Essay on Corporate Governance Reforms for Problems and Growth in Indian Economy

Various Current Issues of Indian Economy:

Indian economy encounters various issues like unequal circulation of wide range, joblessness due to lack of proficient labor force, non-recovery of small business loan, and rupee dropping as a result of reduced export and also trade battle at the globe level. This situation has been exacerbated by the global recession and recession in the USA that has hit the industrial sector hard.

The present scenario is not sustainable. It is highly dangerous for the Indian economy. An aggressive growth strategy is needed to overcome these problems. A strategy to grow by 5-8 percent in the medium term could be effective.

Please Check and recheck data from other sources.

Low Rural Purchasing Power needs to be raised:

1. Raise the purchasing power of the peasantry. The value of agricultural produce in today's market is negligible. The minimum purchase power is Rs 10,000 per annum. In terms of rural purchasing power, the present value of this purchasing power is estimated to be about Rs 2 lakh crore. This figure needs to be raised to achieve sustainable growth by 2020. This will be done by hiking the price of vegetables, fruits, tea, wheat, and fertilizer at the world market. In addition, there is scope to introduce price regulation as a strategy. The present government has introduced new policies like Buy national Food Security Program, National Food Security Act, and National Agriculture Growth Mission.

Purchasing Power of Industrialists:

2. Raise the purchasing power of the industrialists. The minimum purchase power of industrialists is about Rs 35 lakh crore. This amount can be increased by introducing policies like the Corporate Social Responsibility Act, Income Tax Reforms, National Integration Board, and Corporate Apprenticeship Act. Also, an integrated corporate structure for maximum corporate social responsibility can be done.

Private investment to be Encouraged:

3. Encourage private investment. At present, only 20 percent of corporate profits go for R&D and about 80 percent go for buybacks. This ratio needs to be changed. One option is to move towards a market economy whereby corporate buybacks will still account for a significant proportion of corporate profits. This would also boost employment in terms of employment for those employed in corporate buyback schemes and apprenticeships. Also, corporate profits that have to be invested in buybacks should be tax-efficient.

Taxation Reform:

4. The present regime of personal income tax is progressive and has a lower rate for the higher income bracket and a higher rate for the lower income bracket. A very regressive tax regime. The rate of corporate tax is quite regressive also. An alternative will be to move towards value added tax. The income tax regime is already a bit regressive. The present government has introduced two other regressive taxes. These taxes are energy tax and carbon emissions tax. These taxes are regressive tax regimes and it should be encouraged that corporations pay these taxes through enhanced taxation.

Corporate Governance reform:

5. Some of the reforms are corporate governance reforms, environmental reforms, labor reforms, procurement reforms, and financial reforms. Integrated corporate governance can be done by the incorporation of corporate governance structures (corporate governance reforms). The corporate structures can be brought under a corporate agreement (corporate governance reforms) or a board of directors (environment).

Procurement Reform:

Corporate practices that should be encouraged are changes in the procurement regime and procurement reforms. Also, some of the procurement practices that are now carried out by corporates can be encouraged like market evaluation of selected products/services.

In the procurement reform, it is proposed to change the criteria for procurement from discretionary to mandatory, which will give more freedom to the procurement manager to choose products/services based on the market conditions. In this way, market failures can be encouraged and the consumer will be happy. Also, some of the procurement practices that are now carried out by the corporates should be encouraged such as stock management. ( procurement reform).

Labour Reform :

Corporations should be encouraged to adopt labour reform to ensure a better quality of labour. Some of the labour reforms that can be encouraged are: the creation of a new department of Labour Management and enhancement of the role of the labour commissioner.

What is Embrace Reform?

Embrace reform is to change the management practices of corporations. Also, some of the corporate practices should be encouraged. They are changes in the procurement regime, procurement reforms, and labour reforms.

With Embrace Reform the procurement manager will have more scope to choose products/services based on market conditions. Some of the procurement practices that are now carried out by the corporates can be encouraged such as stock management and appraisal of selected products/services.

Embrace reforms are to change the procurement regime. Also, some of the practices of the procurement manager can be encouraged to ensure that no waste is leftover from selected product procurement.

Corporation Reform:

Corporation reform is to change the management practices of corporations. Also, some of the practices of the corporations can be encouraged to ensure that stock management is ensured. Also, some of the procurement practices that are now carried out by the corporates can be encouraged as they will be carried out according to market requirements.