‘India needs another round of reforms’

OECD Deputy Secretary-General Richard Boucher believes India should keep reforming its economy to continue on the growth track irrespective of the forthcoming elections.

In an interview to Business Line on the sidelines of the World Economic Forum for East Asia in Nay Pyi Taw, Myanmar, he made a strong case for easing regulatory hurdles and taxation reforms. Excerpts from the interview:

What do you think India should do to reverse the slowdown in its growth process?

Part of India’s slowdown has to do with external factors. But our basic view is that India needs another round of reforms. You started that last September.

The country has to open up some more to competition even if there is an election coming up.

It will bring much broader benefits if other sectors are opened up as opposed to one specific sector.

What can be done in the short run?

It has to keep smoothing the way for projects. Focus has to be on how to reduce the regulatory burden on projects and companies. We are now starting the next economic survey of India which will come out next year. A lot of reforms that we want to see are the ones that are already underway. But you need a political push to get them through.

What kind of regulatory hurdles are you talking about?

We don’t want to say no environmental reviews. Big projects need environmental reviews. You just need to structure them in a way that is simple. Having to make the rounds of 20 different offices, when one can go to one place, is not desirable.

OECD recently came out with a paper on Base Erosion Profit Shifting (BEPS). How is it relevant for India?

The way the world trades has changed. Manufacturing value comes not only from pieces and parts, but also from services, business process and brands. Companies structure their business process in a way they pay least amount of tax. It decreases the capacities of taxation authorities and national governments to tax the process.

But it is mostly the multinational companies that get away with it whereas domestic companies that are smaller can’t do it. It is fair for both companies and nations to develop a new idea of how the value chain should be taxed. What parts get taxed and how things should be priced. That is the idea behind BEPS and India is contributing strongly to it.

So will this put an end to the tax disputes that the Indian Government have with companies like Apple and Vodafone?

What I am saying is that it will give everybody — Apple and the tax authorities, Vodafone and the tax authorities, Starbucks and the tax authorities — a clear idea of what gets taxed and where.

What is the progress on India’s participation in OECD’s anti-corruption initiative?

India is an active observer there. People from the ministry of personnel, CBI and other departments have used the platform to make contact with other people in the world they want to talk to. India has got a proposed legislation in front of Parliament to ban bribery of foreign officials which is a commitment it has made in the UN convention against corruption. It is the same commitment that is required to participate in the anti-bribery committee of the OECD.

amiti.sen@thehindu.co.in

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