Putting Reforms Into The Fast Lane

There is deluge of positive news on India by foreign institutions in last few months. After IMF, other multi-lateral funding agency, World Bank has asserted that India’s growth story has found a new wing after change in regime at centre. The World Bank in its twice yearly report on the Indian economy has affirmed that India is set to grow at 5.6 per cent in the current fiscal that is likely to go up to 6.4 per cent in FY16 and seven per cent in FY17.  The same agency in a different report on “Ease of Doing Business” points that India ranked 142 among the 189 countries surveyed, a drop of two places from last year ranking. But I believe that this is not a concern for us for two reasons. First is, though, India’s ranking has slipped by two places our overall score has improved from 52.78 points in the previous year to 53.97 points this year. The drop in India's ranking from last year's 140 is mainly because other nations have performed much better. The second and more important reason is the latest ranking, does not take into account the slew of measures taken by Modi Government to make India a business friendly destination. Therefore, I believe it is highly likely that India will significantly jump up the ladder in the next ease of doing business report.

The factor that will really help India to move up and improve its position in ease of doing business, is stepping up of reforms. The government is already moving in the right direction as it has already started to overhaul labour rules that include amendments to the Apprentices Act 1961, Factories Act 1948, and Labour Laws (exemption from furnishing returns and maintaining registers by certain establishments) Act, 1988.  Beside this government is moving ahead with weeding out the archaic laws that have no relevance anymore. Government has identified at least 323 Acts to be repealed and bills in this regard would be presented during the next session of Parliament. More recently it has de-controlled diesel price and raised the price of natural gas by a third to USD 5.61 per mmbtu to augment reform in oil & gas sector.

Regardless of the above initiatives a lot more ground need to be covered by the government to improve business environment in country. Some of the important reforms that should be taken with priority are to ease the land acquisition rules, raise FDI limits in insurance and pension sector and early introduction of goods and services tax.

The policy reforms are need of the hour that will help India to push in newer orbit of growth. The recent victory of BJP in Maharashtra and Haryana unmistakably point towards acceptability of new economic policies by the citizen of India and government should continue and implement reforms at a faster pace.

The recent decision by the finance minister Arun Jaitley in case of black money, to reveal only those names in public where there is prosecutable evidence, reiterates the government’s commitment towards complying with the international law. Although, the Supreme Court have asked the government to disclose names of all Indians who held foreign bank accounts, it does not tar’s government’s image internationally.

All these reforms process will help India to chart a better economic growth trajectory going forward. One of the sectors that had remained in doldrums due to slower pace of economic growth in last few years is auto sector. The pickup in the economy augurs well for the entire sector, however, the auto stocks have already run up in anticipation of smooth ride ahead and right stock selection will be the key to making money in auto stocks. Our cover story details the performance of various segments and what lies ahead for them along with our top picks in auto sector.