February 19, 2020
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The State Of Reforms

The State Of Reforms


  •  Industrial licensing abolished except for a few industries
  •  Private sector role expanded
  •  Trade made free with a very small negative list of exports and imports
  •  Peak tariffs brought down from 300 per cent to 50 per cent and import duty on capital goods reduced from 85 per cent to 25 per cent
  •  Rupee made fully convertible on current account
  •  Automatic approval granted for foreign equity participation up to 51 per cent in 36 specified high priority industry groups and 100 per cent equity permitted in core sectors like power
  •  Restrictions on expansion of large industrial houses removed
  •  FERA'S restrictions significantly relaxed
  •  The Capital Issues Control Act, 1947, revoked
  •  Indian companies permitted to access international capital markets through Euro-issues
  •  Foreign Institutional Investors allowed to invest in Indian capital market
  •  National Stock Exchange set up to introduce transparency through screen based trading as also to create secondary market for debt instruments


  •  Runaway fiscal deficit not contained
  •  High interest rates continue
  •  Consumer Price Index rise not controlled
  •  Full convertibility of the rupee still a pipe dream
  •  No transparent policy on transnational corporations
  •  Depositories still not set up
  •  New financial instruments like derivatives and options not available to investors
  •  Absence of a vibrant debt market
  •  Insurance sector still closed to the private sector
  •  Infrastructure bottlenecks continue. In the absence of appropriate regulatory framework and transparent clear-cut policies, investment in infrastructure sector remain an unattractive proposition
  •  Labour laws not suitably amended to permit closure of unviable sick units
  •  Judicial framework, institutional and administrative structure not in tune with the reforms regime
  •  Stranglehold of bureaucracy on commerce and industry still a problem
  •  Plethora of permissions required to start an industry still prevalent, in spite of delicensing
  •  PSU privatisation and disinvestment as well as opening up of oil sector incomplete
  •  Discrimination against domestic companies by charging them higher tax rates on capital gains than the rates charged to FIIs continues
  •  Value-added tax not introduced
  •  Restrictions on international trade in agricultural goods continue
  •  Agriculture not given the status of industry. Agriculture sector reforms lagging behind the overall liberalisation process adopted by the Government
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