State of Drift
India’s transition from a prime destination for investment to a sluggish economy that ranks lower than most major developing nations in the ease of doing business is well documented. India’s global image is now of a faltering nation that is plagued with corruption, high inflation and a low growth rate. The UPA Government’s dilly-dallying on key policy decisions along with the public and judicial scrutiny of some investment deals has only weakened India’s case. It was to sum up this dire situation that top industrialist Anil Agarwal invoked the legendary strategist Chanakya: “In the absence of fruitful economic activity, both current prosperity and future growth are endangered.”
Agarwal, whose fairytale rise from a scrap dealer to the head of a $70 billion conglomerate, Vedanta Resources, is also a story of struggles and extended wait for government approvals, questioned the Government’s apathy towards the natu- ral resources sector during the session titled ‘How India Can Win the Next Decade’. Agarwal pointed out that India imports $500 billion worth of goods even though it has the capacity to produce most of these at home and, in the process, provide jobs to an additional 100 to 150 million people. “Australia, Canada, South Africa and Latin America produce much more than we do. We have the capability to produce 600 million tonnes of iron ore but we produce just 100 mil- lion tonnes and even that causes a hue and cry,” the industrialist said, alluding to the ban imposed on iron ore mining in 2012 following allegations— subsequently validated by a court order—of illegal mining. To drive home his point that doing business in India requires extraordinary will and patience, Agarwal recounted that he had to wait 18 months before the Central government cleared his acquisition of Cairn India.
Agarwal emphasised that to spur growth and
development, India has no choice but to reform its economy. And top of the reform agenda should be selling majority stakes in public sector companies. This, he said, will ensure these firms are better run. “Let the shareholder decide who should be on the board, who should be the CEO,” he added.
Union Minister of Commerce and Industry Anand Sharma agreed that returning to the highgrowth path is more a necessity more than an aspiration. “India can’t afford but to recapture 8 to 9 per cent growth. We know we are capable of doing it,” Sharma, who has a formidable reputation as a deft negotiator on world trade platforms, said. He, however, emphasised that growth must have a ‘human face’: Its benefits must reach the socially and economically disadvantaged citizens.
The minister also underlined the need to invest heavily in infrastructure. “Of the 1.2 billion people in our country, more than 630 million are below the age of 21. As many as 15 million young people will join the workforce annually over the next 10 years,” he said. “In such a scenario, creating jobs as well as cities of the future is a need, not an option.” The Central Government has been at work on this, developing the integrated industrial city of Greater Noida-Dadri, the Shendre-Bidkin integrated industrial city in Maharashtra and the Knowledge City in Ujjain, among others. To build more such cities as well as other infrastructure, India needs to attract foreign investment, he said. Though foreign investment to the tune of $176 billion has arrived in the last four years of the UPA 2—in all, the country has gained foreign investment of about $303 billion since 2000—there is a need to improve India’s image as an investment destination.