India’s Growth: Land & Business Reforms Key to Viksit Bharat 2047

Economists assert that resolving domestic policy bottlenecks and fostering a more predictable investment climate are vital for Prime Minister Narendra Modi’s upcoming generation of reforms. These critical areas include land reforms and an enhanced ease of doing business across the nation.

This strategic focus aligns with India’s ‘Viksit Bharat’ vision for 2047, which Modi outlined in his Independence Day address. The vision includes ‘Sapta Dhara’—seven streams of strength encompassing manufacturing, agriculture, infrastructure, soft power, and global influence—to drive economic transformation.

Driving Growth Through Micro-Reforms

N.R. Bhanumurthy, Director and economist at Madras School of Economics, highlighted the necessity of micro-reforms, especially easing land acquisition. This involves rectifying land record discrepancies, a step where states in western and southern India have shown progress and are outperforming northern and eastern states in manufacturing.

• Manufacturing’s contribution to GDP currently stands at 16-17%.
• The government aims to increase this contribution to 25% by 2035.

Crisil Chief Economist D.K. Joshi emphasized India’s need to focus on internal policy bottlenecks like land acquisition and ease of doing business amidst global uncertainties. The government has already begun addressing these land reform gaps.

Finance Minister Nirmala Sitharaman announced fiscal support for states in the FY25 Budget to improve land administration, planning, management, urban planning, land usage, and building bylaws. However, land reforms are a state subject, necessitating increased efforts from state governments.

Ensuring Predictable Foreign Direct Investment

Joshi also stressed the importance of a stable and predictable Foreign Direct Investment (FDI) policy to meet India’s substantial capital needs. This is particularly crucial following the termination of approximately 60 bilateral investment treaties (BITs) in 2016.

The termination of these treaties coincided with a sharp decline in net FDI inflows. In response, the government is actively working on an updated model BIT, with a review announced in the FY26 Budget to enhance investment predictability.

Streamlining Existing Policy Frameworks

Economists further suggested that the government should continue streamlining existing reforms, such as the Goods and Services Tax (GST). This includes bringing petroleum products under its ambit and reducing compliance burdens for uniform implementation across states.

Regarding labor reforms, Bhanumurthy advised assessing the impact of the four consolidated labor codes before introducing further changes. The overarching recommendation is to focus on removing implementation bottlenecks in existing policies to facilitate investment and capital flow into productive sectors, thereby helping India achieve an 8% annual GDP growth necessary to become a developed economy by 2047.