Here's how India can attract domestic, foreign capital

Q: If India would have been an entrepreneur looking for money and he or she came to you, what would you say he/she needs to do?

Gupta: I would suggest one yardstick, today if you look at the ease of doing business we are about 150th. We should strive to make that to at least 50 and then leave rest to the entrepreneurs, investment community. The role of politicians and bureaucrats is to make that happen. This is the only country, large economy that has the potential, not just the potential everything is placed for us to grow at 8 percent for the next 20 years.

China has done that, Korea has done that, Japan has done that, Brazil has done that, Singapore has done that, we can do it and we were on that track except the global financial crisis happened and then we had our governance crisis.

We have to reduce bureaucracy, we have to get rid of all the archaic regulations. These incremental changes in regulations don’t help because you are still carrying the legacy. The economic structure is very different, the market players are very different.

Today, you need to have a completely different set of rules and you cannot look at the past and make incremental changes, you have to look at principles, what kind of regulation do we need?

Secondly, we should try and rely on the market mechanism. Market has an amazing power to make things happen.

Regulations job should be to prevent abuses and excesses but let 95 percent of the transactions happen through the market mechanism and that is what we need.

Q: Are you confident that we can move on that path because the ease of doing business as Akhil Gupta says is we are way down the ranks. How easy is it for us to leapfrog into the top 50?Shah: It is relatively very easy. All it requires is mindset change. In some parts of India we are already doing that. In the state of Gujarat Thermax put up a project where the approvals came in 15 days and they were putting up a project in Maharashtra where approvals took about 3-years to come. So, in one part of India we know how to do it quickly, other parts have to just copy from them.Q: This is using the same regulations?Shah: Precisely.Q: Isn't that a little more difficult getting that mindset change done because if it was just a stroke of a pen it is perhaps a little easier.    Shah: There is an awareness today broadly in the political class that electorates are electing those governments which have done something for growth, something for employment. So, I don’t see a problem from changing mindset on the political side.The second thing is again from the entrepreneurs side. There have been various examples of different entrepreneurs who have succeeded in different ways. They also have to turnaround and say that we will use market as a mechanism to succeed rather than using our connections and everything else to succeed.So, we require mindset change not only at the government level but also at the entrepreneurial level.Q: How do you deepen this market?Munot: On one side you need ease of doing business but you also need a ecosystem where companies or projects can raise money both debt and equity capital, that is why some of the moves like issuance of infrastructure bonds by banks or Reits or the infrastructure investment trust and so on and so forth. However we need to ensure that large amount of savings that we have household savings and a good part of that is going into unproductive assets like real estate and gold, how do they come to financial assets and that can actually fund the productive assets, that can fund the infrastructure or housing for all or non-renewable energy or whatever all those projects.So, you need to deepen that market, ensure that long terms savings comes. We have got some 40 million odd mutual fund investors while you have 700 million bank account holders. Even if there are let's say two or three accounts of one person but still there is a huge ground to cover. The same ease of doing business, a single KYC, once a person has opened a bank account he can invest across all financial products. Similarly ensure that how the companies, the way they do it in US where they can deduct from the salary or from the payment they are making and it goes into a long terms savings, we need to build that culture and need to invest in financial education.