Drop the pretence

The Indian economy has been in the process of opening up for so long that anyone might have been forgiven for imagining that India was at...

The Indian economy has been in the process of opening up for so long that anyone might have been forgiven for imagining that India was at last a little easier to do business in. Perish the thought. Seven years by conservative standards into reform, India remains distinguished by its intricate ways of tying enterprise up in knots. The only difference may be that whereas in the past government harassed business, government institutions now get on each other8217;s back as well.

Take two current cases, that of the Securities and Exchange Board of India versus the Ministry of Finance, and the Department of Telecom versus the Telecom Regulatory Authority of India. SEBI threatens to take the Ministry of Finance to court in the ongoing row about the HLL-BBLIL merger. The DoT takes the TRAI to court in the matter of cellular licences and wins the day. Both are regrettable cases of retrograde arms of government taking its reformist wings to court, on taxpayers8217; money. Who allowed this? Such wrangling does not ofcourse preclude government clobbering business at the same time as chanting the old-new mantra of reform. That is India8217;s famed complexity, after all. The situation is perhaps best summed up in Maharashtra Chief Minister Manohar Joshi8217;s reported eagerness to have the proposed Bombay airport named after J.R.D. Tata in acknowledgment of the aviation pioneer. This when the Tatas are forced to 8220;exit8221; from the airport plan, and when they have been made to stew in their own juice about their airline proposal.

Such a well-developed sense of irony could only be Indian. And why not? It comes cheap to the bureaucracy and the politicians. The bodies which make businesses miserable proliferate in the name of institutional regulation. The Enforcement Directorate gives individuals a bad time in the name of enforcing wretched laws, while governments talk of substituting them with better ones. Horrors such as an Aircraft Acquisition Committee are perpetrated so that government can decide how many aircraft privateairlines may buy. This so that they may not overreach themselves and go under, the poor babes. The market mantra may be on all lips, but its meaning has not penetrated minds. The essence of market reform is to create competition. Its other side is about giving companies freedom to make their decisions in order to stay profitable, alongside the risk of having to go bust for their mistakes. Is any of that true just yet in India? What kind of competition is it when, years into reform, the Directorate General of Civil Aviation requires airlines to seek its permission before cutting fares, so that the public sector airlines could be spared well-earned pain?

In the face of all this, governments and public leaders should forget blaming the MNCs for Indian businesses8217; woes. If anything gets in the way of the latter having a level playing field it is government. Further, token gestures such as raising import duties will do nothing for them. What is required is for the government to get out of businesses8217; hair -nothing more, nothing less. If that cannot happen, let India go back to the days of the commanding heights. At least the people will know then whom to blame for their predicament.