OF THE STATE

past. Ret­ro­grade poli­cies, buried in the 1990s are killing In­dia Inc.

India Today - - COVER STORY - By Dhi­raj Nay­yar

At 10.30 a. m. on the morn­ing of May 2, two of In­dia’s top tele­com en­trepreneurs, Su­nil Bharti Mit­tal of Air­tel and Kumar Man­galam Birla of Idea, and two CEOS of global tele­com gi­ants, Vit­to­rio Col­lao of Voda­fone and Jon Fredrik Bak­saas of Te­lenor, walked into the of­fice of Union Home Min­is­ter P. Chi­dambaram in Delhi’s North Block. They expressed grave con­cern about the rec­om­men­da­tions of the Tele­com Reg­u­la­tory Au­thor­ity of In­dia ( TRAI), an­nounced just two days ear­lier on April 30, which they said would kill the In­dian tele­com in­dus­try. The four busi­ness­men spent the rest of the day, un­til af­ter 7 p. m., meet­ing min­is­ters and bu­reau­crats who could con­ceiv­ably help an in­dus­try that has been re­peat­edly bat­tered in the past three years. They called on Pranab Mukher­jee, Sharad Pawar, M. Veer­appa Moily and Mon­tek Singh Ah­luwalia, who are mem­bers of the Em­pow­ered Group of Min­is­ters on spec­trum pric­ing. They met Cab­i­net Sec­re­tary Ajit Seth, the then com­merce sec­re­tary Rahul Khullar and Joint Sec­re­tary, Prime Min­is­ter’s Of­fice, BVR Subrah­manyam. The sight of top busi­ness­men shut­tling fran­ti­cally be­tween Gov­ern­ment of­fices was a re­vival of the worst ex­cesses of the pre- 1991 li­cence raj. The UPA Gov­ern­ment and its top func­tionar­ies have res­ur­rected the ghosts of In­dia’s So­cial­ist past 20 years on. Said the usu­ally cau­tious but now ag­i­tated Mit­tal as he tra­versed New Delhi’s cor­ri­dors of power, “This has been the most de­struc­tive pe­riod of reg­u­la­tory en­vi­ron­ment I have seen in 16 years.”

In­dia Inc spent much of 2011 com­plain­ing about pol­icy paral­y­sis in the UPA Gov­ern­ment. The spec­tre of cor­rup­tion, and the prospect of be­ing in­ves­ti­gated, had made jit­tery bu­reau­crats ter­ri­bly shy of putting their pen to the pa­per of Gov­ern­ment files. Then in 2012, the em­pire of Gov­ern­ment awoke from its slum­ber to strike back at its de­trac­tors. Large sec­tions of In­dia Inc would no longer suf­fer from pol­icy paral­y­sis. They would suf­fer in­stead from pol­icy ac­tion of the most ar­bi­trary, ret­ro­grade kind. Ev­i­dence sug­gests that sec­tors which have a close in­ter­face with Gov­ern­ment, like in­fra­struc­ture, min­ing and nat­u­ral re­sources, are strug­gling. Those at an arms length are do­ing rea­son­ably well.

An anal­y­sis by a lead­ing busi­ness daily of the Jan­uary- March 2012 quar­terly fi­nan­cial re­sults of 989 com­pa­nies that make up 52 per cent of the to­tal mar­ket cap­i­tal­i­sa­tion of the Bom­bay Stock Ex­change showed that just five sec­tors were prop­ping up the net prof­its growth of In­dia Inc. None of these five sec­tors— bank­ing, IT, pharma, fast mov­ing con­sumer goods, and ce­ment— have ex­ten­sive in­ter­face with Gov­ern­ment. With these sec­tors taken out, the net prof­its of In­dia Inc ac­tu­ally

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