Pressure is mounting on the Indian government to move fast and decisively on economy. Time recently labelled the Prime Minister Dr Manmohan Singh as ‘underachiever’. An article in The Independent wondered whether he was India’s saviour or Sonia’s poodle. Economist has called him a lame duck. Some rating agencies have downgraded India.
And now come comments from the US President Barack Obama, no less, citing concerns over a deteriorating investment climate and endorsing “another wave of economic reforms to make India more competitive in the global economy”.
American business community, according to Obama, tells him “it is still too hard to invest in India. In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow.”
To be fair to Obama, he has been guarded in his statements, citing others’ views and not proffering his own opinion, and that too not of his own volition but in replies to questions put to him by the news agency PTI.
In contrast with the measured and temperate nature of Obama’s remarks, reactions from India’s political leaders display immaturity and needless jingoism.
Commerce minister Anand Sharma reminded him that ‘policy making is a sovereign function.’ Corporate Affairs minister Veerappa Moily sensed a foreign conspiracy, saying that “international lobbies like Vodafone” had led to Obama “not being properly informed”. BJP’s Yashwant Sinha said “it (FDI in retail) won’t come just because he’s demanding it”, and Mukhtar Naqvi declared that India needed no advice from a country itself “facing economic problems”. With the pro-reform BJP speaking on these lines, it was no surprise that the CPI(M)’s apoplectic comments were in keeping with the inflexible anti-Americanism that remains its sole ideology.
These intemperate comments expose the debasement of public discourse in India, because Obama has not said anything with which we Indians are not painfully familiar.
Foreign direct investment (FDI) is restricted in India, and foreign companies do find it hard to invest. The World Bank’s “Ease of Doing Business” rankings put India at 132, close to the bottom, only ahead of Nigeria at 133; even Pakistan enjoys a more respectable 105. Many in India certainly feel a second generation of reforms is overdue.
It is entirely possible that in lamenting India’s restrictions on FDI in retail and other sectors, Obama was probably not addressing an Indian audience as much as scoring debate points in politics back home. A deal on allowing the likes of Wal-Mart access to India’s growing consumer market could help him earn some electoral brownie points.
Even outside the FDI in retail, there is a large domestic reform agenda which lies almost abandoned. India needs to find political courage to decontrol diesel prices, remove wholly inefficient fertiliser subsidy, abrogate coal nationalisation, make transition to a goods and service tax, and expand and reform the judicial system to ensure that no case takes more than a couple of years to be settled beyond final appeal.
But instead of moving towards these, the Indian government seems to be putting up obstacles for investors in the telecom, metals, automobile and IT sectors, and has slammed shut the doors of the financial sector on them by making credit costly.
This is one reason why big-ticket investment is drying up and the $1trillion infrastructure spending target now seems increasingly remote. This is what should make Indians sit up, not the campaign rhetoric in the US.
From : Khaleej times