ECONOMIC SURVEY 2024-25 CALLS FOR ENHANCED DEREGULATION

The Economic Survey 2024-25, presented in Parliament by Union Minister of Finance and Corporate Affairs Nirmala Sitharaman, emphasizes the critical need for reforms to boost Indiaโ€™s economic growth. The survey argues that small and medium enterprises (SMEs) are vital for this growth. However, excessive regulatory burdens hinder their efficiency and competitiveness. By reducing these burdens, the government can help unlock new opportunities for businesses, ultimately leading to a more robust economy.

The Role of Small and Medium Enterprises

Small and medium enterprises play a crucial role in India’s economy. They contribute significantly to employment and innovation. However, many SMEs struggle to grow due to regulatory challenges. The Economic Survey highlights that the current regulatory environment often discourages firms from expanding. Many businesses choose to remain small to avoid the complexities of compliance with labor and safety laws. This tendency stifles employment generation and undermines labor welfare, which regulations were originally designed to protect.

The survey acknowledges the government’s efforts over the past decade to support MSMEs through various policies and initiatives. Despite these efforts, challenges persist. The compliance burden remains high, limiting productivity and innovation. The survey points out that reducing these burdens is essential for fostering a more dynamic business environment. By allowing SMEs to operate more freely, the government can stimulate job creation and enhance overall economic growth.

Deregulation as a Path to Growth

The Economic Survey outlines the importance of deregulation in fostering industrialization. It notes that both the Union and state governments have taken steps to simplify regulations and reduce compliance burdens. These efforts include streamlining taxation laws, rationalizing labor regulations, and decriminalizing certain business laws. The survey emphasizes that states have also played a role in this process by digitizing procedures and making compliance easier for businesses.

To further enhance the business environment, the survey proposes a three-step process for states to review regulations systematically. This process involves identifying areas for deregulation, comparing regulations with those in other states and countries, and estimating the costs of these regulations on individual enterprises. By following this approach, states can create a more conducive environment for business growth and innovation.

The Future of Ease of Doing Business

The survey introduces the concept of Ease of Doing Business (EoDB) 2.0, which should be a state-led initiative. It calls for states to address the root causes of difficulties in doing business. The next phase of EoDB should focus on liberalizing standards, reducing tariffs, and applying risk-based regulations. These measures will help create a more favorable business climate.

The survey also draws attention to the need for urgent action on deregulation. In a world facing various challenges, including environmental and energy issues, the need for growth avenues is more pressing than ever. The survey argues that without deregulation, other policy initiatives will fall short of their goals. By empowering small businesses and ensuring a level playing field, the government can foster an environment where growth and innovation thrive.

In conclusion, the Economic Survey 2024-25 presents a clear message: Indiaโ€™s economic aspirations depend on the ability of small and medium enterprises to flourish. By implementing effective deregulation and reform measures, the government can pave the way for a more vibrant and competitive economy.

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