The Government also has not done enough to reduce the cost of land, labour, capital and Power. Once that is done, India will be able to compete globally.
Somehow the Government must prick the land asset bubble, so that the land is available at a cheaper rate and easily. That will help both industrial and infrastructure development.
In India the cost of labour is not cheap at all considering the skill sets. Whoever calls it cheap needs to see the inefficiency of labour in India.
COST OF CAPITAL
Cost of capital is too high only because of huge inter mediation costs charged by banks. Banks earn about 4% NIMs and that is a big cost. Proper development of bond market will help corporate avail of cheaper capital. However the Government needs to ensure that bond investors are not taken for a ride and bond trustees really protect the interest of bond holders.
In India, Power costs is quite high due to theft, transmission losses and subsidy. Somehow the costs of Power should be brought down by curbing all the above three.
If the Government can do all of these things, it will really provide long term boost to Indian industry’s competitiveness.
TO IMPROVE TRADE DEFICIT
The Government has not done enough to attract investment in Oil and Gas exploration, Consumer Electronics and White Goods manufacture and curbing imports of gold. If the Government can successfully do all these three, India’s trade deficit will be vastly reduced and lot of foreign exchange will be saved. That will result in rupee getting stronger, which is a real sign of the wealth and prosperity of a nation.