Cut red-tape, initiate long-term reforms for growth: Lobet

Written By Unknown on Rabu, 24 Oktober 2012 | 08.11

Jean Michel Lobet, private sector development specialist, World Bank explains to CNBC-TV18 that reduced formalities and implementation of long-term reforms was the key to boost growth in India and improve its ranking in the World Bank's Doing Business Index.

Also Read: World Bank index ranks India at 132 for slow reform-process

Below is an edited transcript of the analysis on CNBC-TV18.

Q: India's low ranking has been unchanged. India continues to be at 132, but over the past several months it seems to be at the forefront of carrying out reforms. What explains the low ranking and is there any silver-lining at all as far as this report is concerned with regards to India ?

A: For the last eight years, India has implemented 17 reforms and has dramatically improved its investment climate as measured by Doing Business in such a way that it is amongst the 28 economies around the world that have improved the most over the last 8 years.

So, this is very encouraging news and if we only take into consideration the last 12 months the ranking of India has remained stable. We have also recorded an important reform in the area of construction permits with the simplification of the process to obtain a construction permit.

Q: What are the measures that Indian can carry out in the long and short term that will help improve ranking on this study?

A: Countries that have successfully improved in the Doing Business Report have followed a dual strategy of simplification of regulatory processes which makes it easier for small and medium-sized entrepreneurs to conduct business with reduced formalities which creates more jobs and initiating complex, institutional and long-term reforms such as making the courts more efficient and responsive.

All these create a better sense of confidence for investors because they know that the courts are efficient. These are the type of initiatives that can be undertaken in the future.

Q: If India does manage to improve on some of the parameters that you have talked about, how much would you think that would add to the GDP?

A: A few years ago in India, a study found that progressive elimination of the licence regulating entry and production in industry led to a 6-percent increase in the registration of new firms. This proves that small initiatives in reducing procedures have an important impact on creation of more companies, jobs and ultimately, increase economic growth.



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