Dr Ashwani Mahajan
It is now more than 6 months since Narendra Modi has taken over as Prime Minister. Though many flagship programs such as Jandhan Yojna, Swachata Abhiyan and many others have been implemented and are being widely appreciated, economy is yet to experience a turnaround. Inflation is now getting calmed a little bit, thanks to the easing of global crude prices and efforts of the Government. Though automobile sector shows some revival in recent years, country is yet to come out of manufacturing stagnation, after nose diving to -0.7 percent in 2013-14.
It is ironical that, condition of poor does not show any noticeable improvement, despite high rate of GDP growth. It is notable that per capita income has been showing significant upward trend in the last 25 years, with rising GDP growth. GDP grew at an average rate of nearly 8 percent in the last two Five Year Plans; however, we find that nearly 30 percent population is still reeling under poverty.
For improving the condition of the poor, it is essential that they are made part of the development process. Financial inclusion in this regard could be an important tool. Jandhan Yojna, may prove to be a milestone in this regard, however for real financial inclusion we have to go miles ahead. Education, skill formation, health, promotion of SSIs, artisans and cottage industry could provide suitable employment and respectable living for the poor and deprived.
Washington Consensus Guided Reforms
Nobody can deny the importance of policy reforms to make the conditions for development better. However, contents and direction of reforms need debate. It is unfortunate that reforms so far have been based on a set of policy suggestions made by international financial institutions like IBRD (World Bank), International Monetary Fund etc.; what John Williomson termed as Washington Consensus. These so called ‘reforms’ included set of policy measures for opening up of boundaries for foreign goods, services and capital by removing tariff, non-tariff and institutional barriers, changing intellectual property regime etc. to facilitate foreign companies, even if they were contrary to the interests of Indian economy and people. For instance, new intellectual property regime was harming public health and opening up of imports was harming the interests of SSIs. It is notable that there was no consensus about these so called reforms.
Unease of Doing Business
India has never got good ranking in terms of ease of doing business. It is generally believed that India is not a good destination for doing business, due to unfriendly business environment. According to the ranking of the World Bank, India stands at 142nd position out of a list of 189 countries, in terms of ease of doing business. A close perusal of the World Bank report in this regard we find that India stands at 158th position in terms of ease of getting permission to start business, 184thpostion in terms of getting permission for construction, 137th position ease of getting electricity , 121st position regarding registration of property. With regard to international trade, the report says that we are 126th position. About ease of enforcing contract, perhaps we are the worst with186th position. Thanks to our banking institutional development, we are better placed at 26th position, regarding credit, while we are much better in terms of protecting interests of minorities, at 7th position.
Why Business is Inconvenient
With such inconvenienced business, how can we strive for economic development of the country? It is worth noting that there is no dearth of resources in the country. Our nation is known for its abundance of natural resources and our banks also have overflowing funds. Adverse environment of business, which is vitiated due to our institutional drawbacks, has been making us uncompetitive. It is unfortunate that in the last more than 23 years, while talking about economic reforms, all efforts have been to open up imports, allowing and raising FDI cap in different sectors, tax concessions or changing of rules to facilitate foreign investors, even if it is for being lenient towards their tax evasion activities (Vodafone is the example), through illegal methods of transfer pricing or routing their funds through tax heavens. Even after 67 years of independence there was hardly any talk, lest effort to end the inconveniences to do business, as reflected by the fact that we are still lagging at 142nd position in ease of doing business.
It is notable that our small scale sector which is still facing the menace of inspector raj, difficulties of getting credit, labour laws issues and unmanageable web of laws, despite its huge contribution to national economy. However, no effort is being made to end their miseries.
Whether it is policy announcements, international agreements or budget, all the efforts of the government(s) are concentrated on how to make international trade, especially, imports of goods easy, making foreign business interests happy, even if they are at the cost of the exchequer. Classic example is that making of GAAR (General Anti Avoidance Rules), by then Finance Minister was considered to be a retrograde step, because they were made to discourage tax evasion by foreign companies, by making them laws with retrospective effect, and delaying of implementation of GAAR was considered as a progressive step. To facilitate the provision of land for the business houses by amending the recent Land Acquisition, Rehabilitation and Resettlement (LARR) Act 2013, even at the cost of the farmers and farming is also being propagated as one of the economic reforms. Recently concluded WTO Agreement, on trade facilitation, is yet another example of how the international trade agreements are not for facilitating the domestic sector, but for facilitating foreigners to do business.
Need of the hour is that today the ease of doing business for the domestic entrepreneurs is improved, to build their competitiveness; that is, domestic business, especially the small business is equipped with the facility of ease of starting business, ease of registration of property, ease of starting construction, ease of getting electricity connection, ease of implementing the contract etc.. Indians who have proven their worth, in terms of entrepreneurship, brains, skills, hardworking and devotion, world over can excel in their own country also, there cannot be any doubt. We have to keep faith in our people, and give them a favourable business atmosphere, which they are deprived of, even after 67 years of independence. Then there would be no need to invite foreigners and saying ‘come and make in India’, slogan would be ‘come buy made in India’.
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