Beyond staying the course

Many policies available to the Centre (and potentially states), none radical, can even lead to faster growth in the short run while India's demographics are still favourable

- NIRVIKAR SINGH

INDIA'S RECENT UNION Budget had the flavour of "staying the course", which is not surprising, given the continuity of the government at the Centre. There were proposals for adjusting personal income taxes, incentivising private sector research and development (R&D), providing more credit to micro, small, and medium enterprises (MSMEs), development of nuclear energy, and the usual number of more-or-less targeted welfare schemes.

The Indian economy has demonstrated that it can grow comfortably at 6% a year, given its current capabilities and policies. Only major global events, such as financial crises or pandemics, affect that trend. The challenge is accelerating growth so long as the country enjoys favourable demographics, while also facing some global headwinds caused by conflict and an inward turn by the US.

One key aspect of India's economic strategy has been to be more "pro-business". This can mean many things. Broadly, it means less regulation of businesses, a process that has been going on for decades, but not in an even manner: in some dimensions, regulations remain cumbersome and even irrational. Of course, they are meant to protect workers, consumers, and citizens in terms of health, safety, and uncompensated harms of any kind. So, deregulation is not a trivial exercise. This year's Budget and Economic Survey seem to get into the details of this issue more than in the past, and the focus on reducing the regulatory burden of MSMEs has increased.