Credibility Of Governance

The common minimum program (CMP) of the United Front government targeted foreign direct investment (FDI) of $10 billion a year. More recently, the RBI governor has talked about a more modest figure of $5 billion a year by 2000 AD. To my mind, if we are serious about a 7 per cent real GDP growth, we may need FDI in excess of $10 billion, and a matching current account deficit. That apart, whatever its level, attracting FDI requires credible governance, sanctity of contracts, and a continuity of policies. Are we displaying these to the rest of the world?

Consider last week's affidavit of the Maharashtra chief minister before the Mumbai high court in the Enron case. When the judges, quite rightly in my view, insisted upon the chief minister stating exactly why the project was cancelled, and then reinstated, the poor man squirmed. He stated that one of the reasons for the cancellation was reports of bribery, corruption and misrepresentation appearing in newspapers. He had to confess that these were without base. It is truly amazing that the government of a state which boasts of being the most industrialised, whose capital is the commercial capital of the country, a state which sets trends for the rest, should have been so irresponsible as to cancel a major, and pioneering, infrastructure project on the basis of newspaper reports. What credibility will the government of Maharashtra carry now in the eyes of foreign investors? As a government which brazenly goes back on contractual commitments on the basis of unsubstantiated newspaper reports?

 

I cannot resist the temptation to quote some extracts from the article I wrote then (World Money 14-8-95) A lot of innuendoes about corruption in the award of the contract have been bandied about, the alleged high cost and the speed with which the decision was taken being cited as the proof...The ministers in Maharashtra, from whom one had a right to expect greater maturity, have now cancelled a major contract for political games, on innuendo and half truths.

If the Maharashtra government has delayed a vitally important power project by more than a year, environmentalists led by Maneka Gandhi, will do so for Cogentrix in Karnataka. While some environmentalists are obviously sincere, one suspects that others are in the game for the newspaper headlines and to bolster their own egos. After all, environmental concerns are difficult to criticise directly