Page 29 - Nuvama | IC Report 2023

INDIA: THE 5D ADVANTAGE

From ‘policy paralysis’ to ’policy panacea’
At the start of 2010s, ’policy paralysis’ was the buzzword in Indian media. It essentially implied red
tape. During that phase, several large business projects stalled due to lack of timely approvals, and
were threatening to become non-performing assets. The Modi government’s philosophy of “maximum
governance, minimum government” has significantly helped in lowering India’s red tape.
A case in point is the jump in India’s ranking on the Ease of Doing Business, up many notches, and this
is being recognised by business leaders across the world. In 2017, Apple CEO Tim Cook mentioned
“India is a great place to be”. Even during covid, Cook reiterated that India remains important in Apple’s
expansion plans.
Exhibit 8:
India’s Ease of Doing Business ranking India ranks a
few notches
60 higher on Ease
of Doing Business
70
80
90

100
110
120
130
140

150
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: World Bank, Nuvama Research

In short, India’s perception in the world has undergone a step change—from a country afflicted by
‘policy paralysis’ to a destination that promises ’policy panacea’.

Jumping places in “ease of exit” and not just “ease of entry”

In India’s Economic Survey 2016, Dr. Arvind Subramanian, then CEA, highlighted the “Chakravyuha
challenge for Indian economy”. He argued that over the course of six decades, India has moved from Impeded exit
‘socialism with limited entry’ to ‘marketism’ without exit’. Impeded exit has substantial fiscal, economic has substantial
and political costs. The ease of exit is extremely critical for a well-functioning market economy. fiscal, economic
and political costs;
Economist Joseph Schumpeter recognised the vital role of exit via “the gale of creative destruction” the ease of exit is
in efficient workings of a market economy. It is a continuous “process of industrial mutation that extremely critical for
incessantly revolutionises the economic structure from within, incessantly destroying the old one, a well-functioning
incessantly creating a new one.” market economy

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