Pitching for better business environment for startups, Reserve Bank governor Raghuram Rajan said on Saturday India has done away with the ‘licence raj’, but ‘inspector raj’ continues to some extent.
He also said regulations should be for betterment of the industry and not to discourage entrepreneurs and suggested a system of self-certification for the industries with some checks on the part of the authorities to prevent any misuse.
Advocating an easier set of regulations for small and medium enterprises in India, Rajan gave examples of the UK and Italy, saying, “We have seen that while regulations are liberal in United Kingdom, it is very heavy in Italy. It is seen that the start ups in the UK grow faster than their Italian counterparts.”
Addressing ministers, bankers, bureaucrats and other stakeholders at the 4th Odisha Knowledge Hub in Bhubaneswar, the RBI chief also said Indian economy is in the midst of recovery but some areas are still under stress.
“Some sectors are doing quite well while some are experiencing stress and they still need some pick up -- most obviously the agriculture sector which faced two successive droughts,”, Rajan said.
A good monsoon will be helpful for the growth of the economy, he added.
Stating that the government needed to create a proper environment for the start ups, Rajan said “though India has done away with the licence raj, inspector raj continues to some extent”.
He batted for lighter regulation for small scale industries and easier business environment for startups in order to foster job creation.
Rajan emphasised on new technology and new institutions to lend credit to the sector which could grow and become big enterprises after some time.
“These entrepreneurs mostly depend on small banks and credit to them is given basing on different factors,” he said adding as certain companies vanish after taking loans, the system of unique identification of promoters should be there.
The RBI governor also advocated for safety nets for the start ups besides being given skill training and access to national and international market.
Noting that land acquisition is a big problem for the sector, Rajan said the state and agencies should create land bank or industrial parks to provide land to the start ups who mostly come forward in the small and medium sector.