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The short-selling of India

The Financial Express The next several decades will hopefully see the further emergence of India on the world stage. While things are gradually improving, they are not improving fast enough. While there is a recognition at the very top of most political parties that things need to change quickly, the inertia of graft, corruption and coalition politics is strong and has this country in a vice-like grip, which cannot be removed in a hurry. Unfortunately, while the country has begun to prosper through the hard work and entrepreneurialism of its people, the government has not kept its side of the bargain. Take Mumbai, where infrastructure is in shambles. While high-rises are being constructed everywhere, no new roads, drains or utilities are being built and beyond endless planning, little actually is being done. Progress is a victim of the many vested interests that exist in our system. For so many centuries have Indians been exploited, that we have lost our sense of self-respect. This has created its own tyranny of low expectations. We expect next to nothing from those who are supposed to govern us and, as a result, get poor governance. How can this be addressed? First, notwithstanding the reform process, we still have some of the worst regulations in the world. Bureaucrats can tie almost any enterprise into knots and stifle almost any sense of entrepreneurialism. This needs to change. We need to untangle our laws and, almost de novo, redraft these so that our regulations are simple and easy to understand. It is the enforcement that needs to be improved. We need to rapidly reduce the points of contact between common Indians and our government. The more such points, the more the scope for corruption, nepotism and exploitation. We need a small government, focused government and targeted government that has a well-defined, but limited, mandate. We do not need the kind of government we have today, which is all-encompassing and controlling. Our laws need to change faster, and our governance architecture needs to change. But the dilemma is that those who need to bring about this change, i.e. our politicians and bureaucrats, have the strongest vested interest in letting things remain as they are. Second, our system of judicial redress needs to be addressed quickly. Why does it take an Indian decades to get some form of justice? Isn’t being provided law and order and basic justice one of the most fundamental rights of our citizens? Our judicial system, so quick to opine on the shortcomings of the executive branch, needs to reflect on this and be answerable to the citizens. Third, the government needs to vacate many spaces and limit its activities to areas where private enterprise cannot go. In other areas, it needs to set up effective regulatory frameworks and let the market take care of the rest. A strong spirit of enterprise, currently trapped, once unshackled, can turbo-charge India’s growth. Take cellular telephony, insurance, mutual funds, aviation, metals, construction, entertainment, IT, BPO, etc—all sectors where the government was either never there, or let go of at some point. Witness the better service standards in public banks, government-owned airlines, etc as a result. On the other hand, look at the gridlock in power, infrastructure, airports, roads, mining, the poor record in rural health, rural irrigation, water and sanitation, primary education—the list is endless—all areas where the government is still in regulatory limbo, or where it is itself the primary operator. It is interesting to note the fuss we make about corporate governance. We should be making a much bigger issue of public governance, which impacts so many more people. The inevitable argument will be that it is the voters who ultimately decide and eject those who do not provide good governance. Surprisingly, the same sentiment does not apply to companies, where taking a similar analogy, investors can either remove management, or simply sell the shares of a company if they don’t like it. And there is no five year lock-in period as there is with our government! Unless we ordinary Indians do something radical quickly, with out-of-the-box solutions, governance will continue in its usual woeful manner. And we will continue to sell India short, and continue to shortchange our potential as a great nation.

Source: Financial Express