CII and OECD: Inclusive Growth through Greater Collaboration
In a globalized world where there is increasing interdependence among nation’s economic policies and multiple spill-over effects, the role of multilateral organizations like the Organisation for Economic Co-operation and Development (OECD) and the global governance they support is crucial to keep the global economy on the right track through collective action and policy coordination. The G7 and the G20 are key fora for such global governance through which OECD outcomes form an important layer of logical policy action. OECD’s role of providing facts and evidence based analysis for G7 and G20 nations to guide the global economy in the right direction, it has been a policy laboratory for finding economic solutions to the world’s most pressing problems.
The relationship between India and the OECD has developed steadily since 1990s in raising industry voices for policy attention, especially from the context of the developing world. To take the relationship forward, both have collaborated in a number of events, programmes and initiatives across various issues and subjects of Education, e-waste, global partnerships, Innovation among others. As a norm OECD conducts economic surveys to keep abreast of changing dynamics across the world economies.
In a recent survey done on the Indian Economy called the “OECD Economic Surveys – India”, OECD has pegged the economic growth in India at around 7½% making India the fastest-growing G20 economy. According to the study, the acceleration of structural reforms, the move towards a rule-based policy framework and low commodity prices have provided a strong growth impetus in the country. It also stated that the recent deregulation measures and efforts to improve the ease of doing business have boosted foreign investment. However, investment is still held back by the relatively high corporate income tax rates, a slow land acquisition process, regulations which remain stringent in some areas, weak corporate balance sheets, high non-performing loans which weigh on banks’ lending, and infrastructure bottlenecks are areas of concern prevailing in the business climate; as also the rate of quality job creation has been low, due to prevalent complex labour laws.
Keeping the findings in mind, the survey recommends that in order to strengthen macroeconomic resilience and growth India should ensure that government debt to GDP returns to a declining path, increase public spending on physical and social infrastructure and gradually extend the subsidy reform to other products. A prudent monetary policy, flexible labour law, improved access to education and better and earlier vocational training, creating an environment of positive competition among states in the ease of creating jobs are few factors which will infuse greater confidence in a sustained economic growth. Implementing a comprehensive tax reform to boost inclusive growth will be possible by the Removal of tax expenditures that balances out the economy.
For India – an active partner of the OECD with its involvement in ten committees and bodies in a multitude of policy areas it is imperative that measured steps be taken in areas which are high impact in nature in tandem to these global recommendations by OECD. Government of India’s regular participation in meetings and dialogue sessions to advocate for India’s policy integration with the globalized world therefore assumes greater importance than ever before.