Bhandari talked about bringing education reforms, particularly at primary level, to push up long-term economic growth.

       “Those about to enter primary school are going to be 30 years of age and your main workers by 2047. Half the primary school students cannot read or write. So your 2047 dream (cannot be realised) if you cannot get primary schools right now,” he said.

       Joshi said labour did not contribute much to growth because of their lack of education and skilling.

       He talked about four labour codes that were passed by Parliament but were awaiting introduction since all states had not sent back their rules under them to the Centre. Inflation

       Joshi said the problem of inflation had primarily been of food items for the past two-three years, while the core inflation rate (inflation sans food and oil items) was benign. He estimated the non-food inflation rate at 3.1-3.2 per cent for this

       financial year.

       However, now the food inflation rate is beginning to come down while the core inflation rate is inching up, he pointed out.

       He said while the food inflation rate might come down because of a high base effect, prices might not.

       Sikka, however, said financial awareness and education were getting better in smaller cities and towns.

       “I think it’s not just about inflation but how it makes you poorer day by day. People in smaller cities are now aware of this fact. It was never there. People earlier never understood that inflation actually ate away their wealth. So that change has started,” he said

       He gave credit to industry and regulatory bodies for this financial awareness and education.

       Sikka pointed to inflation shrinking disposable income of the people in smaller towns.

       This has led to stress faced by fast-moving consumer goods and other companies in these towns. Even microfinance institutions are facing stress due to this situation in these areas.

       “I think cash in hand is not as much in smaller towns as we expected. Consumption is also not as much in these areas as we expected,” he pointed out.

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