Synopsis
The Economic Survey 2024 emphasizes the need for ongoing reforms by Union and state governments to enhance the operational efficiency of MSMEs, suggesting that reducing regulatory burdens will unlock new growth opportunities and improve competitiveness.Key Takeaways
- Accelerated economic growth is contingent on effective government reforms.
- Reducing regulatory burdens can enhance business efficiency.
- Compliance pressures hinder job creation and innovation.
- States should systematically review regulations for cost-effectiveness.
- Ease of Doing Business initiatives must tackle root causes of operational challenges.
New Delhi, Jan 31 (NationPress) Accelerated economic growth can only be achieved if both the Union and state governments persist in enacting reforms that empower small and medium enterprises to function efficiently and maintain competitive pricing, according to the Economic Survey 2024 presented on Friday.
Introduced in Parliament by Union Finance Minister Nirmala Sitharaman, the Survey urged the reduction of stringent regulatory constraints, asserting that governments can facilitate business efficiency, lower operational costs, and unveil new avenues for growth.
It emphasized, “Regulations elevate the costs associated with all operational decisions within companies,” it stated.
While acknowledging that the government has rolled out various policies and initiatives over the past decade to bolster the expansion of MSMEs, the Survey pointed out that certain regulatory challenges persist.
The pressure of regulatory compliance hampers formalization and diminishes labor productivity, restricts job creation, stifles innovation, and hinders overall growth.
The Survey noted a trend among firms in India to remain small, often driven by a desire to evade regulatory oversight and avoid compliance with labor and safety legislations.
It highlighted that the most significant victims of this situation are job creation and labor welfare, which many regulations were originally intended to support and safeguard.
The Union government has moved towards deregulation through governance reforms, simplification of tax laws, rationalization of labor regulations, and the decriminalization of business laws.
According to the Survey, “States have also engaged in deregulation by alleviating compliance burdens and streamlining processes through digitization.”
The Economic Survey 2024-25 articulated a three-step framework for states to systematically evaluate regulations based on their cost-effectiveness.
This framework comprises identifying potential areas for deregulation, critically comparing regulations with those in other states and nations, and assessing the financial impact of each regulation on individual businesses.
The Survey underscores that Ease of Doing Business 2.0 should be a state-led initiative aimed at addressing the fundamental causes of business operation challenges.
