A Last-Ditch Effort: Seeking Salvation in Further Deregulation
WITH the first signs of deceleration of growth in India since 2009-10, economic and political agencies of high finance were back at their old game: pressuring New Delhi for more concessions and further opening up of the economy. The government was criticised for “policy paralysis”, the PM was personally attacked and the credit rating agencies threatened to – and actually did – downgrade India’s creditworthiness. As usual, Indian big business and corporate media were singing the same tune. To be sure, the government was always willing to fall in line but the sheer unpopularity of the proposed reform measures and calculated opposition on the part even of parties (like the BJP) which are actually in favour of such measures and even some constituents of the UPA, held back its hand. But not for long. After some dillydallying, towards the end of 2012 the Congress decided to go on the offensive once again from the side of big capital. It was expressed in several forms: a booster dose of reform, budget 2013 and an unending series of anti-people, pro-corporate policy decisions. Instantaneously, the avalanche of admonitions turned into a spring tide of profuse praise. “The lion roars again”, it was announced in praise of Manmohan Singh. For ordinary people, harder days were in the pipeline.
Another Tranche of Neoliberal Reforms
In September 2012, at one go price of diesel was hiked by Rs.5 a litre, subsidy for LPG cylinders halved, sectors like multi-branded retail, civil aviation and broadcasting were opened up for foreign investment and shares of several profit-making public sector units were put up for sale.
Among these, the one that attracted the people’s ire immediately was the severe curtailment of subsidy on LPG cylinders and the steepest-ever hike in the price of diesel. The latter, even the government could not deny, was sure to result in a hike in transport costs which, in turn, would impact on food prices. The government’s claim that the hikes were justified in the light of losses suffered by oil companies was exposed as a shameless subterfuge on at least two counts. One, all the oil and gas companies had recorded substantial net profits. Secondly, it was pointed out, the government has to pay huge subsidies on diesel only because it collects a still larger amount in duties; if it decided to raise this amount by taxing the rich and improving revenue collection, no subsidies would have been required!
In addition to straightforward withdrawal of subsidies, the government has also devised a set of indirect methods of doing the same. The arbitrarily determined, ridiculously low poverty line has already disentitled a huge number of poor people from bare necessities like low-cost food and shelter.
The decision that invited the sharpest debate in addition to protests on the street was the green signal to FDI in multi-brand retail. The government claimed that this will result in investment in cold chains and therefore in lower prices by “eliminating middlemen”; it was pointed out that in the fruits and vegetables sector, where a cold chain infrastructure was most needed, data from developing countries indicated that prices in new supermarkets were generally higher than in existing retail shops. The officials asserted that existing retailers will not be harmed. But data from Latin American and South Asian countries showed a significant decline in the number of small shops and in the market share of open air vendors consequent upon the entry of foreign retail chains. The Indian Government claimed that many new jobs will be created when new shopping malls come up. That this was a pure deception was easy to understand, because by no stretch of imagination the employment potential of capital-and-technology-intensive shopping malls can come anywhere near that of labour-intensive kirana shops.
The policymakers’ most potent argument was that corporate retailers would buy directly from farmers and other small producers, who would get better prices with the elimination of middlemen. This might seem plausible in the abstract, but not to those who are familiar with ground realities in our country. Most purchases for corporate retailers occur through contract farming, which leaves the farmers at the mercy of the big players. Even otherwise, rarely can small farmers access the supply chains because the latter insist on arbitrary quality standards and prices. Furthermore, the powerful retailers can start with better terms for the producers and, once the old middlemen are thus elbowed out of competition, use their monopoly positions to squeeze the unorganised small suppliers in a buyers’ market. All these and many other pitfalls have been thoroughly exposed in a huge and growing number of studies by institutions as well as individuals in India and abroad.
Finally, the government spoke of various “checks and balances” to protect the interests of small producers and retailers. That these are nothing more than false promises was proved when, for instance, the initial promise that foreign retail chains shall be required to source at least 30% of products from Indian small and medium enterprises (SMEs) was summarily waived in the case of Swedish furniture giant IKEA.
So on and so forth, arguments in favour of FDI have been de-molished one after the other. Even the Supreme Court accepted a PIL in January 2013 and asked the Centre to file a response on how it intends to safeguard interests of small traders. “Have you got any investments or just a political gimmick? Has the FDI policy brought some fruits?” it asked the government counsel. However, the court was not within its powers to rescind the executive decision. The government had its day. It rolled out the red carpet to retail MNCs like Walmart and Tesco, even as the latter were facing unprecedentedly massive protest in the West, in Los Angeles and New York for example.
Less protested on the street but strongly criticised in informed circles is the decision to open up pension funds and banking to global finance capital. Following the passage of the Insurance Law (Amendment) Bill, 2008 and the Banking Laws (Amendment) Bill, 2011, which provided a new momentum to the privatisation offensive, now there is also the Pension Fund Regulatory & Development Authority (PFRDA) Bill, 2011, which seeks to allow 49% FDI in the pension-PF sector. These moves will give free hand to the fund managers to play with billions of rupees of hard-earned money of the Indian working people to reap huge profits through share market speculations and by other means.
That the RBI is in full concurrence with the Government of India on the question of further opening up our financial sector was made clear by R Rajan late last year in Washington. Forgetful of the catastrophic collapse of American banks and financial institutions only a few years ago, he issued an open invitation to the banking giants of America to gobble up Indian banks. “That is going to be a big big opening because one could even contemplate taking over Indian banks, small Indian banks and so on ...if you adopt a wholly owned subsidiaries structure ... we will allow you near national treatment”, he told a gathering of representatives of the American financial establishment.
2013-14 Budget Blues
The country has no choice but to invite foreign investment, said P Chidambaram in his budget speech. An obvious understatement, it meant that the government was prepared go to any length to try and revive capital inflows at any cost. This was the main thrust of the budget proposals, and remains the cornerstone of the government’s economic thinking as a whole.
And what do suppliers of foreign finance, particularly their most vocal representatives, the credit rating agencies (CRAs)
It was the railway budget 2013-14 that anticipated the austerity thrust to be fully manifested in the general budget. Not only were freight, fare and sundry other charges (such as cancellation charges for reserved berths) steeply hiked, steps were taken to deregulate fares and freights by linking these to variable fuel prices, which effectively meant that with every increase in the price of diesel or electric power the railway fares and freights will automatically rise.
As for the general budget, P Chidambaram earned kudos from vocal proponents of fiscal orthodoxy by (a) restricting fiscal deficit for 2012-13 approximately at the budget estimate (BE) i.e., 5.2% of GDP despite a slowdown in revenue growth and (b) promising to further reduce the deficit to 4.8% of GDP in 2013-14.
The first he achieved by drastically reducing both revenue and capital expenditure in the financial year just ended: total Plan expenditure being Rs.90,000 crore less than the budgeted amount. Almost all sectors from agriculture and rural development to social services have experienced the cut. The much-touted MGNREGA gets Rs.33,000 crore, the same as in the previous year. In both school education and health, allocations have been increased merely by 8% compared to the previous year’s budget, which means practically zero increase when inflation is taken into account. As per the revised estimate 2012-13, total capital expenditure is a drastic 18% less than budgeted while central assistance to states is also 14% less than budgeted. In fact such drastic cuts in expenditure, which depress effective demand and slow down capital formation, are partly responsible for the deceleration we are already experiencing.
As for the second – the promise to further reduce the fiscal deficit – the FM finds himself in a tight corner. Data released by the government on the last day of 2013 showed that the fiscal deficit in the April-November period was already Rs.5.09 trillion, against a budgeted target of Rs.5.42 trillion for the whole year to next 31 March. It was obviously not possible to keep the deficit within 0.33 trillion during the remaining four months. The problem, as usual, lay in expenditure exceeding the budget and revenue collections falling below estimates in a backdrop of slowdown. Given the government’s fiscal orthodoxy, the upshot in all probability will be further cuts in state spending. In that case the economic benefits of a healthy state spending – promoting infrastructure, creating jobs and thereby augmenting domestic demand when export markets are shrinking, improving the conditions of life and therefore productivity of the masses – will be lost. With slower growth of GDP, tax revenue will shrink further, making it more difficult to meet targets of fiscal consolidation. The entire exercise will prove counter-productive, just as the austerity programmes in countries like Greece and Spain have.
The budget was not shorn of tokenism either. A case in point is the surcharge (one-time, one-year levies) on individuals with an annual taxable income of more than Rs 1 crore and on domestic and foreign companies with taxable incomes above a certain limit. The fact of the matter, however, is that this ‘burden’ is more than offset by continuing discrimination in favour of property income (no tax on dividends, no long-term capital gains taxation of share transactions, and no inheritance tax).
Kowtowing Before Foreign Capital
Among the steps taken to keep foreign investors in humour, the most shameless was the backtracking on the General Anti-Avoidance Rules (GAAR). Introduced only the previous year (2012) by the then Finance Minister Pranab Mukherjee, its purpose was to prevent the misuse of law to ‘legally’ avoid (as opposed to illegally evade) tax payment by foreign investors. But this thoroughly just and rational decision was soon put on hold, first for one year when Mukherjee was kicked up the ladder and Manmohan Singh temporarily assumed charge of the finance portfolio, and then, in January 2013, for another two years. However, the very mention of GAAR on budget day generated much adverse reaction on the part of investors and the finance ministry had to promptly clarify that all that was required of foreign institutional investors was tax residency certificates to continue to enable them to avoid paying tax on the income they earn on the investments they have brought in from Mauritius. Additionally, it was clarified that GAAR provisions will apply only on investments made after August 30, 2010 and that too only above a threshold of Rs.3 crore in tax benefits. All these assurances were necessary, it was said, for restoring and sustaining the confidence of foreign investors (and – this was left unsaid – also of Indian investors who prefer the Mauritius route of “round-tripping” to avoid tax).
Another symbolic gesture of appeasement was to be seen in the volte face on the Vodafone tax case. The Vodafone-Hutchison Essar deal of 2007 involved transfer of shares of a foreign company (Hong Kong-based Hutchison) on Cayman Islands, that is outside India, which indirectly held the shares of an Indian company (Hutchison-Essar, since renamed Vodafone Essar and currently known as Vodafone India). In one of India’s biggest tax controversies, with the Tax Authority demanding approximately $2.5 billion in capital gains tax from Vodafone and additional penalties in a similar range, the Supreme Court held in January 2012 that indirect transfer would not be taxable in India. The SC also dismissed the review petition filed by the Union of India and the Tax Authority in February 2012. The Supreme Court directed the tax department to return the Rs. 2,500 crore deposited by Vodafone in compliance with an interim order. The apex Court’s order was seen as a victory for Vodafone. In response, the then Finance Minister Pranab Mukherjee amended the Income-Tax Act, 1961 with retrospective effect to undo the Supreme Court’s judgement.
Following this, international and domestic investors began to raise concerns about investing in India. The government then appointed a committee under tax expert Parthasarthi Shome to look into the issue. The Shome committee promptly recommended the reversal of Mukherjee’s decision regarding GAAR and withdrawal of the demand on Vodafone. Both recommendations were accepted in principle and conciliation with the MNC arrived at, even as P Chidambaram kept visiting the US and other Western countries begging for foreign investment and meeting foreign investors in Delhi.
Moreover, as if to flood the country with all types of foreign funds, the government further eased ECB rules also. ECB limit for NBFCs, including IFCs (Infrastructure Finance Companies) under the automatic route has been increased from 50 % to 75 % of their owned funds, including the outstanding ECBs. The limit for automatic approval has also been increased from $100 million to $200 million for the services sector (hospitals, tourism, etc.) and from $5 million to $10 million for non-government organisations and micro-finance institutions.
But this is a short-sighted policy that directly contradicts RBI’s stated policy stance of “discouraging debt flows”. It will further enhance our external debt and interest burden, the ill effects of which we have already discussed.
Administrative Reforms to Help Corporate Plunder
With the SEZ avenue of corporate loot coming up against powerful mass resistance and the land acquisition legislation getting delayed, in early 2013 the UPA cabinet took a bypass route – that of administrative reforms aimed at speeding up economic deregulation. Thus in the name of clearing the obstacles to growth, the government set up a pair of high power supra-ministerial bodies mandated to use authoritarian discretionary powers to sanction industrial/business projects by overriding principled opposition from official and non-official bodies. One is the Foreign Investment Promotion Board (FIPB) and the other, the National Investment Board (NIB). The latter was soon renamed as Cabinet Committee on Investment (CCI) and placed under the chairmanship of the Prime Minister, so as to make it all-powerful.
In whose interest were these bodies founded? Facts speak for themselves.
It was at the instance of the FIPB that, as already noted, IKEA was allowed to sidetrack the condition of accessing at least 30% of products from Indian SMEs. At the time of founding NIB/CCI, the finance ministry observed that it was needed because green clearances were holding up the country’s infrastructure development and growth. This was strongly contested by the Ministry of Environment and Forests (MoEF) and others like the Delhi-based Centre for Science and Environment (CSE) and the Bengaluru-based Environment Support Group (ESG). “The board is patently undemocratic, anti-federal, counter-intuitive and an extremely dangerous proposal and it militates against the national interest, compromises good governance, and imperils our cherished constitutional legacy,” said the coordinator of ESG. But the FM had his way and the CCI was set up as a fast track supreme arbiter working for industrialists. In a matter of two months, that is by March 2013, it gave the nod to projects worth Rs. 74,000 crore, stuck for years due to lack of various clearances. Most of these projects are in the infrastructure and energy sectors (mainly coal, oil, power) and they involve large scale evictions and damage to the environment. In several cases, objections raised by Ministry of Defence and Oil Ministry, the Defence Research and Development Organisation (DRDO)/Indian Air Force (IAF) were overruled. Interests of local communities as well as overall environmental and security concerns were thus sacrificed on the altar of ‘development’.
Minister of state Jayanthi Natarajan wrote to Prime Minister Manmohan Singh expressing concern over setting up of such a body. She pointed out that the NIB was to set deadlines for granting clearances which includes environmental clearances, for ultra mega projects of Rs 1,000 crore and above. The project proponents could approach NIB if they were aggrieved by the decision of MoEF. But an ordinary person’s right of appeal to the board, if aggrieved by the project, was not recognised. She noted that her ministry in no way has ever stalled projects and had granted environmental clearances to as many as 181 coal mine projects in the 11th Five Year Plan and alleged that the proposed changes in the environmental clearance procedure would have far-reaching consequences on the way the MoEF runs.
The rational position was not acceptable to top industrialists and therefore the Congress high command; Narendra Modi also raised the bogey of a ‘Jayanti Tax’. Following the party’s dismal performance in the Assembly elections at the end of 2013, the Congress, desperate to appease big business and step up investment before the Lok Sabha polls, removed Natarajan from the cabinet on December 21. Two days later Veerappa Moily, who had already proved his mettle as Petroleum Minister in the service of the likes of Mukesh Ambani, was given the additional charge of MoEF.
The environment ministry had, in 2009, made it mandatory to get the consent of all the gram sabhas whose lands were involved in projects like roads, transmission lines and pipelines that pass through several villages and vast forest land, in order to protect the rights of scheduled tribes and other traditional forest dwellers under the 2006 Forest Rights law. The CCI or Cabinet Committee on Investment ordered a roll back of this “hurdle” but Natrajan was willing to follow the law of the land and Supreme Court directives on the matter. For that crime and for doing her duty she lost her job. After approving projects (including Posco steel) worth Rs 1.5 lakh crore in the first three weeks, Moily said in mid-January that in another month he will clear 55 more projects.
Serving Private Sector with Public Resources
Subsidisation of the corporate sector by the state has assumed scandalous proportions in recent years. Exemptions handed out to the corporate sector in annual budgets gives us one straightforward indication and the amount adds up to more than Rs 5 trillion in the last eight budgets. As we have noted earlier, the corporate sector is the biggest recipient and defaulter of loans extended by Indian public sector banks – and despite the gloomy economic scenario banks are loaning out huge amounts to their corporate clients, the total volume of highly risky corporate debt running into Rs. 3.6 trillion.
Here is another example. We often hear that thanks to reforms, the private sector is now playing a big role in infrastructure development, which is so crucial for national prosperity. What is kept secret is the fact that this is just another way of milking the public cow for earning private profits (and praise). In the aviation sector for example, a host of private players started operation with much aplomb and fanfare but almost all of them – Kingfisher being only the most sensational, tip-of-the-iceberg case – have since gone into the red, with burgeoning defaults on the huge loans from (mostly public sector) banks. An even larger sum of money – Rs.2,69,165 crore – has been lent to private power projects, many of which, being neck-deep in trouble, are habitual defaulters. The government on one hand is trying to bail out these projects with subsidised coal supply and other concessions and on the other hand making periodical cash infusions into the banking sector – to the tune of Rs.20,157 crore, 12,000 crore and 15,000 crore respectively in FY 2010, 2011 and 2012 – so as to maintain the required capital adequacy ratio. Both ways, it is public resources that the government is arbitrarily siphoning off to the private sector whether directly or indirectly through (PSBs).
Just as the SBI has been the worst sufferer in the Kingfisher case, so also in most other instances PSBs had to bear most of the burden. The reason is that the government pressures them into lending to these high-risk ventures, which private banks generally steer clear of. This is clearly manifested in available data. During the period FY 2009-12, bank credit grew at approximately the same rate in state-owned and private banks: by 19.6% and 19.9% respectively. But the volume of restructured loan grew at a compound rate of 47.9% in the case of public sector banks, compared to only 8.1% in the case of Indian private banks. Foreign banks acted even more prudently during this difficult period. The loans they advanced grew at a modest 11%, i.e., more than eight percentage points lower than their Indian counterparts, and they religiously avoided lending to the risky infrastructure sector. The result was that their restructured loans decreased by as much as 25.5% during the same period. Clearly, the worst performance of PSBs on this score is to be attributed not to their presupposed inefficiency, but to the government’s policy stance of providing all conceivable help to big capital even where that entails huge losses for the lending banks, i.e., ultimately for the national exchequer.
Allowing Corporate Encroachment in the Banking Sector
Going ahead in the same direction, the government has now conceded big business houses’ long-standing demand that they be allowed to set up their own banks. The latter are very happy, for now they will be able to take easy loans from public deposits. Such banks can confer undue advantages in lending to their own business concerns by breaking norms of prudent banking (very low interest, extra leniency regarding repayment etc.) thereby jeopardising the interests of other shareholders of the bank. That is why Nobel laureate Joseph Stiglitz said in Mumbai In January 2013 that corporates should not be allowed to enter the banking space as it has the potential to create conflict of interests. As one perceptive analyst quipped, the best way to rob a bank is to own one!
It has been argued that the move would serve to extend banking services to more people, including those in rural areas. Does past experience justify such expectations?
When doors were thrown wide open to foreign and domestic private banks (though not to existing corporate entities) in the 1990s, the number of scheduled commercial banks first rose but then declined as banks were closed on grounds of non-viability. The share of rural branches in the total fell from 58 per cent in 1990 to 37 per cent in 2011. The population cover also worsened: from 13,700 per bank branch in 1991 to 15,200 in 2001 and close to 16,000 by the end of the first decade of this century. Moreover, there was a sharp decline in the share of priority sector advances in total non-food credit: from 40 per cent in 1990 to 33 per cent in 2012. The shares of agriculture and the small-scale industrial sector came down to 12.2 and 6 per cent respectively in 2012 from 16.4 and 15.4 in 1990.
It is futile to expect that the new breed of corporate banks would tread a very different path and serve any useful social purpose. Of course, the real purpose – that of opening yet another channel of private corporate plunder – will certainly be served.
To judge the new decision in perspective, the Indian experience tells us that public ownership to some extent influences the behaviour of bank managers trained as public servants not to succumb to the lure of quick profits, and this helps avoid the US-type banking crisis. The period since 1993, however, has witnessed a steady retreat from the dominance of public ownership by means of (a) grant of greater space for foreign banks (b) grant of licences to new private banks and (c) considerable dilution of public ownership in the nationalised and state-owned banks by significantly increasing the share of private equity ownership. The latest decision allowing corporate entry is yet another retrograde step in the same direction, one that further strengthens corporate control on the banking sector and goes directly against the needs of small business and the small account-holders.
The New Land Grab Legislation
The government never tires of waxing eloquent on its commitment to inclusive growth, but in real life contradicts itself in every step. The latest example is the land acquisition Act passed last year, which seeks to satisfy the hunger of big business by dispossessing the toiling millions.
Deceptively titled “The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement”, the new Act actually leaves the field open for accelerated and unfettered transfer of agricultural land without any effective provisions of compensation or resettlement.
The Act is essentially about the procedure to be generally adopted – exemptions are always allowed as ‘a demonstrable last resort’ – for acquisition of land by the state. ‘Private purchase of land through private negotiations’ is completely outside the ambit of this entire legislation. And contrary to the text of the 2011 draft, the final version does not specify any limit for such privately negotiated private purchase (read corporate land grab by hook or crook) and leaves it entirely to the whims and fancies of ‘the appropriate government’.
The acquisition of land by the state is legitimized by invoking ‘public purpose’. The new Act has evolved a most flexible definition of public purpose by virtually including any and every purpose other than agriculture! Any supposedly strategic purpose is obviously designated as public purpose and that includes ‘purposes relating to naval, military, air force, and armed forces of the Union, including central paramilitary forces or any work vital to national security or defence of India or State police’ or ‘safety of the people’. And then all kinds of infrastructure projects, industrial corridors or mining activities and investment or manufacturing zones designated in the National Manufacturing Policy, and projects for sports, health care, and tourism also come within the purview of ‘public purpose’. Private hospitals, private educational institutions and private hotels are excluded, but public-private partnership projects where the ownership of the land continues to vest with the government or private companies involved in any activity defined as ‘public purpose’ are all covered by the Act. In other words, the pursuit of private profit is also being sanctified as ‘public purpose’.
A major grievance against the 1894 Land Acquisition Act concerned the forcible nature of the acquisition where the affected people had little say. The government claims to have addressed this aspect and the new Act requires the state to obtain 70% prior consent in the case of acquisition of land for public-private partnership projects and 80% consent where land is being acquired for a private company. But no prior consent is needed where the state acquires land for its own use or for Public Sector Undertakings.
Instead of seeking the consent of the affected people, the Act talks about consulting concerned local bodies and conducting a social impact assessment study and getting it evaluated by an expert group. The recommendations of the expert group are however not mandatory and any government can overrule them provided the ‘reasons’ are recorded in writing. Moreover, the requirement of a social or environmental impact assessment study does not arise if and when any government invokes the ‘urgency’ provision relating to any strategic purpose.
Next comes the question of compensation, rehabilitation and resettlement. Here again, the question does not arise in cases of ‘privately negotiated private purchase’. A private company attracts the provisions of compensation, rehabilitation and resettlement only when it requests the state to acquire some land over and above what it has already purchased. It has been widely seen that land acquisition affects a whole lot of people beyond the owners of the concerned land plots. The new Act recognizes this reality while defining ‘affected families’ but leaves out the landless from the ambit of compensation. Those who suffer displacement are offered something by way of rehabilitation and resettlement, but landless agricultural labourers and share-croppers or people engaged in sundry professions whose livelihood is affected by land acquisition hardly get anything.
Beyond the direct loss of land and livelihood, acquisition of agricultural land, existing or potential, adversely affects food security. The new Act has a small section entitled ‘special provision to safeguard food security’ which however offers no concrete safeguard. Projects that are ‘linear in nature such as those relating to railways, highways, major district roads, irrigation canals, power lines and the like’ are exempted from this provision and recent experience clearly shows that huge amounts of agricultural land are being diverted in the name of expressways and corridors. Acquisition of agricultural land is however not restricted to only such projects of ‘linear nature’. The Act allows acquisition of all kinds of agricultural land including irrigated and multi-cropped land for any project in ‘public purpose’, and that too, without specifying any limit.
At a time when India needs to increase food production and increase the actual area under cultivation, the state is thus paving the way for a steady decline in effective availability of agricultural land thereby pushing the country into a more acute food and agrarian crisis. What kind of growth can take place on this foundation, and for whom?
The Elusive Upturn
Now, leaving apart for a moment the question of the desirability of the seven sets of measures outlined in this chapter, will they prove effective in bringing back the high growth rate of yester years? That hardly seems to be the case. Even the big ticket reforms – read new concessions to big capital – are in most cases failing to produce expected results. Thus, last year’s relaxation of the cap on foreign investment in almost all sectors was immediately greeted by South Korea’s Posco scrapping its $6 billion project in Karnataka and the world’s largest steel maker Arcelor-Mittal withdrawing its $12 billion steel plant project in Orissa. And there is nothing to be surprised about such setbacks. Given the fragile state of the Indian economy, it is only to be expected that profiteers from abroad would not show much interest investing in this country. The actual experience over the past one year (in the case of FDI in retail for example, where their response was less than lukewarm) amply proves this.
Similarly, the poor prospects of the economy are prompting many an Indian businessperson to invest more abroad than in the home country. Their pragmatic approach was authentically voiced by noted industrialist and FICCI ex-Vice President Y K Modi at the 76th convention of FICCI held in December 2013. In reply to Rahul Gandhi’s appeal for brisk investment he said he would not invest in India just because she needs it, but only in the interests of his concern and its shareholders; otherwise he would prefer investing in other countries.
To take another instance, there is hardly any progress in the matter of opening corporate banks. Following Value Industries, promoted by Videocon’s Venugopal Dhoot, Tata Sons has withdrawn its application for opening a new bank. A few other prominent players like Mahindra Finance have announced they preferred to stay away from the field.
Clearly, the spell of Manmohanomics is over. What remains, and is growing profusely, is a pair of its toxic by-products.