It is vital that the new government resists calls to ditch inclusive legislation for the sake of exclusive entitlement
  • Dumping good laws will hurt economy
Narendra Modi and his colleagues must resist calls to equate economic growth with blind approval for projects. Photo: Ramesh Pathania/Mint
These euphoric post-election days in India are for many hopeful in terms of the future of the country, and for some, loaded with impending horrors. I’m not going to add to either stack of perception, but to the depleted stack of necessary cautions.
There is little dispute about the fact that India’s economy needs to grow robustly for the country to simply continue running in place, let alone take fantastic strides into a future of self-fulfilling prophecies of widespread peace and prosperity. But that future cannot arrive by pandering to a privileged band of robber rajas, as it were, or the notion that industry, benefits and a better life are the prerogative of a few.
To that end, it is vital that Prime Minister-elect Narendra Modi and his colleagues at the Bharatiya Janata Party (BJP) resist calls to equate economic growth with blind approval for projects, especially in the areas of infrastructure, extractive industries and construction. They must resist calls that only such blind approval—or more precisely, wide-eyed approval blinded by falsified notions—will accelerate slowed economic growth.
It is also vital that the new government resists calls to ditch inclusive legislation for the sake of exclusive entitlement. I refer specifically to the on-the-record calls by several business leaders to negate legislation such as the new land acquisition law and make the pending mining Bill entirely pro-business. I wouldn’t be surprised either with a growing pitch to amend the forest rights law, a move that assumes the BJP-led alliance’s majority in Parliament is enough withal to do whatever it pleases.
To do so would be to add to India’s brimming cauldron of internal security issues. Legislation of affirmative action and fair play are designed to reduce or resolve disenchantment, anger and conflict—key ingredients to increasing the country’s economic efficiency and prosperity.
Here I offer some observations from McKinsey and Co., which, like others of its ilk, is considered by several of India’s business leaders (and not a few in government) as a holy grail of advice. In 2009, some months after the United Progressive Alliance took office for the second time, McKinseypublished a report, titled Building India: Accelerating Infrastructure Projects. The report’s observations of policy and procedural impedimenta—largely derived from the thoughts of India’s business leaders, some engaged today in pushing a rampage of pro-business legislation—remain as valid today.
The report lists several areas of inefficiency in India that have little to do with pro-business arguments of inclusive legislation damaging economic growth. I quote: Quality of planning and engineering design is poor. Tendering unviable public-private partnership projects is common. Contracts in use are inappropriate. Pre-tendering approval process is centralized and slow. Performance management is weak. Availability of skilled and semi-skilled manpower is insufficient. Weak risk managementskills. Below-par design and engineering skills. Lack of best-in-class procurement practices.
In areas related to delays in land acquisition, the McKinsey report states: “Global best practices suggest that land acquisition should be complete before a project is tendered. In India, projects are often awarded with only part of the land physically acquired, sometimes as low as 30%. Delays in subsequent land acquisition are possibly the single-largest factor causing project delays. These delays are driven by three factors: 1) undervaluation of land price; 2) dependence on state governments for land acquisition; and 3) the ambiguous definition of the term unencumbered land.”
The report also adds that in India, “dispute resolution processes are ineffective”, on account of “ambiguous” legislation and the tendency of arbitration to be ineffective, leading to “long drawn-out disputes”.
Nearly without exception similar points can be applied to major manufacturing projects, extractive industries and construction projects. Such inefficiencies need fixing, not fixing the match by dumping, preventing or weakening legislation that seek to correct—entirely within the spirit of participatory growth—massive disadvantage. Those at the bottom of the pyramid must not be made to pay for the deliberate policy, procedural and performance inefficiencies of government and business, those that occupy and dominate the apex of the pyramid. Eminent domain must not come to mean domination.
To do otherwise would, among other things, make a mockery of Modi’s declaration to the BJP parliamentary party meeting where he was formally invited to premiership by his party. In a message beamed countrywide, Modi dedicated BJP’s Lok Sabha victory to India’s poor, and the country’s dispossessed and trampled.
Empowering and enriching them will grow India—and the BJP—not calls to nationalism or notions of exclusion.
Sudeep Chakravarti is the author of Red Sun: Travels in Naxalite Country and Highway 39: Journeys through a Fractured Land. This column, which focuses on conflict situations in South Asia that directly affect business, runs on Fridays. Respond to this column at [email protected]
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