India can return to 9% growth if the government removes uncertainties in policy-making and go for early implementation of some of the long pending tax reforms, a senior World Bank official said today.
"The worst thing for investment is not knowing what is coming next. And if that can be tackled by the government, it is going to restart the process of 8-9% growth," World Bank's Chief Economist for South Asia Region Kalpana Kochhar told reporters on the sidelines of a CII event.
Kochhar suggested early implementation of long pending reforms like the Goods and Services Tax and the Direct Tax Code, and reduction in subsidies to control the expenditure.
Vijay Kelkar, chairman of National Stock Exchange and former Finance Secretary blamed 'bad policies' for low growth and its impact on employment generation.
Uncertainties in policies result in investors staying off a country, he said and pointed out to the retrospective nature of tax laws. Besides, he added that non-conformity of contracts added to the constraints faced by investors.
"That's not the way to encourage investment, not the way to encourage growth because you are increasing cost of risk capital. Nothing hurts investor [more] than not knowing what his tax burden is going to be," he said.
Due to global problems like slowdown in the Eurozone and domestic issues like widening fiscal deficit, depreciating currency, inflation and the consequent rate hikes by the Reserve Bank, the government has been forced to revise downwards its FY12 growth forecast.
