State Must Create Inclusive Political, Economic Institutions To Grow

To grow the nation, the state must create inclusive political institutions such as government and elections along with smooth power transition and economic institutions like property rights, abolishing monopolies, creating a competitive environment for businesses to grow and allowing new technologies to come, said Sudhuanshu Sarangi, IPS, Director General, Fire and Emergency Service, Commandant General, Home Guards and Director, Civil Defence, Odisha.

While speaking at the ninth pan Indian Institute of Management (IIM) world management conference at IIM Sambalpur, he said that when the country does not abuse power and corruption, the nation will grow. 

Sarangi stated, “The problem when we look at India is that we are growing at five to six per cent (GDP), whereas we are required to reach ten to 12 per cent. We have a state, we have elections, but to what extent it is inclusive and what more needs to be done is the challenge.”

Sarangi asserted that the countries which are struggling to create inclusive state institutions are facing hurdles because the state lacks the capacity. The economic success has to be processed with governance reforms. One can not have economic success first and then governance reforms, he stated.

“If you fail to create an inclusive government, you leave out 30 to 40 per cent of your population, particularly certain sections of the society and then you will have a situation when the state will be under threat,” he added.

Economic growth And beyond

While talking about India’s economic growth and achieving the target of a ten to 12 per cent growth rate, he talked about the neighbouring nation China. In the last quarter, China has seen negative Foreign Direct Investment (FDI), but for the last 20 years, they have been doing amazingly well as in quarters they were getting USD 100 to 200 billion of FDI which we get in a year, he stated.

The reason behind the massive FDI, he said was because that is the way governance was running, the business environment and ecosystem were operating. 

Shedding light on the more FDI inflow expectation, Sarangi asserted, “Money is not going into China and is definitely coming to India but getting distributed. Our ability to attract more investment depends upon the ability to get our governance right.”

Emphasising more about a stable investment environment, he further stated that India needs to get its judicial system right as a contract law enforcement can not take 25 years and there should be proper law and order and security. “If you can maintain law and order, GDP will grow two to three per cent straight away,” Sarangi mentioned.

Abhishek Sharma

BW Reporters Abhishek Sharma is a Correspondent with BW Businessworld.