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Journalism of Courage
With economic ministries opposing the National Security Council8217;s proposal for a new law on monitoring foreign direct investment, two conclusions can be drawn. First, the NSC8217;s misguided zeal is less likely now to result in a silly new law. Second, something positive has happened in that most change-resistant of institutions 8212; India8217;s economic bureaucracy. The second point is important because it has implications beyond the current discussions on FDI and security. Indian economic administration8217;s glory days were when more or less everything was regulated. Reforms challenged that and, as Arun Shourie8217;s book among other accounts points out, the creative subversion of new policy ideas was rampant.
Not everything has changed, of course. The chemicals department8217;s attempts to micro-manage drug pricing is a good example of the regulatory ancien regime. But many major economic ministries are now votaries of liberal policy 8212; because the sectors they are responsible for can flourish only with private/foreign investment and an enabling business environment. Thus it is that the department of telecom, a veteran of battles against a liberal telecom policy, now opposes the home ministry8217;s grand paranoia 8212; 8220;sensitive and strategic sectors shouldn8217;t be controlled by entities inimical to India8221;. It is worrying, however, that our security establishment can put on blinkers as large as those indicated by the reported Intelligence Bureau suggestion that CEOs, MDs, as well as chief financial and technology officers of all FDI-financed entities must be resident Indians. Foreign citizens holding crucial, decision-making posts in companies located in other countries is so commonplace, that were India to set up restrictive rules in this matter, the real and perceptual losses could be severe. Almost as bad as those from the idea that FDI from specific countries be declared a priori suspicious. That means, Chinese colour TV manufacturers are a threat to national security.
