The Rate of Economic Growth in India

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Arguably, India has underperformed other developing nations in terms of privatization. The country has a target of selling stakes in a number of companies, but the pace of privatization has been slow (Joshi, 2011). The country's privatization drive was going strong in the early part of the 2000s, but tailed off by the middle part of that decade, maintaining a sluggish pace since then. The trend towards deregulation has also been slow, but many believe that it has been steadier. Nevertheless, the Indian government is still viewed as being too controlling of the economy in many sectors, and this is placing limits on the country's growth potential (Venter, 2011). Likewise, India is still considered to underperform in attracting FDI, in relation to comparable economies (Srivastava, 2003). India could improve its economic performance in a number of ways by removing barriers to foreign direct investment and encouraging deregulation and privatization. Business would be able to operate more freely in India. Foreign firms are attracted by the size of India's market, but they are also dissuaded from investment because of the stifling bureaucracy and high levels of corruption. The bureaucracy also dissuades new business formation. Deregulation in particular will help encourage foreign direct investment, and the formation of new companies. At present, regulation is at high levels in India, and this makes the country less attractive than other high-growth regions.
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