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Illiberal India

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Elite journals like Economic and Political Weekly are full of articles describing Indian economic policy as neo-liberal. This might lead readers to think that India has become a haven of economic freedom, a business paradise. Anybody who has actually tried to start and run a business will tell you this is a pack of lies, but the fiction continues unabated.  

Look at where we actually stand:

  • Ease of doing business - 132 out of 183
  • Ease of starting a business - 166
  • Ease of getting construction permit - 181 out of 183
  • Ease of enforcement of contract - 182 out of 183
  • Ease of paying business taxes - 147
  • Ease of winding up - 128

The key reforms India needs are not higher limits for foreign investment in banks or insurance. The most important reforms will be those making it simple for millions of Indians to start businesses and stand on their own feet. Such reforms will not get banner headlines or TV coverage. Yet they are the most important reforms of all.

For the full article by Swaminathan Aiyar in the ToI, click here.

Each of these were what I too faced, before I shifted out a large part of my operations to Gulf and eventually sold out, in the pre-reform days. Sadly, the situation seems to have got only worse since then.

What the country needs desperately is to liberate itself from the stranglehold of the neta-babu combo, and, not the least of all, the pseudo-Socialists.

Muralidhar Rao


Naveen's picture

Neo-illiberalism Indeed

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A very fine article by Swaminathan Aiyar - one of the few realists in our country, a country in which most people keep crowing about the so-called 'democracy' & 'freedom', claiming it to be the biggest /greatest /most vibrant, & what have you !

China beats us hollow—it ranks 16th in the world. Contract enforcement in China averages 114 days, less than one-tenth of the time taken in India.

-- Our media & citizens keep criticizing China for it's lack of 'democracy'. One wonders which country is actually providing better freedom & opportunities to it's citizens.

The government wants the aam aadmi to be a recipient of subsidies and freebies

No doubt, but where are all the subsidies going ?

People who own Mercs, BMWs & other expensive cars use diesel fuel that remains subsidized ostensibly to 'assist the common man', whilst the common man uses expensive petrol for his two-wheeler; ATF is heavily taxed since flyers are claimed to be rich (even in under-developed regions such as north-eastern states), crippling business cost efficiencies; building plan sanctions need umpteen 'approvals' & 'payments', not to mention the bribes & harassment -- the list goes on & on.

What a joke this country is, indeed !!

murali772's picture

where Team Anna got it wrong

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The essence of the reform programme of 1991 was to attack this approach to policy-making, to reduce if not remove the distortions. Twenty years later, however, the ancien regime is back with a vengeance — it was in the name of garibi hatao earlier, now it is in the name of the aam aadmi.

Why rake all this up now, at the start of 2012? Because the hyper-ventilating leaders of an anti-corruption movement who roiled the waters for most of 2011 have not thought it necessary to say one word about how it is government-induced market distortions that lie at the root of corruption in so many sectors, and how reforms of the 1991 variety might provide solutions — indeed, better and more lasting solutions than sending Lok Pal hounds after every babu who yields to temptation. Not just Anna Hazare and his cohorts, most ordinary people can now see that no political party really wants a Lok Pal. But shouldn’t it be equally obvious that no political party wants reform either — because at the Centre, in the states, in panchayats, politicians of every party hue are the direct or indirect beneficiaries of government-induced market distortions that bring about market failure, and opportunity for scamsters?

For the full essay in the Business Standard by Sri T N Ninan, click here.

A most highly readable essay.

Muralidhar Rao
Naveen's picture

Any solutions ?

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Thanks to T N Ninan for providing a detailed summary of how the system manipulates to continue to siphon off so-called subsidies in the name of the poor.

Any proposed large scale reforms to address such market distortions would be highly unpopular since subsidies (ostensibly for the poor) would be met with stiff resistance by opposition parties in the name of welfare of BPL families, & so, it continues merrily, year after year, decade after decade, & with increasing magnitude.

The article also indicates why China is able to sidestep all such resistances & take many unpopular decisions, enabling it to move ahead with great speed.

Wish Ninan or someone could make recommendations on how the mess could be untangled, within the political setup that we have & the democratic system that we are so proud of & claim as vibrant whilst the poor keep getting squeezed.

murali772's picture

the dire need

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Vijay Mallya has not paid employees of Kingfisher Airlines for months, and has defaulted on thousands of crores due to suppliers and creditors. Yet he has just donated three kilos of gold, worth almost one crore, to the Tirupathi temple. In August, he offered 80-kilo gold plated doors to the Kukke Subramanya temple in Karnataka. Possibly he believes that the gods can be bought off in ways that employees and creditors cannot.

- - - I constantly hear that India has gone in for neo-liberal policies. That’s pure rubbish. Neo-liberalism would have given employees and creditors the right to quickly seize and sell a company that cannot meet its obligations. The problem is not liberalism but the continuing old illiberalism that keeps promoters in charge, forcing other stakeholders to take a hit. Temples and religious trusts can keep enormous donations from defaulters instead of handing them over to others who, in all justice, should have the first right to such money or gold. This area desperately needs reform.

For the full text of the essay by Sri S A Aiyar in the Sunday ToI, click here

It's absolutely stupifying the way the government has allowed this to go on, quite as much as how it has gone on throwing good tax payers' money into AIR-INDIA.

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