‘To compete, make foreign investors feel they’re wanted’

The Government appears to be incapable of efficiently managing PSUs. Your view?Dr F S K Barar THERE is no hiatus between disinvestment and i...

The Government appears to be incapable of efficiently managing PSUs. Your view?Dr F S K Barar

THERE is no hiatus between disinvestment and improving management skills and productivity of PSUs. As a general principle, though, I believe that private monopolies are worse than public monopolies in view of differences in accountability patterns.

We need to have regulatory structures in place to prevent unhealthy monopolistic practices. However, the biggest insurance against monopoly is to promote enhanced competition.

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How can India beat China in attracting foreign investors?Shailendra Kumar

BY creating an environment in which foreign investors find themselves genuinely feel wanted and by fostering a regime which is transparent, competitive and optimises Indian’s comparative advantage in utilising productively its large base of skilled manpower.

NEXT WEEK : AIR CHIEF MARSHAL S KRISHNA SWAMY

With the induction of the Sukhoi-30 MkI days ahead of its 70th anniversary on October 8, the Indian Air Force has added reason to cheer. But once the celebrations get over, the IAF will have to return to problems that continue to nag: a spate of MiG crashes, coupled with the loss of young pilots; the controversy over spares; and, the debate over the issue of inducting women pilots in the fighting arm. At a time when air power is playing a role like never before—the bombing of Afghanistan was a clincher—Air Chief Marshal S Krishnaswamy, a former test pilot himself, has to ensure the IAF keeps pace with emerging global trends in military aviation. Shoot your queries to the air chief through firingline@expressindia.com

We also need to make institutional and procedural changes which can improve India’s image in the eyes of foreign investors. All important economic decisions need to constantly harmonise conflicting considerations because the sustainability of change can only be based on the widest possible consensus.

In a recent survey, India was listed as being among the 30 most corrupt nations. Do you still expect foreign investors to take us seriously?Anirvan Mukherjee

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CORRUPTION is an endemic problem and foreign investors do regard the high transaction cost in India as a serious inhibiting factor in undertaking investment decisions.

While all measures must be taken to eliminate corruption, the only abiding remedy is to eliminate discretionary powers through greater deregulation and increasingly moving government away from managing micro-economic decisions to creating a competitive environment for private initiative to sprout and flourish.

Foreign investors will factor in not merely corruption costs but also the government policy aimed at increasing market deregulation and creating new opportunities along with India’s other advantages like a democratic framework, accountability, an independent judiciary and a large skilled man-power base in their decision making process.

Your recommendation regarding FDI in retail is correct. Retail is one way wealth could be sucked out of our country. But retail is another way to improve upon the unemployment scenario. How about allowing 49% FDI in retail and restricting the number of players to 3 or 5 ?Avinash Muly

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I STAND by my recommendations that for the present it would be appropriate not to open the retail sector to foreign investments given its labour intensive characteristics, its presence in the unorganised sector and the potential serious implication on employment.

The checks and balances which you suggest may not be adequate to mitigate the impact that the special characteristic of the retail sector particularly on employment.

What, in your view, would be a workable model to increase FDI inflows that reconcile our interests with the need to pursue reforms?Nishant Maurya

THERE is no dichotomy in promoting foreign investment and protecting domestic interests. Foreign investment enhances overall investment ratios and enables the country to achieve higher levels of productivity and GDP growth.

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Of course, it is necessary to achieve an orderly transition which is non-disruptive for labour and small scale industry.