Every state has a role to play: Modi

Every state and district of India has a role to play in the country’s efforts to transform itself into a $5 trillion economy by 2025, Prime Minister Narendra Modi

Every state and district of India has a role to play in the country’s efforts to transform itself into a $5 trillion economy by 2025, Prime Minister Narendra Modi said on Thursday, stressing the importance of healthy competition among state governments and the need to provide an enabling ecosystem for investors.

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“Every state and every district of the country has great potential and they will play a vital role in achieving the target,” Modi said at the inauguration of an investors’ summit organized by the Himachal Pradesh government in Dharmshala.

The ruling Bharatiya Janata Party (BJP) promised to make India a $5 trillion economy by 2025 in its manifesto ahead of the national polls in April-May although declining economic growth, which decelerated to a pace of 5% in the quarter ended June, the slowest pace in over six years, has caused some economists to wonder if the target wasn’t too ambitious .The size of India’s economy was estimated at $ 2.75 trillion at the end of March.

In his speech, Modi noted India’s climb up the World Bank’s Doing Business (DB) 2020, a measure of how easy it is do business in the country, as it aspires to become a business-friendly destination, improve service delivery and the ecosystem for investors. India ranked 63rd in DB 2020, a 14-notch improvement over last year.

“This is not only an improvement in ranking but a revolution in the style of doing business in India — new dimensions are being added to it every year,” the PM said.

He said the outlook of the states too had changed. Where earlier, state governments offered discounts and concessions to attract investors, they have now realized that such incentives benefitted no one, neither the states nor the investors, who simply wait for competing governments to offer them better terms.

An enabling ecosystem that’s free of the so-called Inspector Raj and where they didn’t need to run around for permits at every stage is needed to be in place to attract investors, the PM said.

“Healthy competition among states would enhance the competitiveness of our industries on the global platform,” Modi said, listing steps taken by the government to make the climate for doing business more conducive.

“We implemented GST {Goods and Services Tax}, which was considered impossible in India,” he said, referring to the overarching tax that subsumed a raft of central, state and local taxes. Earlier, companies had no clear exit route, but today, “the Insolvency and Bankruptcy Code is a reality and helping recover lakhs of crores of rupees,” he said.

Unwanted laws and government interventions, he said, only put the brakes on the progress of industry. Because of changes put in place over the years, “India today stands out as a business-friendly destination,” the PM said.

Modi noted recent announcements by his government to benefit corporate taxpayers and transform itself into a low-tax economy.

The government slashed the corporate tax rate to 22% from 30% for existing companies, and to 15% from 25% for new manufacturing companies, sacrificing ~1.45 lakh crore in annual revenue.

He also cited Wednesday’s decision to set up a ~25,000 crore fund to revive stalled housing projects, which will help 458,000 families that have invested in buying apartments whose construction has come to a halt.