NEWS COMMENTARY SPECIALS CHAT ARCHIVES
Amberish K Diwanji
The Indian reforms have failed absolutely and miserably. I have said that and I have no hesitation in saying that again. We haven't gained as a country. All that we have done is solved our foreign exchange problem so that everyone can fly around the world without worrying about their foreign currencies. But what has the poor man gained? The poor man is relatively worse off today than ever before," says Lord Swraj Paul, Baron of Marylebone, at his office located near Madame Tussaud's waxwork museum in London.
''Regarding investments in India, our company keeps looking at it, but not with the seriousness that it deserves if a project is to be set up. This is because the atmosphere is not right. There is far too much waste of time. We keep looking at it but no one is jumping to it," he added.
But Lord Paul has more than criticism to offer. As a businessman who years ago tried to invest in India and created a furore in DCM and Escorts, he can put his finger to what is wrong. "To attract investment in India, the country must show some successful projects that have been set up, and prove to the world that those involved with the project are happy with it. You show me one foreigner who is happy. Don't believe what he tells the press, that is something he cannot avoid. But in their own minds nobody is happy. We need evidence that the Government of India is not discretionary, that it is transparent. We need to curb corruption and give a good account of ourselves and show the world that good things can happen in India," he said.
But what about the investment that has come into the country? Was not India grandiosely aiming for $10 million investment by 2000? Lord Paul pooh-poohed the idea. "In India, there is no distinction, either in the journalists's mind or in the government, between investments in the stock market and investments in industry. I personally don't consider investment in the stock market as investment. I am talking of industrial investment, which once invested, is tied up for the next seven years or more. It is that kind of investment that India has not even started to attract. It made no effort in the previous government's rule, and it has made no effort in the past one year,'' he said.
This does show his bias for manufacturing -- he is, after all, a graduate from the Massachusetts Institute of Technology. "I very strongly believe that manufacturing is very important for the benefit of the country. There is a view that came into the UK in the 1970s and 1980s that if you do financial juggling and have stock market investment, then you don't need a strong manufacturing base. I feel India is heading in that direction.
"In the last six years of liberalisation of India we have done nothing to make our manufacturing industries efficient. We talk about the stock market and financial services. Wealth is created when manufacturing is made more efficient, and competitive prices are offered,'' he says.
What does this forbode for India? Will it be left behind the Asian Tigers? "The money is going to other Asian countries. Look at China. Just this morning I received a proposition for investment in southern China, which I have already passed on to one of my sons. So one can see the effort here.
"Ever since liberalisation and reforms began, more money has gone out of India than has come in. That is why the country's national debt has gone up," says the peer.
So what was wrong with the reforms? ''Nothing wrong with the ongoing reforms and liberalisation, but everything is wrong with its implementation," is his wry reply. "We need people willing to take responsibility for implementation. I had given a suggestion to (former finance minister) Manmohan Singh that, with the work of the bureaucracy shrinking, joint secretaries should be given responsibility for projects of a certain size being set up in India to speed up implementation. The secretaries can take responsibility and deal with difficulties. But so far, there has been no move on this aspect.''
Lord Paul points out how little things have changed in the Indian bureaucracy, often considered one of the primary reasons for India's slow growth. "Previously, we were stopped for licensing; now the government has created the FIPB, which once again is a hurdle. So we go through the same number of forms. Go to the Reserve Bank, the same number of forms. So for the foreign investor, what have you done? What have you changed?" he asked. And you wonder.
But what about the fact that so many foreign companies continue to evince interest in India, tying up with Indian partners. Lord Paul scoffs at the very notion. "All companies are interested in India, because it is a very large market. But very few have really taken stakes. Some have started off as joint ventures and ended up buying the Indian partner. But you really needed the Indian partner only to help out on administrative details, and in the corridors of power. The Indian partner is only a fixer, little more."
Reiterating that India has not made an effort to attract investment on the scale that it can, he says, "I'll give you an example. When the automobile company Nissan was planning to invest in Europe, Thatcher sat in the chairman's office and asked him what he wanted her to do to invest in the UK, and then provided the same. Nissan set up its plant in the UK. Which Indian PM or finance minister has made such an effort?"
Another surprise! Lord Paul was actually critical of the recent Budget, acclaimed by one and all. "It is a Budget based on hope. Hope that things will improve and that people will voluntary disclose their black money, which can then be put into the country's economy. In my experience that does not happen and a Budget based on hope is not a good Budget. This Budget is based on a disclosure scheme, and I hope it works."
Lord Paul points out that disclosure schemes have not worked in the past. "I don't like voluntary disclosure schemes. It implies that you tell people: 'Whatever you have hoarded, bring it out, and then do it again for another five years until the next disclosure scheme.' So what you are doing is punishing an honest person and offering incentives to a dishonest person."
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