You are here: Home » Opinion » Columns
Business Standard

Oh for a crisis!

Look how it has concentrated the government's mind

T N Ninan  |  New Delhi 

T N Ninan

It has long been said, only half in jest, that India needs a crisis in order to reform. That seems to be proving true, yet again. Confronted with a potential foreign exchange crisis, the government is opening up to foreign investment like there is no tomorrow - and all the vociferous protests and dilly-dallying of yesteryear have evaporated. No, retail chains don't have to buy so much from domestic small-scale units, and they don't have to be only in the big cities. Yes, majority foreign ownership in the defence sector is allowed, if certain conditions are met. Why, even foreign ownership of domestic airlines by foreign government-owned airlines is allowed, indeed we will give them a red carpet by laying out additional bilateral flying rights. And, by the way, foreigners don't have to go create complicated pyramid structures of ownership to acquire control of telecom companies, they can have full and total ownership directly, through the front door. Ever stopped to wonder what happened to those fears for national security, concern for the future of kirana shops, and all the other heavy political guns that were being fired during these long years of inaction? All we need to do is create a record current account deficit and the risk of a credit downgrade, and it focuses the mind like never before.

It's the same with the fiscal problem. Once foreigners begin to look long and hard at subsidies and deficits, we find we can raise petrol and diesel prices every month (till now, once a year was a heroic achievement). And runaway growth in government expenditure - a feature of the last so many years - can be squeezed back into the genie bottle. In the Parliament session that starts next week, we may even witness the unthinkable - some laws actually get passed.

All of this was said to be politically touch-me-not. Till now, the accepted wisdom was that economic reforms didn't help the poor, that they could not be sold to voters, and that there would be a heavy political price to pay if anti-people steps were taken, like doubling cooking gas prices. But a government that paralysed itself by believing such claptrap, and which now faces the certain prospect of being thrown out of office next year, has discovered that, hello, reforms are the way to win back the voter's favour. Go figure.

So let's create some more crises - domestically, so that the government gives Indian businessmen the kind of attention that foreigners have been getting. Many moons ago, Ayn Rand wrote an unlikely novel, Atlas Shrugged - businessmen went on strike by refusing to invest in the face of anti-business rules. As it happens, many Indian businessmen have done just that. None of them will say it openly, but everyone knows that some of the largest have decided that life is easier abroad - and that means anywhere, so long as it is not India; at least they will be welcomed and not treated as criminals in mufti.

Maybe, just maybe, the government will then decide that exploiting valuable mineral wealth should take precedence over animist beliefs. That it is better to hand out generous, indeed over-generous, payouts to a few hundred displaced people so that a massive steel plant can come up and imports come down. That labour laws that come in the way of industrial activity - which has grown at the tell-all annual average rate of about two per cent for more than two years - need to give way so that, among other things, we can create jobs that pay more than what is handed out under the Mahatma Gandhi National Rural Employment Guarantee Act. My fear, though, is that we will need a much bigger crisis for that and some other things to get done.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, August 02 2013. 22:50 IST