India has under-invested in social capital: Singapore Deputy PM
India’s restrictive employment and land acquisition laws, its school education system, which is marred by a high dropout rate, and the lack of formal employment opportunities for the youth, are responsible for holding back the nation from achieving its true potential, Singapore’s Deputy Prime Minister Tharman Shanmugaratnam said.
“India has over-intervened in its economy and under invested in social and human capital. India has overreached itself in regulating its economy… to achieve its full potential it will, therefore, have to do less in some areas and do a lot more in other areas,” he said.
Ideology vs Legacy
“It has to withdraw from its own role of the state, economic regulation and ownership that restrains private investment and job creation and also preserves incumbents, existing players at the cost of new ones,” he pointed out.
The challenge, he said, is less about ideology than about legacy that comes from the “sheer weight of rules and laws of the bureaucracy and vested interests in society.” There is a need to tackle such legacy issues decisively to fulfil India’s potential, Mr. Shanmugaratnam said while delivering a lecture under the aegis of NITI Aayog’s ‘Transforming India’ series.
“It doesn’t mean smaller ambitions in government, but different ambitions,” he said. Stressing that India is uniquely positioned to recast the global narrative, he said that the country needs to grow at a rate of 8 per cent to 10 per cent over the next 20 years if it is to create jobs and achieve inclusive growth.
For a nation with 18 per cent of the world’s population, India accounts for just about two per cent of global exports.
Highlighting the lack of formal job opportunities and the limited transition of the workforce from agriculture to the manufacturing and services sectors, Singapore’s Deputy PM drew attention to the sharp gap between the small number of large firms in the country and a large number of small companies.
Land acquisition
“It is your employment laws and land acquisition laws that actually discourage firms to become larger,” he said.
