Opinion Making change
PM has underlined his promise of effective, easy governance. His government must follow through .
In his speech at the ceremonial unveiling of the ambitious “Make in India” programme, aimed at encouraging foreign investment and exports, Prime Minister Narendra Modi articulated a significant reorientation of the contract between the entrepreneur and the state, and a shift in the way business is perceived. He underscored the need for trust to be the default setting, rather than oppressive scrutiny and oversight, and for government, as facilitator, to step in less frequently. This marks a paradigm shift from the rote contempt for and suspicion of business that has marked the dominant sarkari culture for decades. It is in this context that a seemingly small policy alteration like the acceptance of self-certified documents — that the PM also mentioned in his speech — becomes the signal for a pivotal and much-needed change.
But the launch of a programme aimed at boosting manufacturing was shadowed by the Supreme Court judgment of the previous day cancelling all but four coal block allocations made since 1993. Without enough coal to sustain the power and steel industries, and a healthy banking system — it is currently staring at the possibility of Rs 1 lakh crore of debt going bad in the power sector alone — the manufacturing sector seems imperilled. In his speech, the PM also talked of businessmen wanting to quit India because of policy flip flops and uncertainty, and of the prerequisite for attracting firms: ensuring security of investment. Given the bitter aftertaste of the SC judgment, or of the CBI’s selective exhumations of long-ago decisions, for instance, the PM’s assurances will not be enough to reassure investors.
The PM has reiterated the promise of change that won him his mandate, but the follow through will require more than catchy phrases and alliterations. The fact is, there won’t be any FDI unless we “first develop India” as a hospitable business destination. This entails revisiting, among other things, the country’s restrictive labour legislation, the land acquisition act and the corporate tax rate, among the highest in Asia. In the immediate term, the government must do what it can to make reparations for the coal block cancellations — an auction should be held as soon as possible and earlier allottees given a right of first refusal. Manufacturing growth is a sine non qua for employment growth and development. The PM’s promises will now be tested by the capacity of his government to dig in its heels, bring in the deeper change.
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