January 16th, 2012
03:10 AM GMT
(CNN) – India is Asia’s third largest economy, the world’s tenth largest by nominal GDP and is dubbed as the world’s largest democracy. So why does India still skulk in the shadows of the world’s other rising superpower China? One reason could be that India is hamstrung by its bureaucracy.
As the Economic Times stated, India needs to reform its bureaucracy and curb widespread corruption so it can fix its global image and achieve economic growth.
A recent report from the Hong Kong based Political and Economic Risk Consultancy Ltd ranked India the lowest on a bureaucracy rating in Asia. The report shows that the country runs an inefficient bureaucracy because of corruption and inadequate infrastructure. Business executives complain about how top officials are willing to accept under-the-table payments and how in turn, companies are tempted to make such payments in order to overcome bureaucratic inertia and gain government favors, the report says.
The report defines a bureaucratic system as “one where workers in the public sector view themselves as officials in a hierarchical structure in which the higher you are on the organization chart, the more important you are.”
Onerous and fickle tax, environmental and other regulations that could make business in India “frustrating and expensive,” the report says. Dealing with the court system in India is “such an unattractive one in terms of time and costs that most companies avoid it.”
Bureaucrats are rarely held accountable for wrong decisions, the report says, and it’s extremely difficult to challenge them as they wield “terrific powers.” This could be one of the main reasons why average Indians as well as existing and would-be-foreign investors perceive India’s bureaucrats as negatively as they do, the report concluded.
The report showed that nothing has changed since the survey was carried out in 2010 where India fared the worst again. It is also this corruption and bureaucracy that has kept non resident Indians (NRIs) away from investing in India.
However, it was not all doom and gloom for India. The report did mention that India was better than the other BRIC nations, Brazil, Russia and China, as the fastest place to set up a new business and to deal with construction permits. India was the second fastest place to deal with export and import procedures.
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