INDIAN ECONOMY- TRIPPED BY CRONIES

Published: Mon, 02/09/2015 - 09:57 Updated: Mon, 02/23/2015 - 07:46

The other day, one of the chambers of commerce grimly stated that Indian industry has not really seen any change in fortunes since the new government of Narendra Modi came to power. Worse, it was not really expecting any great transformation in the next few quarters. These sentiments run contrary to the optimism betrayed by the International Monetary Fund that cheerily announced that next year India’s growth rate will overtake that of China. It did not take long for the Chinese to lend perspective to what their fall in growth rate really amounts to. A Chinese spokesman told an Indian journalist that even with low growth, their economy would still add $800 billion every year. And as they are growing from a higher base, even 6 per cent growth would be equivalent to their 10 per cent of a few years ago. In short, the Chinese quietly and confidently stated that India, despite a higher growth rate as predicted by the IMF, had lots to catch up with. Prime Minister Modi rode to power on the plank that he would kickstart an economy that had got mired in all kinds of difficulties. During his earlier trips as CM of Gujarat to China, Modi came to the conclusion that India would have to follow their model in order to succeed in its endeavour to be a high-growth country. That’s easier said than done. Modi may be giving precedence to development (vikas) over other social issues, but the truth is that China and India are two different countries and systems. In a noisy, argumentative society like India, everything has to be debated and questioned. This process has accentuated due to the Right to Information (RTI) and the penchant many NGOs and activists have for public interest litigation (PIL) to question decisions they consider anti-people.

Despite these manifest constraints and delays that the consultative process brings to taking decisions pertaining to environment or even the acquisition of land, there are many things that the government can do if there is sincerity of intent. Take, for instance, the government’s fervent desire to attract foreign direct investment (FDI) in our economy. Ask any foreign investor who committed the folly of believing in the government’s promise to provide a facilitating environment for investment what it has been to do business in India. Whether it was Enron in the ’90s or those foreign companies that brought in their billions in the telecom sector, hoping to strike gold in India, grief has visited them on some count or the other. Closer analysis would reveal that the major reason why many of these investments have struggled is due to crony capitalists that control  the commanding heights of our economy. Every sector has a lead crony capitalist who shapes policies to bolt the gate after his company has entered or to make life difficult for those who mistakenly believe in the stated investment policies of the government. These foreign companies are harassed either by regional parties or environmental groups on some issue or the other. Enron was needled  by the Shiv Sena to such an extent that the project became unviable. Desperate to hang in there, it spent a colossal amount of money to ‘educate’ Indian politicians. In those cases where there are no environmental issues involved, cases of corruption, excise, custom or corporate issues are raked up. In aviation and telecom, so much pain has been inflicted on companies that came to India hoping to do business and make a neat profit. Telecom companies like Etisalat, Nortel and Russia’s MTS were forced to leave due to scam investigations; eventually, Nortel  and MTS were allowed to return.

Editor of Delhi's Hardnews magazine and author of Bad Money Bad Politics- the untold story of Hawala scandal.

Read more stories by Sanjay Kapoor

This story is from print issue of HardNews