To make “Make in
delete control. India
Over a hundred uncles use the park for their morning/evening walks, society meetings and yoga classes. Each uncle also carries a stick, and uses it on the few kids who happen to venture into the park. If a kid jumps too much, squeals in delight, climbs up a tree or plays cricket, the uncles whack the kids. After all, the uncles feel, the park must be kept in order. There is even a microphone system installed that warns kids to behave.
As expected, the kids soon abandon the park. They go across town to
where they are made to feel welcome. There are rules in that park too — kids
are told to keep the place clean and not hurt anyone. But apart from that, they
are encouraged to have fun. The only few kids who still use China Park are those who have figured out how to manage the
uncles. Whenever they come to play, they bring treats for the uncles — a box of
sweets, cold drinks or newspapers. Uncles then leave them alone for a bit.
However, the number of kids doing this is small, as bribing uncles is not what
most good kids do. India Park , hence, is mostly empty and under-utilized. India Park
Then the uncles of
start wondering why so few kids come to play there
while twenty times the number go to India Park ? Uncles have meetings, sticks kept in their lap, to
discuss the solution. They put up huge signs outside the park saying ‘Kids
Welcome’. However, nothing seems to change. China Park
In the above story, replace uncles with the Indian Government, kids with Foreign Direct Investors, fun with legitimate profit and
with India Park . This sums up how we approach the global investor
community. We want them here, but we want to beat them with a stick and shout
at them the moment they start having some fun (or earn a reward, in terms of
legitimate profits). India
This is why we have a long way to go to achieve the PM’s ‘Make in
’ slogan. The hardest part in achieving this is not the manufacturing
infrastructure we need to set up; it is the ‘control freak’ mindset that exists
in our power corridors (or rather in any Indian entity with power). India
So we say we will never use the retrospective tax laws (which effectively allow the government to change tax laws for previous years and take more money), but we don’t remove the law either. The uncles say, ‘We will keep the stick, but we will never use it’.
Well, maybe not today but what if another uncle comes tomorrow? Are the rules going to depend on the uncle’s personality? We want companies across the world to invest here, but the government places so many controls and permissions that it effectively controls every business. We call it free-market capitalism, but in reality it is state-controlled capitalism. The only way the uncles will let you do business is if you keep giving them enough treats. This is how
has been run since India , and that is why it is difficult to change the
The unfortunate part is this uncle-and-stick model keeps the park empty. If investors don’t come, we don’t have jobs or growth. Kids can play in other parks. Asian economies,
Eastern Europe and Latin
America are all competing
for investor dollars and to be manufacturing hubs. The only way the investors
will come is if the rules are clear, simple and not
politician-personality-dependant — in spirit, writing and practice.
If we really want Make in
, the government has to let go. Keep business rules,
but according to international standards. Get the government out of business,
not just in terms of selling PSUs, but also having no arbitrary or
discretionary control over individual businesses. All this should be
personality-proof. The current FM may be investor friendly. The next one may not. If I have invested money in India , how can I be sure the new guy won’t come behind me
with a stick? India
All these issues have to be addressed if we want economic and jobs growth which, come to think of it, is what makes ‘acche din’ happen. Let go of the sticks uncles; let the kids come and play.
By Chetan Bhagat -
24 Aug 2014 – The Times of India
Chetan Bhagat is a bestselling author and a popular newspaper columnist.