India will benefit a lot if it modernises its land management, streamlines courts and steps up-regulation of its troubled shadow banking system, World Bank Group President David Malpass said here on Saturday after meeting Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.
Malpass’ suggestions on further reforms come in the context of India improving its position in World Bank’s ‘ease of doing business 2020’ study released earlier in the week showing that India had moved up 14 places in this year’s ranking to 63rd position, up from last year’s 77.
Malpass said he had the chance to discuss issues related to India’s financial sector and skill development during his meeting with the Prime Minister, in which he highlighted the advantages a deeper bond market and stronger regulation of non-bank lenders could fetch India.
“India made progress in moving up to 63 in the ease of doing business ranking. We think there can be more progress inland permits and in the enforcement of contracts. I congratulate India. Even more, can be done in the future,” Malpass said.
He explained later in response to a question from Mint that one way to improve India’s performance in the enforcement of contracts, is to ensure that commercial courts are “adequately resourced at district level”. He also said that the possibility of setting up fast track courts for dispute resolution could be considered. To modernise land management, India could digitise land records, which will facilitate quick transactions inland, he said.
Malpass said that he discussed issues relating to India’s financial sector with the Prime Minister. The suggestions included facilitating the growth of private sector banks, deepening the capital markets especially the bond market, and scaling up the regulation of non-banking financial companies. NBFCs have grown in importance in the country but these entail some risks, he said. They also discussed Modi’s goal of scaling up the size of India’s economy to $5 trillion over the next few years.
Malpass said the global trade uncertainty, Britain’s plan of leaving the European Union and the low investment rate in the world are among the factors affecting growth. “I think what is to be done is to have better growth programs country by country. India has taken a good step on the corporate tax rate. That should add more growth,” said Malpass.
The Narendra Modi government, which is confronting a sharp economic slowdown, has taken a series of reforms in its second term in office, which includes making it easier for companies to access capital, rationalising various corporate compliance requirements as well as penalty provisions and sharply raising the monetary threshold for tax department to appeal on disputes.
Malpass is on a visit to India after assuming leadership of the World Bank Group in April and is exploring ways to expand partnership with India. As of June, the total net financial commitments to India from the World Bank group’s two arms — International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) stood at $25.5 billion across 101 projects. The World Bank group’s private investment arm, International Finance Corporation, has an exposure of $6.9 billion in India across 219 clients, World Bank had said last week in a statement.