Reforms for Effective Governance

Author: parth J Shah
Publication: Economics Lawlessness & Justice in India by Shri Ram Centre for IR & HR
Date: December 2009

The industrial sector in India has been largely liberalized. The license raj has been dismantled and now there is less emphasis on this particular aspect of the larger governance structure. That the whole informal sector is not yet liberalized needs emphasis.

The license raj exists in the informal sector as badly or even worse than what it was for the industrial sector. There is a need to focus on three groups of people which are affected by this.

One is the urban informal sector, the hawkers and the cycle rickshaw pullers seen allover the Indian cities. The issue relates to the huge amounts of corruption involved in this sector, which is not getting attention since the focus has been largely on the formal structures of corruption.

According to an estimate, about Rs. 200 per hawker or per cycle rickshaw puller and others in the informal sector is being collected by the officers of the state. If this amount is multiplied by about 5 lakh hawkers in Delhi, Rs. 10 crore a month is being collected from the poorest of the poor. There is a lot of rethinking about the liberalization process because of what has happened in the financial sector. This is the sector where liberalization is still very much required and which is at the heart of what needs to be achieved for inclusive growth and to co-opt those who have not been able to participate in India's growth story until now.

That applies to the tribal population living in the forest as well as well as the the farm labourers. The Essential Commodities Act and Agricultural Produce Marketing Companies Act are still ruling and agriculture needs to be liberalized substantially in order to give a fair chance to the farmers to stand up on their own feet.

In terms of the overall structure of governance there are several ideas, which are being floated around.

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