Profit Motive instills efficiency

Sunday, August 12, 2012

Govt of India's incompetence in building a business friendly environment

Article in TOI by Jaithirth Rao. The sarcastic and humorous nature in which the article was written only explains the state of Indian Enterpreneurs...... if the govt allows any enterpreneurs to exist.
The irony of the present impasse in our country is that Indian businesses may have been freer under British rule than under our own political masters. Of course, throughout the permit-licence raj this fact was so obvious that no one even bothered to bring it up as a matter worth discussing. In the 1920s, JN Tata was able to build a steel plant in India. Between 1956 and 1991, no citizen of free India was allowed to imitate JN Tata.
In the early nineties, the understated (and under-estimated?) Narasimha Rao liberated Indian entrepreneurs. Within a decade, Indian businesses had delivered spectacularly and had proved that once they were unshackled they were as good as any of their counterparts anywhere in the world. And then the creeping comeback of the permit-licence raj began all over again.
Large sections of the Indian political class, many academics in the miasmal landscapes of places like JNU and Jamia, and most members of our omnipresent bureaucracy never fully or properly bought into liberalisation. They have waged a steady guerrilla war against freedom for India's businesses. Many Indian businesspersons who preferred cozy crony capitalism have been their willing accomplices.
Net-net the permit licence raj is back with us in forms far more insidious and debilitating than the earlier Udyog Bhavan Avatar. We have been made to give up our "Narasimha-Swatantrata" and today we are steadily and inexorably embracing the capricious, wealth-destroying regime of the hapless Mohammed bin Tughlaq.
The most intriguing similarity between Tughlaq and our present sultans is their habit of changing their minds so frequently that no one in his right mind would want to start a business given that the rules can get altered, amended and then retracted all in a matter of days, weeks and months. Farmers were forbidden from exporting cotton; two days later they were told that they could do so.
The highest court in the land told Vodafone that there was no obligation on their part to withhold taxes which were in any case not payable by the redoubtable Li Ka-shing. Some days later, they were told that way back in 1961, the brilliant parliamentarians of India definitely intended that they should have withheld what Li was definitely liable to pay! Actually, Mohammed bin Tughlaq was probably less whimsical and certainly not given to such gross terminological inexactitude.

Udyog Bhavan, JCCIE (the august Joint Chief Controller of Imports and Exports), the DGTD (the even more august Director of Trade and Development, who funnily enough believed neither in trade nor in development) have been replaced with a whole new set of umrah of the new sultanate that we now have in place in imperious Delhi.
Now let us assume that the Ministry of Petroleum and Chemicals has issued you a letter inviting you to explore for oil and gas in Telaurgaspur district. Mind you, it took you five years of much effort and great expenditure working on the bidding process, qualifying and re-qualifying several times... and finally you have got the invite.
As far as I can tell the Ministry of Petroleum and Chemicals is part of the Government of India (Dear Reader: if in your opinion this is not the case, please provide me the superior information that you have). So you assume that the Government of India has invited you. You start ordering rigs, you start recruiting drilling engineers, you raise capital, you line up suppliers and you turn up at Telaurgaspur.
Now you discover, that the august Ministry of Petroleum and Chemicals is as powerless as any other harassed citizen of India. What they propose can and is promptly disposed off by the august Ministry of Environmental Affairs. This august ministry now informs you that Telaurgaspur district, which shows up in all atlases as desert country actually possesses a "desert forest". Now please do not ask me what a desert forest is. The august Government of India is committed to preserving our glorious ancient culture and heritage.
Classical Sanskrit writers have talked about the fact that the power of "naamakarana" - the power to give names is one of the greatest powers conferred on humans by the Creator. Once the august Ministry of Environmental Affairs has classified any part of India's map as a "desert forest" then trust me, it is a desert forest.
And even though the august Ministry of Petroleum and Chemicals (which now it turns out is not part of the Government of India, but part of the Government of East Timor!) may have "invited" you to drill and explore, that invitation is quite worthless.
Even though you are frustrated, you console yourself with the fact that at least the invitation to explore in the Telaurgaspur district will still be valid. No such luck. The august Ministry of Defence (of you guessed it, the Government of India, not the Government of East Timor) have concluded that Telaurgaspur may be along the flight path of rockets that our country likes to test once every six months.
You try arguing with them that since the tests take place only once in six months, there can and should be some way this can be coordinated. You mention the fact that the august Ministry of Petroleum and Chemicals has invited you so courteously. Now that was your fatal error Your argument might have succeeded on its merits. But mentioning the name of another august ministry is an error of great magnitude. For in our country today, it has been decreed by the great gods above that every august ministry of our august government will implacably oppose, derail, sabotage and subvert the efforts of every other august ministry.
These august ministries have decided that it is the "dharma" of each of them to fight with the other and in the process strangle Indian businesses and keep the country gripped in a paralysed gridlock.
Now let us assume that you are half way through a project building what you think is a world class aluminium plant. You are feeling good about it. But you too failed to see that while the august ministry of aluminium may be on your side, the more august Ministry of Environmental Affairs and the most august Ministry of Tribal Affairs have a different point of view.
Quite frankly they do not like you. When you point out that the beneficiaries of this blockage will be Canadian and Scandinavian aluminium companies, the redoubtable august Ministry of External Affairs chips in (after all, they too want to do something, don't they?) that India has friendly relations with Canada and Scandinavia.
Now let us assume that you are building a world class hill resort. You have been given all the approvals and permissions by an august state government. Aha - there you go. It is the sworn "dharma" of the august Government of India to oppose anything that is approved of by august state governments.
You are suddenly informed that all these years, though you may not have known it, and though the august state government may or may not have known it, the fact of the matter is that all along you needed the blessings of - you guessed it - the august Ministry of Environmental Affairs.
Once more the endless dharmic civil strife between august governments and government departments results in your being stopped, strangled, suffocated and of course bewildered.
But having said all of this, I must say that all is not bad for the Indian businessman and businesswoman. Indian entrepreneurs are free and welcome in Singapore and Dubai. Those who manage to get an H-1 visa are pretty free in California.
Free to go ahead with their plans, free not to get caught in a tug of war between august ministries, free to assume that a rule made or a permission given will not be arbitrarily and capriciously overturned, free to assume that when one part of the government is welcoming so are other parts, free to get on with the business of business rather than keep running around from one august ministry to another.
Subhash Chandra Bose gave the slogan "Delhi Chalo" to Indians in Singapore and Burma. Our present rulers have given Indian businesspersons the slogan "Singapore Chalo, Dubai Chalo, California Chalo".
Dear Reader: On that happy note, I end with every good wish to all Indian citizens on our 65th Independence Day. Jai Hind!

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