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"According to the “2014 Index of Economic Freedom”, published by the Heritage Foundation, a U.S. –based think tank, in partnership with The Wall Street Journal, India continues to underperform partly because of policies adopted by New Delhi.
The index classifies India as a “mostly unfree” economy despite modest signs of improvement. India’s current account deficit, although high, shrank to $5.2 billion – the lowest in four years in the last quarter of 2013. Industrial output in the country, however, fell for the second-straight month in November."
One of the easiest(and perhaps hardest) ways to further liberalize the Indian economy would be labor law reform. As of right now, it's extremely difficult to fire someone and almost impossible to layoff people. You actually need gov't approval to lay people off. There is relatively more risk than opportunity in hiring someone. This has stifled growth in the manufacturing sector and has considerably hurt start-ups not to mention the effects it has on managerial efforts to increase productivity and efficiency.
The Indian gov't needs to get it's act together and focus on getting things done the areas it should be(education, infrastructure, sanitation, etc) and absolutely get the hell out of the way in areas that they have no business being in. Hopefully, this will be happening in a few months when elections boot the Congress Party out of office. In the history of democracy, I don't think their has been a worse group of inept, nepotistic, corrupt, myopic clowns than the Congress Party of India. Only a fool believes that the half-baked leftist philosophy that the Congress Party has been pushing for over six decades is the path to prosperity for a poor country.
While I can't really comment on the Indian business structure I can say with confidence that the WSJ economic freedom ranking is highly politicized and rife with bias and is generally unreliable. For example, the rankings do not mention that the government in Singapore and Hong Kong owns the land and essentially leases the land to its citizens. They also don't mention the extensive government intervention in the economy of HK and Singapore. The ranking mostly favors countries that are open to foreign companies (which means free trade and open markets) and to governments that do not interfere with the operations of foreign companies. Notice that many of the top countries in the ranking are tax havens like Mauritius and Bahrain. Also notice the low ranking of China and Russia. China mostly ranks low because much of the Chinese market is closed to foreign companies and because China requires tech transfers or some sort of substantial investment (such as factories and etc) to gain access to its market.
One of the easiest(and perhaps hardest) ways to further liberalize the Indian economy would be labor law reform. As of right now, it's extremely difficult to fire someone and almost impossible to layoff people. You actually need gov't approval to lay people off. There is relatively more risk than opportunity in hiring someone. This has stifled growth in the manufacturing sector and has considerably hurt start-ups not to mention the effects it has on managerial efforts to increase productivity and efficiency.
The Indian gov't needs to get it's act together and focus on getting things done the areas it should be(education, infrastructure, sanitation, etc) and absolutely get the hell out of the way in areas that they have no business being in. Hopefully, this will be happening in a few months when elections boot the Congress Party out of office. In the history of democracy, I don't think their has been a worse group of inept, nepotistic, corrupt, myopic clowns than the Congress Party of India. Only a fool believes that the half-baked leftist philosophy that the Congress Party has been pushing for over six decades is the path to prosperity for a poor country.
This is so crazy to my American ears. I hear its like this in Europe too, that it is difficult to fire people. That is so terrible for business. If someone isn't doing their job then they need to be fired! My last company had a four strikes and then your out rule. A strike would be calling in sick for the day for instance. If you didn't call in and just didn't come into work then you could be fire on the spot.
While I can't really comment on the Indian business structure I can say with confidence that the WSJ economic freedom ranking is highly politicized and rife with bias and is generally unreliable. For example, the rankings do not mention that the government in Singapore and Hong Kong owns the land and essentially leases the land to its citizens. They also don't mention the extensive government intervention in the economy of HK and Singapore. The ranking mostly favors countries that are open to foreign companies (which means free trade and open markets) and to governments that do not interfere with the operations of foreign companies. Notice that many of the top countries in the ranking are tax havens like Mauritius and Bahrain. Also notice the low ranking of China and Russia. China mostly ranks low because much of the Chinese market is closed to foreign companies and because China requires tech transfers or some sort of substantial investment (such as factories and etc) to gain access to its market.
This is correct. Another aspect that also hurts India's ranking in this index is that foreign shareholders are limited to owning 24%-49% of Indian companies depending on the sector and in most sectors they would more or less have go go into a joint venture with an Indian company to gain access to the Indian market. The logic behind this is that India would be immune to corporate raider types like Carl Icahn and domination of the Indian economy by foreign companies. There is a grain of credibility in this logic, but it does ultimately make the Indian economy less efficient and Indian companies less competitive.
I actually think companies like Walmart and Tesco would revolutionize the supply chain and logistics for food if they had more free reign in India. Something like a fifth to a third of all food stuff in India spoils before it reaches dinner tables because of inefficiencies and lack of technology in the supply chain due to dominance by numerous "mom and pop" middlemen. It would also encourage and help Indian companies become more competitive and efficient in the field as managers from foreign companies eventually get "bought out" and bring their knowledge into Indian companies or start businesses of their own.
I think another aspect that hurts the country's ranking is the congress party.
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