Economic Survey to focus on land reforms for ease of business
Simplifying and maintaining a business-friendly regulatory environment remain essential to boosting growth, Nageswaran had recently said
India’s regulations, especially those related to land utilisation, still hamper the ease of doing business, a key issue the government’s Budget-eve Economic Survey, to be tabled in Parliament on January 31, will focus on, HT has learnt.
Low-margin small businesses are hobbled by tight land rules, even as the country aims to leapfrog to a five-trillion-dollar economy, the survey, led by chief economic adviser V Anantha Nageswaran, is set to highlight, underscoring the need for more reforms, a person with knowledge of the matter said.
Simplifying and maintaining a business-friendly regulatory environment remain essential to boosting growth, Nageswaran had recently said.
The government this month lowered its economic growth projection for the fiscal year to 6.4%, the weakest since the pandemic and a burst of reforms are expected to be announced in the upcoming Budget 2025-26, the person cited above said.
The first advance estimates of growth for the year through March 2025 undershot the Reserve Bank of India’s recently lowered projection too.
To be sure, India ranked 63rd in the World Bank’s Doing Business Report (DBR), 2020, which has been since discontinued. The country’s rank in the DBR improved from 142nd in 2014, clocking a jump of 79 ranks in a span of five years.
The manufacturing sector in Asia’s third-largest economy had become “overly complicated” for small and medium enterprises (SMEs) due to onerous regulations, especially those related to land use, Nageswaran had said on January 20, addressing bankers.
“Land is subject to so many regulations that enterprises are not able to use it fully. Any law-abiding SME will not be able to utilise even 20-30% of the land on the ground floor. We have made manufacturing more complicated,” he had said.
The country has the lowest per capita land availability among G20 nations and parking and other regulations force manufacturing units to be built on stilts, shrinking land use, which will be highlighted in the forthcoming Economic Survey, a document that assesses key sectors of the economy.
“To ease the constraints and gaps in the regulatory processes involved in doing business, it is necessary to assess the country’s progress vis-à-vis other leading economies on various parameters,” the official cited above said.
Micro, small and medium enterprises (MSMEs) continue to face challenges, especially in the light of changes introduced through Section 43B of the Finance Act, which mandates that payments due to MSMEs are eligible for tax deductions only if the payment is made within 15 days or within the agreed contractual period, the chief economic adviser had recently said.
The Economic Survey is set to recommend reallocating agricultural land within farm sub-sectors that are performing well, describing agriculture as the “sector of the future”.
