The most significant advantage the India enjoys over China is of course its strong democratic tradition and decentralised model of governance as against China’s highly centralised model which imposes its own limitations for a modern dynamic economy in the information age. Centralisation of political power leads to inferior decisions on economic policy, loss of private sector trust and suboptimal economic outcomes, besides being leader-dependent. (Read More)
To increase the ratio to the level of China’s, India’s fiscal architecture needs to be redesigned so as to encourage both domestic savings and investment, by optimally balancing the interest rates for both. This requires reduction of individual and corporate tax rates as well as simplification of our five-slab GST structure, greater fiscal federalism, easy availability of capital and radical reformation in the factor market. Today India is amongst the most highly taxed countries, and its high factor costs and complex labour and land laws positively discourage investment. (Read More)
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