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Subject: Economics

  • RBI issues revised Prompt Corrective Action (PCA) framework

    The RBI has issued a revised Prompt Corrective Action (PCA) framework for banks to enable supervisory intervention at “appropriate time” and also act as a tool for effective market discipline.

    What is the PCA framework?

    • Prompt Corrective Action Framework refers to the central bank’s watchlist of weak banks.
    • The regulator imposes restrictions like curbs on lending on such banks.
    • The PCA Framework applies only to commercial banks and does not cover cooperative banks and non-banking financial companies.

    When was PCA introduced?

    • The RBI’s PCA Framework was introduced in December 2002 as a structured early intervention mechanism along the lines of the US Federal Deposit Insurance Corporation’s PCA framework.
    • The last PCA Framework was issued by the RBI on April 13, 2017, and implemented with respect to banks’ financials as of March 31, 2017.

    Latest PCA norms

    • The revised PCA framework will be effective from January 1, 2022.
    • Capital, asset quality and leverage will be the key areas for monitoring in the revised framework.
    • That apart, RBI has also revised the level of shortfall in total capital adequacy ratio that would push the lender to “risk threshold three” category.

    When exactly does a bank fall into this list?

    • The RBI has specified certain regulatory trigger points with respect to three parameters for the initiation of the process:
    • Capital-to-risk weighted assets ratio (CRAR): It is a measure of a bank’s capital to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.
    • Net Non-Performing Assets (NPA)
    • Return on assets (RoA): It is an indicator of how well a company utilizes its assets in terms of profitability.

    What are the trigger points on capital and how does a breach invite action?

    1. CRAR

    • If CRAR falls to less than 9 percent, the RBI asks banks to submit a capital restoration plan, restricts new businesses and dividend payments.
    • The RBI also orders recapitalisation, restrictions on borrowings from the inter-bank market, reduction of stake in subsidiaries and reduction of exposure to sensitive sectors.
    • Such sectors include the capital markets, real estate or investments in non-statutory liquidity ratio securities.
    • If CRAR is less than 6 percent but equal to or more than 3 percent, the RBI could take additional steps if the bank fails to submit a recapitalisation plan.

    2. NPA levels

    • If net NPAs rise beyond 10 percent but are less than 15 percent, a special drive to reduce bad loans and contain the generation of fresh NPAs begins.
    • The RBI reviews the bank’s loan policy and takes steps to strengthen credit-appraisal skills.

    3.Return on assets

    • If RoA is less than 0.25 percent, restrictions on accessing/renewing costly deposits and CDs kick in and the RBI bars the bank from entering new lines of business.
    • The bank’s borrowings from the inter-bank market, making dividend payments and increasing staff will be restricted.

    Significance of PCA

    • The financial health of a bank: Essentially PCA helps RBI monitor key performance indicators of banks, and taking corrective measures, to restore the financial health of a bank.
    • Averting a crisis: PCA is intended to help alert the regulator as well as investors and depositors if a bank is heading for trouble. The idea is to head off problems before they attain crisis proportions.

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  • Mixed signals on growth-inflation dynamics

    Context

    We are now at that point in the cycle where all central banks — the RBI, the US Fed, the European Central Bank, Bank of England and others — have begun to signal, a process of normalisation from the unprecedented loose monetary policy stimulus post the onset of the pandemic in early 2020.

    Recovery momentum

    • Surveys and data prints are now signalling that the recovery momentum in the first half of 2021 is decelerating in many countries, although the direction and momentum may vary.
    • The RBI Governor notes that “the external environment, which had been supportive of aggregate demand over the past few months, may lose momentum for a variety of reasons”.
    • China — its policy and economy — is the most salient risk for a sustained global recovery.
    • The Chinese authorities’ seeming determination to push ahead with structural reforms, de-carbonising initiatives, and curbs on real estate appear designed to sacrifice some short-term growth for medium-term efficiencies, and reduce financial risks and inequality.
    • Inflation in almost all major economies continues to remain high.
    • The US Personal Consumption Expenditure (PCE) survey measure of core inflation is running over 4 per cent.
    • The story is similar in Europe.

    Assessing India’s growth recovery

    • India’s growth–inflation dynamics are also becoming favourable, but are still subject to multiple risks.
    • In assessing India’s growth recovery, a risk of the global economy going into “stagflation”, going by US signals seems to be that if at all, it is likely to be mild.
    • The recovery of economic activity continues, although the high-frequency indicators we track suggest that the momentum observed in July and August has moderated.
    • Electricity consumption growth is also down from August levels, but part of this can be explained by both cooler, rainy weather, as well as coal shortage related cutbacks in many electricity-intensive manufacturing.
    • The residential real estate is reportedly doing exceptionally well, with low-interest rates on home loans, cuts in stamp duty and registration charges, and indeed behavioural shifts towards own home ownerships with hybrid and work from home shifts.
    • Even the commercial real estate sector is reviving.
    • The Union government also has large unspent cash balances, which can be judiciously deployed to boost both capex and consumption.
    • The overall inflation trajectory suggests a gradual glide path towards the 4 per cent target by March 2023 or a bit beyond.
    • There are risks of overshooting this forecast trajectory, despite a benign outlook on food prices.
    • This emanates from global metals, minerals, crude oil prices, and from supply bottlenecks persisting till well into 2022.

    Conclusion

    In summary, the growth–inflation signals remain mixed. Multiple episodes of global spillovers in the past couple of decades have taught us that imminent normalisation will have implications for all emerging markets.

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  • Why India needs a Ministry of Energy?

    Context

    The blame cannot be placed on the doors of any one entity or ministry for the shortage of coal.

    Ministries linked with coal shortage issue

    • The Ministry of Coal and Coal India must certainly accept that they slipped up somewhere — whether in managing the production process, planning supplies or leaving vacant crucial leadership positions.
    • The Ministry of Power/NTPC should also accept responsibility as they allowed coal inventories to fall below the recommended minimum in an effort to better manage their working capital.
    • But they can claim they had no other option because the state government electricity distribution companies do not pay their dues on time or fully.
    • The discoms will point a finger at their political bosses, who compel them to sell electricity to residential and agricultural sector consumers at subsidised tariffs.

    Structural issues

    • There is no one public body at the central or state government level with executive oversight, responsibility and accountability for the entirety of the coal value chain.
    • This is a lacuna that afflicts the entire energy sector.
    • It will need to be filled to not only prevent a recurrence of another coal crisis but also for the country to realise its “green” ambition.
    • The word “energy” is not part of the political or administrative lexicon.
    • At least not formally. As a result, there is no energy strategy with the imprimatur of executive authority.
    • The NITI Aayog may well challenge this statement.
    • For they have produced an energy strategy.

    Suggestions

    • Energy act: The government should pass an Act (possibly) captioned “The Energy Responsibility and Security Act.”
    • This Act should elevate the significance of energy by granting it constitutional sanctity; it should embed in law, India’s responsibility to provide citizens access to secure, affordable and clean energy.
    • The law should lay out measurable metrics for monitoring the progress towards the achievement of energy independence, energy security, energy efficiency and “green” energy.
    • Ministry of energy: Towards the fulfillment of this mandate, the government should redesign the existing architecture of decision-making for energy.
    • Preference would be for the creation of an omnibus Ministry of Energy to oversee the currently siloed verticals of the ministries of petroleum, coal, renewables and power.
    • The department would have a narrower remit than the other energy departments but by virtue of its location within the PMO, it would, de facto, be the most powerful executive body with ultimate responsibility for navigating the “green transition”.

    Benefits

    • It is important to stress the positive impact the above redesign will have on investor sentiment.
    • Several corporates have signaled their intent to invest mega bucks in clean energy.
    • Reliance has committed $10 billion, Adani $ 70 billion over 10 years; Tata Power, ReNew Power and Acme Solar have also placed their stakes in the ground.

    Conclusion

    Energy sector will be immensely benefited if the current fragmented and opaque regulatory, fiscal and commercial systems and processes were replaced by a transparent and single-point executive decision-making body for energy.

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  • How to create a truly digital public

    Context

    Despite the push for the adoption of digital technologies, large segments of Indians still can’t access or haven’t learned to trust digital artefacts.

    Issue of exclusion

    • Recognising the power of technology to drive inclusion at a massive scale, the state is doubling down on technology to reach more citizens and serve them better.
    • However, often the paradigm of technology for such services is built around the “elite” citizen, who is comfortable with technology.
    • Often, this imagined citizen is male, urban, upper class.
    • Large segments of Indians still can’t access or haven’t learned to trust digital artefacts.
    • Many among marginalised groups struggle to access digital civic platforms, and instead rely on trusted human intermediaries.

    Suggestions to make digital space truly public

    1) Design with the citizen

    • Encouraging human-centric design, and mandating user-assessments prior to roll out of GovTech platforms should be a key priority.
    • This is a shift from the default “build first and then disseminate” approach.
    • For example, formative research and human-centric design was informative in the creation of the first UPI payments app, BHIM.
    • BHIM’s simple interface and onboarding, use of relatable iconography and multi-language capabilities played an important role in early adoption of UPI among non “digital natives”.
    • Similarly, as the “Human Account” project demonstrated, it is possible to start with users in designing pro-poor fintech products, like the “Postman Savings” product which India Post Payments Bank designed for the rural poor.

    2) Harness trusted human interface to serve those who are not comfortable with technology

    •  Local intermediaries, such as formal and informal community leaders and civil society organisations, can play a key role in bridging the digital divide.
    • Working with existing networks (for example ASHAs) or carefully setting them up (such as the Andhra Pradesh Ward Secretariat programme), where pre-existing trust, community knowledge, and embeddedness can play a significant role, should be prioritised.

    3) Institutionalise an anchor entity that brings together innovators, policy makers and researchers

    • Such an entity will help to push the frontier on citizen-centricity in GovTech.
    • Such a platform — like the Citizen Lab in Denmark — can play a role in generating formative research.
    • Embedding this research in practice by partnering with the government as well as market innovators, and working with civil society organisations to enhance access to GovTech.

    Conclusion

    As India makes rapid strides in its digitalisation journey, it is timely to invoke Gandhiji’s talisman and ensure that GovTech can serve its highest and greatest purpose, that is, serving those who are last in line.

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  • How ONDC seeks to democratize digital commerce?

    The department for the promotion of industry and internal trade (DPIIT) in the ministry of commerce and industry is building an open network for digital commerce (ONDC), designed to curb digital monopolies and standardize the onboarding of retailers on e-commerce sites.

    What does the ONDC aim to achieve?

    • The Unified Payment Interface (UPI) has disrupted the digital payments domain. ONDC seeks to achieve something similar for e-commerce.
    • It aims to “democratize” digital commerce, moving it away from platform-centric models like Amazon and Flipkart to an open network.
    • ONDC may enable more sellers to be digitally visible. The transactions will be executed through an open network.
    • The system may empower merchants and consumers.
    • It will eventually touch every business, from retail goods and food to mobility.

    How would ONDC work?

    • The ONDC is still work in progress and the details are not public.
    • But what we know so far is the network may make it easier for a small retailer to be discovered.

    A boon for retailers

    • Once a retailer lists its products or services using the ONDC’s open protocol, the business can be discovered by consumers on e-commerce platforms that follow the same protocol.
    • A consumer searching for the product can see the location of the seller and opt to buy from the neighbourhood shop that can deliver faster compared to an e-commerce company.
    • This may promote hyperlocal delivery of goods such as groceries, directly from sellers to consumers.

    What are the next steps?

    • A private sector-led non-profit unit will be set up to fast-track its roll-out.
    • It is expected to provide a startup mindset enabled by a management with a futuristic vision, deep understanding of commerce and comfort with cutting edge technology.
    • A non-profit company structure removes any incentive for profit maxi-mization,
    • It would keep focus on ethical and responsible behaviour while providing for trust, rigorous norms of governance, accountability and transparency.

     

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  • Farmer suicide

    The number of agricultural labourers who died by suicide in 2020 was 18% higher than the previous year, according to the National Crime Records Bureau (NCRB) report.

    Farmers suicide in 2020

    • In 2020, 5,098 of these agricultural labourers died by suicide, an 18% rise from the 4,324 who died last year.
    • Overall, 10,677 people engaged in the farm sector died by suicide in 2020, slightly higher than the 10,281 who died in 2019.
    • They made up 7% of all suicides in the country.
    • Most of these deaths were among those whose primary work and main source of income comes from labour activities in agriculture or horticulture.
    • However, among farmers who cultivate their own land, with or without the help of other workers, the number of suicides dropped 3.7% from 5,129 to 4,940.
    • Among tenant farmers who cultivate leased land, there was a 23% drop in suicides from 828 to 639.

    State-wise data

    • The worst among States continues to be Maharashtra, with 4,006 suicides in the farm sector, including a 15% increase in farm worker suicides.
    • Other States with a poor record include Karnataka (2016), Andhra Pradesh (889) and Madhya Pradesh (735).
    • Tamil Nadu also bucked the national trend; although the total number of farm suicides in the State was slightly higher.

    Why more suicides despite a boom?

    • The farm sector was one of the few bright spots in the Indian economy since a year.
    • It recorded growth on the back of a healthy monsoon and the continuation of agricultural activities during a lockdown that crippled other sectors.
    • Hence, suicides among landowning farmers dropped slightly during the pandemic year.
    • Landless agricultural labourers who did not benefit from income support schemes such as PM Kisan may have faced higher levels of distress during the pandemic.

    General causes of farmers suicides in India

    Suicide victims are motivated by more than one cause however the primer reason is the inability to repay loans.

    • Debt trap: Major causes reportedly are bankruptcy/indebtedness, problems in the families, crop failure, illness and alcohol/substance abuse.
    • Lack of credit: Low access to credit, irrigation and technology worsens their ability to make a comfortable living.
    • Responsibility burden: In other words, debt to stress and family responsibilities as reasons were significantly higher than fertilizers and crop failure.
    • Disguised unemployment: This remains high. Fragmentation of land holdings has left far too many farmers with farms that are too small to be remunerative.
    • Mental health: One of the major causes behind suicidal intent is depression. Farmers are often subjected to fear of boycott due to societal pressures.

     

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    Back2Basics: National Crime Records Bureau (NCRB)

    • The NCRB is an Indian government agency responsible for collecting and analysing crime data as defined by the Indian Penal Code (IPC) and Special and Local Laws (SLL).
    • It is headquartered in New Delhi and is part of the Ministry of Home Affairs (MHA).
    • It was set-up in 1986 to function as a repository of information on crime and criminals so as to assist the investigators in linking crime to the perpetrators.
    • It was set up based on the recommendation of the Task force, 1985 and National Police Commission, 197.
    • It merged the Directorate of Coordination and Police Computer (DCPC), Inter State Criminals Data Branch of CBI and Central Finger Print Bureau of CBI.

    Also read:

    [Burning Issue] Farmers’ suicide in India

     

  • The three acts of entrepreneurship that accelerated India’s start-up ecosystem

    Context

    Three acts of entrepreneurship from five years ago — Jio, UPI, and GST — have converged to accelerate our startup ecosystem.

    Let’s look at each in more detail

    • Impact of JIO: India’s per GB internet data costs are just 3 per cent of those in the US.
    • A bold and risky $35 billion bet made by a private company transformed Indians from being data deprived to data-rich; consumption has jumped 15 times because costs fell by over 90 per cent.
    • The addition of millions of consumers and smartphones since Jio’s delightful five-year disruption of the market has exploded the most important universal metric in startup valuation — addressable market.
    • Affordable digital connectivity is transforming 75 crore of them into consumers, entrepreneurs, employees, and suppliers.
    • Role of UPI: Google’s letter to the US Federal Reserve suggesting America learn from India’s Universal Payments Interface (UPI) acknowledged that our real-time, low-cost, open-architecture payment plumbing is a public good.
    • UPI’s mobile-first architecture is a key pillar of the paperless, presenceless, and cashless framework of the Aadhaar-seeded India Stack.
    •  Impact of GST: GST attacked complexity and incentivised law-abiding supply and distribution chains.
    • It was long in the making but going live needed the risk-taking of starting with a second-best architecture, accepting some unjustifiable rates, and state revenue guarantees.
    • The doubling of indirect tax registered enterprises since GST creates a virtuous economic cycle of higher total factor productivity for enterprises and employees.

    Flourishing startup ecosystem

    • India now has the highest ratio of unlisted to listed companies with a $1 billion valuation.
    • Initial public offering documents filed by early startups like Nykaa, Paytm, Zomato and PolicyBazaar roughly average a 10x valuation rise since the triad did IPO.
    • Estimates suggest India’s startup ecosystem valuation will explode from $315 billion today to $1 trillion by 2025.

    Conclusion

    Gandhiji’s notion of democracy — where the weakest have the same opportunity as the strongest — needs an economic meritocracy only possible when entrepreneurs have all the ingredients in the right proportions.

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  • APVAX Initiative

    The Government of India has applied for loans from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) to procure as many as 667 million doses of COVID-19 vaccines under the APVAX initiative.

    Try this question from CSP 2019

    Q.With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements:

    1. AIIB has more than 80 member nations.
    2. India is the largest shareholder in AIIB.
    3. AIIB does not have any members from outside Asia.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”gz52xyhnb9″ question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

    APVAX Initiative

    • The ADB is expected to lend $1.5 billion and the AIIB around $500 million for the vaccine purchase by India.
    • It which has been made under the ADB’s Asia Pacific Vaccine Access Facility (APVAX) initiative.
    • Launched in December 2020, APVAX offers “rapid and equitable support to its developing member countries as they procure and deliver effective and safe COVID-19 vaccines”.
    • The Beijing-headquartered AIIB will co-finance the vaccine procurement.

    About Asian Development Bank (ADB)

    • The ADB is a regional development bank established on 19 December 1966.
    • It is headquartered in the Ortigas Center located in the city of Mandaluyong, Metro Manila, Philippines.
    • From 31 members at its establishment, ADB now has 68 members.
    • The ADB was modelled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions.
    • ADB is an official United Nations Observer.
    • As of 31 December 2020, Japan and the UN each holds the largest proportion of shares at 15.571%.
    • China holds 6.429%, India holds 6.317%, and Australia holds 5.773%.

    Asian Infrastructure Investment Bank (AIIB)

    • The AIIB is a multilateral development bank that aims to improve economic and social outcomes in Asia.
    • The bank was proposed by China in 2013 and the initiative was launched at a ceremony in Beijing in October 2014.
    • The bank currently has 103 members, including 16 prospective members from around the world.
    • The starting capital of the bank was US$100 billion, equivalent to 2⁄3 of the capital of the Asian Development Bank and about half that of the World Bank.
    • It received the highest credit ratings from the three biggest rating agencies in the world, and is seen as a potential rival to the World Bank and IMF.

    AIIB and India

    • So far, the AIIB has approved loans for 28 projects in India amounting to $6.7 billion, more than for any other member of the multilateral bank.
    • India is the second-largest shareholder after China in the bank, which does not count the U.S. and Japan among its members.

     

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  • Krishi UDAN 2.0 Scheme

    The Union Minister of Civil Aviation has launched Krishi UDAN 2.0.

    Krishi UDAN 2.0

    • The scheme proposes to facilitating and incentivizing movement of Agri-produce by air transportation.
    • It lays out the vision of improving value realization through better integration and optimization of Agri-harvesting and air transportation.
    • It works by contributing to Agri-value chain sustainability and resilience under different and dynamic conditions.
    • It will be implemented at 53 airports across the country mainly focusing on Northeast and tribal regions and is likely to benefit farmer, freight forwarders and Airlines.

    Key highlights of the scheme

    • Facilitating and incentivizing movement of Agri-produce by air transportation: Full waiver of Landing, Parking, TNLC and RNFC charges for Indian freighters and P2C at selected Airports. Primarily, focusing on NER, Hilly, and tribal regions.
    • Strengthening cargo-related infrastructure at airports and off airports: Facilitating the development of a hub and spoke model and a freight grid.
    • Concessions sought from other bodies: Seek support and encourage States to reduce Sales Tax to 1% on aviation fuels for freighters / P2C aircraft as extended in UDAN flights.
    • Resources-Pooling through establishing Convergence mechanism: Collaboration with other government departments and regulatory bodies.
    • Technological convergence: Development of E-KUSHAL (Krishi UDAN for Sustainable Holistic Agri-Logistics).

    What is E-KAUSHAL?

    • It is a platform to be developed to facilitate information dissemination to all the stakeholders.
    • This will be a single platform that will provide relevant information at the same time will also assist in coordination, monitoring and evaluation of the scheme.
    • Furthermore, integration of E-KUSHAL with the National Agriculture Market (e-NAM) is proposed.

    Airports under the scheme

    Proposed timeline Locations
    2021 – 2022 Agartala, Srinagar, Dibrugarh, Dimapur, Hubballi, Imphal, Jorhat, Lilabari, Lucknow, Silchar, Tezpur, Tirupati, Tuticorin
    2022 – 2023 Ahmedabad, Bhavnagar, Jharsuguda, Kozhikode, Mysuru, Puducherry, Rajkot, Vijayawada
    2023 – 2024 Agra, Darbhanga, Gaya, Gwalior, Pakyong, Pantnagar, Shillong, Shimla, Udaipur, Vadodara
    2024 – 2025 Holangi, Salem

    7 focus routes & products

    Routes Products
    Amritsar – Dubai Babycorn
    Darbhanga – Rest of India Lichis
    Sikkim – Rest of India Organic produce
    Chennai, Vizag, Kolkata – Far East Seafood
    Agartala – Delhi & Dubai Pineapple
    Dibrugarh – Delhi & Dubai Mandarin & Oranges
    Guwahati  – Hong Kong Pulses, fruits & vegetables

     

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  • What to do about the heavy cost of doing business in India

    Context

    The controversy over Ease of the Doing Business (EoDB) notwithstanding, India must now sharpen its focus on the Cost of Doing Business (CoDB).

    Cost of Doing Business in India

    • India has made considerable progress on EoDB rankings since 2016.
    • While the Centre’s focus on EoDB has been commendable, several state governments have also made efforts to improve business conditions.
    •  India must now sharpen its focus on the Cost of Doing Business (CoDB).
    • India lags behind other countries in terms of CoDB on several counts.

    Two key factors influencing CoDB — energy costs and regulatory overload

    • High fuel costs: Diesel prices in India are 20.8 per cent higher than those in China, 39.3 per cent higher than in the US, 72.5 per cent higher than Bangladesh and 67.8 per cent higher than in Vietnam.
    • This is largely because of heavy taxation — total taxes on diesel account for over 130 per cent of the base price in India.
    • High power costs: In the case of electricity, prices for businesses in India were higher by around 7-12 per cent vis-à-vis those in the US, Bangladesh or China and by as much as 35-50 per cent as compared to those in South Korea or Vietnam prior to the recent coal/energy crisis.
    • Coal, which accounts for more than 70 per cent of electricity generation in India, is also pricier vis-à-vis other countries leading to higher electricity prices.
    • Like in the case of the petroleum sector, government levies account for nearly half of the prices paid by coal consumers.
    • And coal producers cannot claim input tax credit because electricity is not under GST.
    • Further, coal freight costs are amongst the highest in the world as high freight rates are used to cross-subsidise passenger fares by the railways.
    • Regulatory overload: Outsized regulatory levels also pose a significant burden on businesses.
    • A Teamlease report highlights that a small manufacturing company with just one plant and up to 500 employees is regulated by more than 750 compliances, 60 Acts and 23 licences and regulations.
    • A mid-sized manufacturing company with six plants spread across different states is regulated by more than 5,500 compliances, 135 Acts and 98 licences and registrations.
    •  Keeping track of such a large number of regulations along with the changes thereof, imposes huge operational and financial costs on businesses, particularly the MSME segment.

    Way forward

    • Including fuels under GST would lower costs for businesses owing to input tax credit even if taxation levels continue to remain high.
    • Cleaning up the power distribution sector, which is largely state-controlled, could potentially lower electricity prices for businesses.
    • Fiscal incentives by the Centre: A majority of the compliances stem from the states and reducing this burden would require a significant push on states to act on this front.
    • The Centre could leverage the “carrot and stick” framework — using fiscal incentives to nudge the states to act and disincentivise them from maintaining the status quo.

    Consider the question “What are the factors affecting the cost of doing business in India? Suggest the measures to reduce it.”

    Conclusion

    The Government must prioritise reducing the cost of energy and compliances for businesses rather than focusing on de jure measures to boost ease of doing business. These will boost India’s manufacturing competitiveness significantly and further increase formalisation in the economy.

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