Tuesday, Nov 29, 2022

Inside, outside: Reforms derailed, image defaced

Reputation is all. Even by itself it is enough to lead the investor to look elsewhere. We delude ourselves believing that investors will com...

Reputation is all. Even by itself it is enough to lead the investor to look elsewhere. We delude ourselves believing that investors will come one way or another — for they are lusting after the Indian market. Examples we are familiar with here at home will show that such presumption is nonsense.

The youth that have taken to arms, to kidnapping, to ransom and extortion in the North-east have given the region a bad reputation. You and I may keep saying that Nagaland is at peace today, that ULFA is active in only a few pockets of Assam. For the busy investor, the ‘‘North-east’’ is one composite blur: incidents anywhere in the region, reinforce the feeling in the investor’s mind, ‘‘That place spells trouble.’’

Similarly, you and I know that India is a continent — that there is trouble in Kosovo does not mean that Europe is aflame; Yes, Kashmir is still troubled but, you and I know, Punjab settled down long ago. But to the busy investor ‘‘India’’ is one undifferentiated whole: killings and arson in Gujarat are not killings and arson on in the western part of India, they are reminders that ‘‘India’’ is enmeshed in internecine violence. Still.

And a bad reputation, once acquired, sticks. Recall the militant trade unionism of West Bengal Marxists of the ’60s and ’70s. Thirty-forty years have gone by. Private industry — private industry from within India — shuns the state to this day. When that is how events of 34 years ago affect the perception of industrialists from within India about a region within India, how much more will they affect the foreigner, and the foreign government: his information about India is certain to be that much less detailed than of an Indian about a part of India; and he is certain to spare much less time to learn about the country than an Indian is liable to do when it comes to assessing a region within the country.

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Too many voices

India is at a ‘tipping point’, at another moment when it can lose focus for years again. The fiscal crisis is getting more intense; the polity more immobilised whether on the issue of Budget proposals or modernising labour laws

You have directed the execution of a project in India, a Singapore Minister was asked, you have also executed a project for your country in China: what is the one factor which accounts for the fact that China is growing at 9 per cent a year, and India is growing at 6 per cent?

He replied in one word: ‘‘Focus.’’

The Chinese have set one goal for the country — growth — he explained. They do not let anything detract them from that goal. They decide what they need to do next to attain that goal, and they ensure that those things get done. From the President down to the local authorities, they work in one direction, they speak in one voice. In India, you are deflected by something or the other every other day, on every matter you are talking at cross purposes.

Every institution in the way of every other institution. Within every institution — for instance, the bureaucracy — anyone and everyone with enough power to throw the machine out of gear for months — raise a doubt, ask a question on file, recommend that the following alternative be examined before a final decision is taken – but with no one with enough power to see a decision through. A public discourse that revels solely in problems, not solutions, that lunges for every imaginable negative in each solution…. Since 1962 — the year from which Panditji began losing his grip — it is only occasionally, it is only for two-three years at a time that India has had governments with a focus. A generation lost to socialism. A generation and more, to disarray.

Point of tipping over


Once again, the country is at that kind of a ‘‘tipping point’’, another moment when it can lose focus for years again. Reforms in particular are at that edge. And there is an irony to the moment. On the one side, the fiscal crisis is becoming more intense — so much so that government after government is unable to pay salaries to its staff – and government after government is gravitating to the same solutions: privatisation is a ready example. The Congress-I Government of New Delhi is today trying to privatise the Delhi Vidyut Board, whose accumulated losses exceed 23,000 crore. The initial moves for privatising the Delhi Transport Corporation as well as the Delhi Jal Board have already been initiated. In faraway Karnataka, the Chief Minister, Mr. S. M. Krishna, has enunciated his policy towards the state’s public sector units as follows: ‘‘We will privatise all state owned enterprises. Those which we cannot privatise, we will close.’’

A bad reputation always sticks. 34 yrs after the militant trade unionism of the ’60s and ’70s West Bengal Marxists, private industry shuns the state to this day. When that’s how events of 34 years ago affect the perception of Indian industrialists, how much more will they affect foreigners, foreign governments?

That is one side of the picture: identical problems leading government across the political spectrum to identical solutions. And the other side: a polity getting even more immobilised. Whether the subject is budget proposals or implementing the announcements on lowering government equity in banks or modernising labour laws — the situation is the same.

Stand by reformers

What should be done in such a circumstance?

First, do not go about announcing what you intend to do. Let what you have done, speak for you. But if you do announce something — howsoever trivial — see it through.


Second, stand by everyone — anyone — who stands up for the right course. Let me do the politically incorrect thing and name only those who are from other parties. When Captain Amarinder Singh takes steps to expose corruption, stand by him. When Mr. Ashok Gehlot stands up to government employees, and when Mr. A.K. Antony does so, stand by them. When Mr. Gehlot cuts power to 700 villages that have not discharged their dues, stand by him. When Mr. Chandrababu Naidu raises power charges, stand by him…. Anyone — from whichever party — who carries through a reform in any part of the country today, enables others to implement reforms where they are in office.

Indeed, in the current situation it is almost impossible for any government — state or Centre — to implement reforms, specially those that are desperately needed, on its own. For instance, the back of government after government has been broken as a result of the Fifth Pay Commission. But which government can by itself stanch the ever-burgeoning emoluments and allowances of its employees?

The only way the step could be taken is if it were to be taken by all governments at the same time. I have not the slightest doubt that soon enough the bind will become so acute that all our governments will just have to implement harsh measures. But even a modicum of responsibility should induce them to make common cause with each other before that avalanche, and take those inevitable steps: for who can fine-tune an avalanche?

We need to stand by everyone who stands up for the right course. Let me do the politically incorrect thing and name only those from other parties: stand by Amarinder when he exposes corruption; by Anthony when he stands up to govt employees; by Naidu when he raises power charges

Third, some changes in law are just unavoidable: everyone bewails ‘‘non-performing assets’’ of banks, to take one instance; but to enable banks to seize the assets of defaulters we need a new insolvency law. Can we, therefore, expect at least two simple steps from those who preside over our legislatures?

To start with, let presiding officers exercise the powers they already have — of naming members who disrupt proceedings, of expelling them. Second, put a time limit at the tail of the device that was introduced a few years ago. As the whole House was less and less able to weigh details of proposed legislation, Bills began to be referred to Select Committees and Standing Committees. But several Bills have been lying with these committees for up to a year and a half, for two years. Why not introduce a simple change? When a committee does not return a Bill within, say, four months, it shall be deemed that the committee wants the Bill to be considered by the House as it has been proposed.


Of course, that still requires that the House function to consider the Bill! As that may not happen often enough, it would be best for Government to focus on things that can be done without passing new laws, without new ‘‘policy’’ and ‘‘vision’’ statements. In part this is so because, given the stalemate in Parliament, for instance, it is just not going to be possible to get laws through at the moment. In part also because proposing legislation, drafting and broadcasting ‘‘policy’’ statements, ‘‘20/20 visions’’, even Plans, has become a substitute for actually putting them in practice. And neither people within the country nor observers and investors abroad are moved by these announcements any longer. Quite the contrary: so deep is announcement fatigue that the more visionary the statement, the more cynicism it ignites.

Prosecuting corruption cases expeditiously. Privatisation. Simplification of taxes. Tightening tax collection. The reform of financial institutions: IFCI has defaulted a second time, twenty-odd cooperative banks are on a sort of ‘‘endangered list’’, three commercial banks remain in difficulties. Pension reform. Cutting down the delays in courts: recall the simple administrative measures by which arrears were reduced in the Supreme Court during Justice Venkatachalliah’s Chief Justiceship. Expeditious execution of projects — remember that the PM had announced that this would be ‘‘the year of implementation’’, and that a hundred large projects would be executed at record speed. Concentrated attack on cases of corruption. Standing up to recalcitrant unions…. None of these requires new legislation. Yet each of them would yield immediate dividends – for the country, of course, and, I venture to suggest, even for he government that undertakes them.


Fourth, for the time being focus on what can be done through the courts. Decision-makers in the judiciary are so much fewer than in other institutions: 26 judges in the Supreme Court, 600 or so in the High Courts. They are much more amenable to reason, evidence, dialogue. And, finally, there is a new mood in the courts. The BALCO judgement, that on contract labour — several straws suggest that judges are becoming increasingly aware of the ways in which their earlier ‘‘progressive’’ judgements have come in the way of economic progress. But one should not leave the outcome to the random processes by which cases come up in courts. All who are interested in reform — those in public life, leading lawyers, industry, commentators — should get together: identify the judgments that have become millstones, in particular pronouncements in which the zeal of progressive judges carried them beyond what had been legislated; pinpoint the cases in which they are coming up for review; coordinate efforts to present irrefutable evidence, the best arguments through the very best lawyers to the courts in each of those instances.

These are tiny steps, indeed steps that many would dismiss as being in the second order of smalls. But when we have been forced to stand still, even small steps will do: as a country today we have to first dispel the impression that the current stalemate has completely immobilised us, and that we are going to remain immobilised for the foreseeable future.


(Concluded. Based on the author’s address at a plenary session of the CII’s annual meeting held in New Delhi)

Rising sun, setting economy: some lessons from the Far East for India

First published on: 08-05-2002 at 12:00:00 am
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