Land, labour reforms to push India's economic growth, says N K Singh

The 15th Finance Commission Chairman wants the next govt to focus on reforms to push economic growth

Expressing concern over muted private investments, 15th Finance Commission Chairman N K Singh on Friday said in order to push economic growth, the new government should take on the challenge of introducing reforms in areas including land and labour.

He also noted that fiscal rectitude is important for sustaining long-term economic growth and is the core of long-term macroeconomic stability.

Macroeconomic stability is one of the things that will guide India’s high growth trajectory, he said at an event organised by Assocham here.

“One single thing that we could not reform was factors of production — labour, land and capital. We were unable to achieve success on reforming factors of production,” said Singh. Labour laws remain extremely complicated and there is need to bring reform by revisiting some of the issues like long-term contracts and dispute resolution, he said.

Besides, there is a need to visit the area of cost, procedure and processes of land acquisition, he said, adding that the cost of capital remain high which needs to come down so that business become globally competitive.

“The fact that our economy is not competitive is... connected with inability of successive governments to be able to take on this difficult challenge. In terms of the wishlist for any new government it would be that in this first year in office will they look to this... it needs political will.” “That is why I think the sagacity of the Indian people to elect strong, stable government will be one of the important factors which will bring reform in some of the factors of production,” he added.

With regard to high debt-to-GDP ratio, he said, this ratio is misaligned with other peer group countries.

The effort of the government is to bring this down, and both the Centre and state governments are well on track to bring the debt-GDP ratio to prescribed level, he added.

He also said the Fiscal Responsibility and Budget Management (FRBM) Committee 2017 has suggested bringing down the debt-to-GDP ratio to 60 per cent by 2024-25.

The FRBM Committee, which was headed by Singh, also recommended that the states should bring down their debt-to-GDP ratio to 20 per cent by the same period.

The central government debt is estimated at 48.9 per cent as a percentage of GDP for 2018-19. It is expected that the central government liabilities will come down to 47.3 per cent of GDP this fiscal year, according to Budget 2019-20.

The outstanding liabilities of the state governments stand at 23.4 per cent of GSDP at end-March 2017, with a range of 46.3 per cent in Punjab and 15.1 per cent in Chhattisgarh, according to an RBI study on state budgets.