FROM THE EDITOR-IN-CHIEF
In 1991, with Manmohan Singh leading the way as finance minister, India decided to open its economy to the world. It was a ground-breaking decision that led to the growth of industry, manufacturing, jobs, and household incomes. India suddenly became a great place to do business in, with its burgeoning middle class getting a taste for products and brands that were already popular in the rest of the developed world. But over the last four years, as Manmohan Singh’s UPA 2 has been infected by policy paralysis, our economy has got stuck in a vicious circle. Government deficit is leading to growth deficit, which in turn is leading to a trust deficit between India Inc and the Indian state. At the heart of the problem lies the de-facto return to licence raj over the allocation of natural resources, which are now controlled and distributed arbitrarily in the absence of a uniform transparent policy.
INDIA TODAY carried a cover story on August 1, 2011 (Goodbye India, Welcome World) on how Indian business houses were looking abroad for opportunities rather than at home because of the hassles of doing business in India. The situation has now changed dramatically where the fear of prosecution is driving business out. A clear indication of how messy things have become is the claim of former coal secretary P.C. Parakh that his push for transparency in coal block allocations was resisted at various stages. It is this affinity for opacity that led to the so-called coal scam, in which questions are being asked not just of top business houses but also the Prime Minister himself.
Since the 2G scandal, the Radia tapes and the coal scam, the CBI and the courts have gone with uncommon aggression to charge major industrialists with wrongdoing. Many captains of industry, who’ve shaped India’s modern economy, are facing investigations. What further highlights a dysfunctional Government is that most of these probes are being monitored by courts because of their lack of faith in the independent functioning of our investigating agencies. While there is no doubt that wrongdoers must be brought to book, no matter how large their business empires, these cases—some of them patently half-baked—have created an environment where capital is being driven away from the country. A pall of gloom hangs in the boardrooms as industrialists are now finding India a scary place to do business in.
Our cover story, written by Deputy Editor M.G. Arun, looks at the growing lack of faith in the Indian economy by top business houses. It explores how courts, investigating agencies and business being at loggerheads with each other could be the last straw in an environment where profits have slumped and our growth forecast for the financial year 2014 has been downgraded to a dismal 3.8 per cent by the IMF, which is 1.8 per cent lower than their own July projection.
Any policy or decision in retrospect can be found faulty. But often the distinction between decisions taken in good faith and corrupt decisions where quid pro quo is established is being lost. Charging big industrialists makes for populist headlines but unfairly doing so is costing the nation dearly. Today the telecom sector is in a mess, the power sector is suffering because of lack of coal, iron ore mining is at a virtual standstill and bureaucrats are refusing to take decisions for fear of subsequent review.
The country needs to have clear-cut policies where discretion is limited; the processes of allocation are transparent; an investigating agency which is genuinely autonomous and doesn’t give a clean chit to corrupt politicians while prosecuting others on flimsy evidence; and a judiciary which interprets the law instead of deciding the merits of policies or monitoring investigating agencies. Punish the guilty, but swiftly, as nobody can do business with a sword hanging over their heads.