India may have moved up in the World Economic Forum’s latest global competitiveness rankings and credit-rater Moody’s may be on the verge of upgrading the country, but as far as visiting US Treasury Secretary Paul H. O’Neill is concerned, India is ‘‘among the most restrictive countries in the world,’’ and ‘‘corruption and bribery are widespread, frightening away honest businessmen and investors.’’Addressing a luncheon meeting at the Confederation of Indian Industry and the American Chamber of Commerce here today, O’Neill cited various Indian success stories, including its famed presence in Silicon Valley, to soften his blows. O’NEILL’S HARDTALK • No market experimentation and implementation of new ideas • Government fails to effectively invest in the people, so that people have the education and good health that are prerequisites for achieving their goals and raising standards of living. • Nation’s leaders must make an unflinching commitment to good governance, economic freedom, and investment in people. • Good governance means ruling justly, enforcing laws and contracts fairly, respecting human rights and property rights, and fighting corruption. • Economic freedom means divesting govt from businesses, recognizing that it is the private sector, individuals implementing new ideas and pursuing their dreams, that creates prosperity; not central planning or bureaucracies. However, in a hard, unsparing look at governance, he underscored his point that sweeping reforms were needed before India could be a player in the world economy. ‘‘I have seen amazing examples of world-beating high-technology production facilities in Hyderabad’s Hi-Tec City,’’ O’Neill said, but before anyone could even begin to preen, he added that ‘‘in the same day, I have seen an HIV/AIDS clinic struggling against a burgeoning HIV/AIDS epidemic, and a police project to enforce child labour laws and get more children into school.’’O’Neill, similarly, spoke glowingly of a Hyderabad microfinance project called SHARE which lent money to groups by getting borrowers to stand guarantee for each other — he used this, however, to highlight the fact that borrowers were not able to access funds due to serious problems with land ownership rights in India and therefore the lack of collateral. O’Neill remembered Mahatma Gandhi as someone who ‘‘pioneered the vision of non-violence to effect change,’’ and used this to bemoan the fact that India ‘‘environment does not support market experimentation and implementation of new ideas.’’Despite India’s educational excellence, the visiting Treasury Secretary said, a third of Indians still lived on less than a dollar a day. O’Neill said that at 32 percent, India’s average import tariffs were more than three times higher than many Asian economies, its trade barriers remain very high and various indices of trade and investment restrictiveness rate India among world’s most restrictive countries.As a result, he said, US investment in India has languished from a peak of $737 mn in 1997 to only $336 million in 2000, as compared to China where it has gone upto $1.6 billion in 2000 from $1.25 billion in 1997.Neill used the occasion to give a classic text-book lecture on elementary economics as well. Issues such as protection to property rights, he said, were not just important for foreign investors, but applied equally to domestic investors as well.‘‘Domestic savers are the greatest source of investment for any economy, and a nation that does not respect ownership deters its own citizens from putting their money to work in the economy . (and) instead (makes them hide) their precious savings under the floorboards.’’Citing examples of industries — cellular telephony and automobiles — which had grown rapidly after the government eased controls, O’Neill said ‘‘no one wants to spend time and capital fighting a system that is unfriendly to success and fears competition.’’
