Ending the Inspector Raj

Prime Minister Atal Bihari Vajpayee has complained that the media is far too obsessed with negative news. He can certainly help get some positive news if he follows up on his observations at the annual general meeting of the Federation of Indian Chambers of Commerce and Industry FICCI with some action on the ground in the area of economic reform.

Vajpayee is correct to bemoan the 8216;Inspector Raj8217; that harasses business enterprise. Compared to around five inspectors that a firm has to deal with even in a non-democratic country like China, businesses in India have to contend with anything from 30 to 40 inspectors at various stages of production, distribution and sale of goods. A labour inspector, a tax inspector, a health and environment inspector and a factory inspector are about as many inspectors that most firms in modern industrial countries have to deal with. In India, there are central, state and local inspectors triplicating the work in most areas of inspection. To add to this there are inspectors in wholly unimportant areas of an enterprises8217; activity. The burden of the Inspector Raj is made worse by corruption. Rather than ensure good corporate governance, such inspectors often end up as fund collectors for politicians and officials in power. A bonfire of inspection rules is called for. If Vajpayee can enthuse his government to take the initiative, many state governments can also be asked to join in and a policy big bang can help change the image of the NDA government.

Vajpayee also, quite correctly, regretted inadequate movement on other fronts in economic reform. The Union disinvestment minister, Arun Shourie, who presently holds additional charge of the commerce ministry, has also called for some fresh thinking in the area of economic policy by asking whether India8217;s stance on the Doha Development Agenda of the World Trade Organisation should not be re-examined. Shourie is right to ask whether India8217;s stand at Doha, which served a purpose at the time, should now not be altered. Many countries that stood by India at the time are cutting quiet deals with developed countries in exchange for a range of favours. If India decides to rethink its resistance to at least some of the Singapore issues, it will call for further speed being imparted to the domestic reform programme. Vajpayee can get all the positive press he wants if he now chooses to focus on economic policy and pushes for higher economic growth.