Red Carpet Not Red Tape

Red Carpet Not Red Tape

Prime Minister Narendra Modi made a promise on the campaign trail, citing his track record as Chief Minister of Gujarat for proof, that he would create an atmosphere nationally, where business and industry, both domestic and foreign, could expect a red carpet welcome. This, in place of the customary Indian red tape, that sinks all but the most determined initiatives.

The number of captains of business and industry seen at his and the BJP/NDA swearing in on the 26^th of May bear witness to Modi’s popularity and credibility with this class. Also, it underlines his capacity to understand the needs of this vital component towards both job creation and national prosperity.

But now, it is time to take and launch this vision and dynamism nationally.  The Government of India must, to put it simply, learn the Modi way of doing business with business, and fast. The economy, languishing at around 4 per cent growth in GDP, cannot afford to waste time.

Modi’s prompt action of streamlining 17 ministries into a clubbed together 7, headed by like-minded ministers tasked to implement his economic vision, is a great and swift step in the right direction. More of the same, is reportedly in the pipeline, buttressed by the energy of a relatively younger crop of ministers. Of course, the negative culture of pushing files in a dilatory manner, creating obstacles, mangling priorities, causing cost over runs etc. will have to change drastically to suit. Not only politicians but the masses of officialdom must be held responsible for timely and effective implementation.

Notorious and persistent Indian red tape has been endemic, some would call it a temperamental weakness in the national character. We seem to have a love of a multiplicity of permits and sanctions, ponderous bureaucracy, antiquated operations and methods, willful subversion of one department by another, changing of the goal posts half way through the match, promised terms reneged upon, retrospective sanctions, naked graft, deliberate extortion etc.. All this has traditionally made India a very difficult place to do business in.

Independent India has created a government and governance model that has stood apart from the people in a neo-colonial avatar. And with its own selfish logic of officiousness subsuming every action and inaction based on vested interest, it is indeed very difficult to find the nationalism and patriotism we so badly need today to revive our fortunes. Modi is an outsider to this venal way of doing things, a monkish prime minister devoted to the nation, and therefore a very good catalyst for change of this sort.

India is compared to Egypt when it comes to red tape because both countries have legions of unsackable government servants though the political dispensations differ. And the joke goes that the British proclivity for indulging in semantics, fused with the rough and ready Western style education of the Indians and Egyptians, has combined to turn out hybrids of the most obdurate and opaque babus on earth.

This red tape is like a religion unto itself.  And despite the sub-continent’s obvious potential of being amongst the biggest economies in the world, with massive existing and future markets to tap. Compounded with corruption at every level and stage, intractable infrastructure bottle-necks, interminable delays, many is the foreign company that rues the day it set foot in India. Others, overwhelmed by the plethora of red tape, simply give up. This, after incurring massive losses and delays, preferring to do business in other countries, smaller, with more modest prospects perhaps, but with a more welcoming and winning attitude. Yet others, many of which are multi-national companies established decades ago, are made of sterner stuff. They not only stay, but expand, having learnt the Indian way to get over road blocks, and turning it to their advantage.

But none of the welcoming spiel is as per the advertisement or the assurances given when ministers  and senior functionaries go to Davos or to the West and East to drum up foreign investment. Then it is dulcet promises of ‘single window clearances’, prompt and swift land allocation, ample utilities, connectivity, infrastructure, professionalism, educated work force etc. The reality has been, often, if not always, a rude shock. ‘Incredible India’ has been anything but, and more akin to a waking nightmare. It is no wonder that many FDI projects are signed but never implemented and deprive the country of much needed growth. The buck-passing never ceases and no one is held accountable. The exception to this confidence trick of a rule has indeed been Gujarat over the last 12 years of Modi’s rule.

Domestic entrepreneurs without infinite patience and very deep pockets have tended to fight shy of industry altogether, and have launched into the service sector instead. Hence the massive middle class success of an Infosys, or the walking away from Soaps and Oils into IT of a Wipro, or indeed the massive success of TCS that has outstripped a clutch of venerable Tata manufacturing companies both in terms of turnover and profits.

Indeed the red tape may have a lot to answer for when it is seen that the Indian Service Sector contributes 56 per cent to GDP today, while the manufacturing sector accounts for just 20 per cent. And yet manufacturing must be boosted to take advantage of our demographic dividend and provide millions of new jobs, if the Modi promises are to be kept.

India is considered to be a potential manufacturing hub in replacement of other Asian theatre countries by the Japanese amongst others. But even though this is theoretically true, the progress on the Industrial corridor between New Delhi and Mumbai, for example, is far from satisfactory so far.

Almost every aspect of governance needs a radical shake up, and India must present itself very differently both to its voting public that has provided a massive and decisive mandate for change and progress, and to the investment community both at home and abroad. It is not so much the legal and administrative framework that is at fault. Some would argue is already far too elaborate, and so it is in the functioning of it that the swiftest changes can be effected.

The work culture must change. The alternative idea to socialism, always an unwritten apology for lack of efficiency and productivity, has to be replaced with alternative models of getting things done. A lot of it will no doubt come from Gujarat, particularly in the encouragemnent to manufacturing industry and the removal of infrastructure constraints, but other ideas could also come from Japan and China, because both countries have spectacularly reinvented themselves from low bases and turbulent times.

(1,102 words)

May 28^th, 2014

Gautam Mukherjee