Finance Minister Pranab Mukherjee does not reveal a state secret when he says that his government needs to take new policy initiatives to revive growth and check inflation. “Options for fiscal steps as well as monetary measures are increasingly limited,” he told an industry event on Thursday (December 15). “However, there is potential for policymaking in other areas.”
Unsurprisingly, he did not spell out “other areas,” for there are none. Bad governance, along with mindless populism and incessant sloganeering by jholawallahs, has taken a heavy toll. There are few things, if any, the government can do to stimulate the economy. Industrial production is falling, growth is slowing down, prices are soaring, policy paralysis is complete, and business confidence has touched the nadir.
So, the businessmen who are keen to expand their enterprises in the country are forced to look overseas. As RPG Enterprises chairman Harsh Goenka told a newspaper, “We are looking for the red carpet, not for red tape.” He gave voice the exasperation of India Inc: “We look overseas because it's a question of ease of doing business. We are wondering how we can get 50 per cent of our revenues from overseas in the next few years. We are simply fed up of red tapism and the harassment involved.”
He is not alone. Ajay Piramal of Piramal Lifesciences shares his viewpoint and slams the Manmohan Singh government for its anti-business practices: “You don’t know what regulation is going to hit. Sometimes it is not even rational. Very old cases are being pulled out. This doesn’t give you a sense of certainty.”
Remember Lavasa? It is a township, whose development was widely publicized by the promoters. After six years, the United Progressive Alliance (UPA) regime realized that environmental laws were flouted by the project. Jairam Ramesh, the former environment minister, wanted to please UPA boss Sonia Gandhi; he tried to harass the promoters.
Perhaps, the idea was to bolster the pro-poor (and anti-rich) image of the Empress; perhaps, she and her buddies wanted to subdue the big business; perhaps, the motives were even more dishonorable. However, the result of this outrage (and of other outrages) was obvious: it sent jitters in the business community.
Even the normally reticent Birlas are rattled. Kumar Mangalam Birla told a news channel that he would seek opportunities overseas rather than in India: “I think that the environment is not so conducive to growth; there is a lot of policy back-and-forth that’s happening unfortunately... One would want to wait for things to get better. I think it's a good time to start looking overseas.”
While Indian business tycoons have started looking outside, our politicians have not begun looking within; they continue to treat policy as a handmaiden of politics. The guilt of the Congress-led government at the Centre is greatest, but others are not far behind. The Bharatiya Janata Party’s pigheadedness on foreign direct investment in retail is a case in point. The economy is the victim.