India needs a dynamic policy regime, instead of stability, for the industry in future, Principal Economic Adviser Sanjeev Sanyal said on Tuesday, in his first public address after assuming office.
“We need a flexible view on policy-making. We need a simple system continuously adjusted with feedback and this is a completely different way of thinking about policy-making,” Mr. Sanyal said at the launch of Fourth Federation of Indian Chambers of Commerce and Industry (FICCI)-PwC ‘India Manufacturing Barometer’ report.
He said that the industry has always been demanding a “clear and stable policy environment.” “We will go into a new environment where the geological framework and industrial technology is rapidly changing. Do you really want a stable policy environment or do you want a responsive one?” Mr. Sanyal said, while interacting with industry representatives.
He also added that Policy-making should keep in mind that innovation by the industry can also lead to failure. “Creating framework is important but we need to have a culture of innovation which also accepts bankruptcy.” Mr. Sanyal said.
“We have created a new bankruptcy process but it is not only about the legal process. We need a cultural shift in accepting this line of thought that innovation is also dependent on some of its failures. Society needs to understand that bankruptcy is not a stigma,” he noted. Mr. Sanyal, an economist and former global strategist and Managing Director of Deutshe Bank, added.
He said that instead of focussing the debate around policy stability, it should revolve around the rule of law and the enforcement of contracts by the industry.
Manufacturing sector
Mr. Sanyal said that The manufacturing sector has not picked up pace compared with the overall economic growth. “We have a very imbalanced economy dominated by the services sector. Around 60-63% of our economy is services sector.” he said.
Mr. Sanyal said the agricultural sector, which accounts for around 40% of the total employment and contributes around 12% towards the gross domestic product (GDP), will not create the “kind of jobs we need.”
“We also need to be cognisant of the fact that the future of industrialisation may not be export-oriented. We need to adapt to a new world and that is the constraint that we face,” Mr. Sanyal said.
