India’s economic potential can be unlocked through a series of twelve pragmatic reforms aimed at modernizing its legal framework, labor laws, and infrastructure, among other areas.
Until 1750, India boasted the richest economy in the world, but colonialism drastically altered its trajectory as the country entered the 20th century. Since 1991, however, India has embarked on a journey of economic recovery and is now on the verge of becoming the world’s third-largest economy. Despite this progress, the growth story remains uneven, hindered by systemic inefficiencies, outdated laws, and fragmented governance.
To realize its full potential, India requires not just one sweeping reform, but a series of twelve practical, implementable changes. These small, strategic steps can collectively drive transformational growth across the nation.
Legal reform is essential to restore faith in the justice system. Currently, India’s courts are burdened with over 60 million pending cases, leading to a situation where justice delayed is justice denied. This backlog discourages investors who are wary of markets where contracts may not be enforceable. The legal framework must evolve to protect the powerless and ensure access to justice for all, particularly for the poor who often rely on contingency fee-based legal services. Countries like Singapore and the U.K. have established specialized commercial courts that resolve disputes swiftly, a model India could adopt by digitizing filings and creating fast-track commercial benches.
Labor reform is another critical area. India’s labor laws are a complex web of central and state regulations, creating a climate of insecurity for workers and apprehension for employers. Drawing inspiration from China’s labor reforms in the 1980s, which balanced flexibility for employers with protections for workers, India must simplify its labor codes while ensuring dignity and security for its workforce.
Land reform is vital for unlocking economic growth. India’s land remains a contested resource, with outdated records and bureaucratic hurdles stalling infrastructure and housing projects. By digitizing land records and creating enforceable titles, as seen in Thailand and Vietnam, India can enhance property rights and attract foreign investment.
Establishing a robust social security system is crucial for providing a safety net for millions living paycheck to paycheck. A universal safety net would encourage risk-taking and help lift people out of poverty. Brazil’s Bolsa Família and Mexico’s Prospera programs serve as successful examples of cash transfer initiatives that have improved living standards. India’s existing direct benefit transfer model could be expanded to include pensions, unemployment benefits, and basic health coverage.
Empowering states through federalism is necessary to address India’s diverse needs. States should have greater fiscal and legislative autonomy to develop localized solutions. The U.S. and China provide examples of how states and provinces can innovate and compete to attract business, a model India could emulate to foster competitive federalism.
India’s cities, which generate over two-thirds of the GDP, must also be empowered. Many urban centers lack strong leadership and independent budgets. By adopting models from cities like New York and London, India can enhance local governance and competitiveness. Empowering cities with elected mayors and fiscal autonomy will be essential for urban growth.
Tax simplification is another area for improvement. While the Goods and Services Tax (GST) was a step forward, complexities and compliance burdens remain. Learning from Estonia’s streamlined tax system, India can create a more predictable and fair tax environment that attracts startups and foreign investors.
Infrastructure investment is crucial for reducing logistics costs, which currently stand at nearly 14% of GDP, compared to 8% in China. Countries like South Korea and Japan have successfully leveraged infrastructure for economic growth. India must accelerate investments in transportation, power, and digital connectivity to enhance competitiveness.
Education and skills development must align with industry needs. Despite producing millions of graduates annually, employability remains low due to a skills gap. Germany’s dual vocational training system and Singapore’s responsive curricula serve as models for India to adopt vocational education and training that prepares youth for the future job market.
Improving the ease of doing business is essential for fostering entrepreneurship. Despite recent improvements, starting and running a business in India remains cumbersome. By adopting time-bound approvals and reducing bureaucratic red tape, as seen in New Zealand, India can create a more conducive environment for entrepreneurs.
Addressing the employment gap is critical, as only 60 million of India’s 1.4 billion people are on official payrolls. The majority work in the informal economy, lacking benefits and protections. India must incentivize employers to formalize employment and expand financial inclusion, transforming its demographic dividend into an economic asset.
Finally, ending wage theft is paramount. Many workers are underpaid or denied overtime. Countries like the U.S. and U.K. treat wage theft as a criminal offense, which India should consider adopting. Implementing digital payroll systems and enforcing compliance can ensure fair compensation for workers.
India’s challenges are not insurmountable. By modernizing its legal system, simplifying labor and land policies, empowering states and cities, investing in infrastructure and education, and ensuring fair wages, India can unlock its vast potential. These reforms are not radical; they are pragmatic and drawn from the experiences of nations that have successfully navigated similar challenges.
The time for action is now. With political will and administrative efficiency, these twelve measures can transform not only the economy but also the lives of over a billion people. India’s destiny is not predetermined; it is waiting to be claimed. By modernizing laws, dignifying workers, and ensuring fair compensation, the aspirations of a billion people can rise to create a powerful economic force.
Source: Original article