1. Dysfunctional politics blocking reforms in India: Princeton economist

Dysfunctional politics blocking reforms in India: Princeton economist

Talking about important medium-term priorities, the Princeton University economist said India's infrastructure sector and governance need much improvement.

By: | Updated: June 12, 2016 3:45 PM
The Narendra Modi government has already accomplished some significant reforms. Some other reforms are being blocked by India's dysfunctional politics, not by the government's inaction, says Avinash Dixit. (Reuters) The Narendra Modi government has already accomplished some significant reforms. Some other reforms are being blocked by India’s dysfunctional politics, not by the government’s inaction, says Avinash Dixit. (Reuters)

Holding India’s “dysfunctional politics” responsible for delay in essential reforms including GST, leading Indian-American economist at Princeton University Avinash Dixit has said the government needs to do more for the improvement of infrastructure and ease of doing business.

“I think the Narendra Modi government has already accomplished some significant reforms. Some other reforms are being blocked by India’s dysfunctional politics, not by the government’s inaction,” Dixit told PTI.

“… the absolutely essential reform that is being held hostage by India’s dysfunctional political process is the establishment of a uniform national goods and services tax (GST),” he added.

Dixit said the current system of complex local taxation increases the costs and delays in doing business and transporting goods, which hurt the economy.

“It is appalling that whether one is for the GST or against it depends on whether one is in the government or the opposition,” Dixit noted.

The GST Bill — which creates a single national sales tax to replace several state and central levies — has already been approved by the Lok Sabha and is pending in the Upper House where the government doesn’t have a majority.

Talking about important medium-term priorities, the Princeton University economist said India’s infrastructure sector and governance need much improvement.

The infrastructure sector demands faster transport, more reliable electricity and water supplies, while the governance requires improvement on ease of doing business front, he said.

Dixit further said infrastructure and governance will matter more for attracting foreign direct investments in the country.

“India needs not just a large population of working-age people, but a large skilled workforce. For that, education and greater female participation must be top priorities,” he added.

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