Incremental reforms or big bang reforms - what does India need? For policymakers and pundits that has been a vexing question.
For, if you want rapid transformation growth, reforms must ideally be big bang. But if you'd like to muddle along at a slower pace of growth, incremental reforms are the way to go.
Cyril Shroff, managing partner at Cyril Amarchand Mangaldas, presented a well-argued case for big bang reforms in an Oxford-style debate during the 2015 Forbes India Leadership Awards in Mumbai on Wednesday. Opposing him was Manish Sabharwal, chairman of TeamLease Services, who said implementation of incremental reforms targeted at specific regions of a country as diverse as India was the best way forward.
“While there is no doubt that India has achieved a lot as a services economy, if India is to become a manufacturing powerhouse, it can only be achieved through big bang reforms," Shroff argued. And such reform is needed not just with commercial laws, it is needed with labour laws and with how the courts function. Being on the receiving end of a slow judiciary, Shroff argued, "How will people invest if enforcing a contract is so hard?
Sabharwal argued in favour of a hundred small steps rather than one giant leap. "The idea of big bang reforms is incompatible with a country like India. Its labour markets are so different, why not have state-level labour reforms instead?” he asked.
He eloquently made the point that in the last year, India had a lot more labour reforms than in the last six decades. “Our provident fund rules have changed, the tyranny of the inspector raj reduced and the process of filling forms while starting a business has been digitised,” Sabharwal said. He also cited examples of countries that have adopted big leaps only to flounder - for instance, in Pakistan, every military coup is referred to as transformational, but after a few years, the country is exactly where it was before the coup, he pointed out.
India, he argued, is a lot better off with state governments working on reforming their procedures, albeit gradually, rather than the centre dictating a one-size-fits-all approach.
At the end, the audience cast their vote. The result: An almost even split with 52 percent supporting big bang reforms and 48 percent in favour of incremental reforms.
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since 1990 reforms pace is moderate as it is most suitable for such a largely populous country like india. implementation of reforms in banking sector as recommended bu NARASIMHAN COMMITTEE clearly giving results. during tha same period MEXICO implemented reforms aggressivle and was affected a lot. if it were the case in case of india we would have gone to which end we dont know. Phased manner implementation gives scope for rectification of errors if any crept in policy making. high speed always not deservedon Oct 4, 2015
There is substance in the view that "India is a lot better off with state governments working on reforming their procedures, albeit gradually, rather than the centre dictating a one-size-fits-all approach." The writers of Indian Constitution would not have imagined the political diversity within the country and global integration of several ingredients of economic growth while drafting the Constitution. Thus, the division of responsibilities between Centre and states and having a 'Concurrent List' of subjects did not provide for safety-valves in case of disputes of the kind now we are facing. Sooner than later, political leadership will have to address this issue and have a Common Minimum Programme for taking forward the business of governance.on Oct 2, 2015