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Saturday, 9 November 2013

India’s three growth-killer ministries (Pakistan Observer)

By MD Nalapat
Friday, November 08, 2013 - Manmohan Singh admires Europe and the US, so commentators and media outlets there repay the compliment by claiming that he was the originator of the 1992-94 economic reforms which to an extent energized the Indian economy. The truth is that Manmohan’s only contribution was to relentlessly push for easier entry of foreign companies into India, rather than seek to ensure that domestic companies were enabled to compete better abroad.

As Union Finance Minister, he presided over such giveaways as a $12 b billion gift to Moscow in the shape of the rupee-rouble pact. Because of this unwise and one-sided decision, India became the only country in the world to repay loans taken from the USSR at an exchange rate several multiples higher than that prevailing at the time. The talk in Delhi was that it was the Bill Clinton administration in Washington that was instrumental in getting India to accept such an expensive policy, because Clinton wanted to funnel financial help to the newly created Russan Federation. Only, he wanted the largesse to come from a desperately poor country, India, rather than from his own. The $12 billion gift to Moscow did not result in any benefits for India, as Boris Yeltsin ignored the former close friend of the erstwhile USSR and refused to make any concessions on sale of defense equipment.

China has emerged, together with South Korea and Japan, as a powerful competitor to the dominance of companies from countries forming part of the NATO bloc. Luckily for all of them, the Sonia-Manmohan duo has ensured that Indian companies now pose no threat to MNCs based in Europe, China or the US. This has been done through multiple agencies. The Reserve Bank of India has been carefully headed only by those known to favour foreign interests. The present Governor, Raghuram Rajan, is a Green Card holder who pines for the day when he will return home to the University of Chicago, or perhaps become the first “non-American” to head the World Bank. Although technically not a US citizen, Rajan can be expected to do all that is necessary to safeguard and advance US interests in the World Bank, thereby enabling Washington to claim that it gave up the US monopoly over the top post in the Bank, even while continuing to get all the benefits of such a monopoly.

Rajan has twice in his brief tenure since coming to office hiked up interest rates, thereby further crippling industry in India and handicapping them from facing foreign competition. A company headquartered in the US or the EU - or indeed in Japan, South Korea or China - gets finance at a rate that is far below the 15 percent paid by an Indian competitor. The new RBI Governor is following in the footsteps of his two immediate predecessors by boosting interest rates and thereby ensuring that banks in India become loaded with no-performing assets, thereby crippling them from competing with foreign banks. Incidentally, Raghuram Rajan has laid out welcome mat for foreign banks. Of course, only those from NATO bloc will be welcome.

Those from the GCC or from Africa or South America are not part of the small group of countries favored by Rajan and his bosses, Manmohan Singh and Sonia Gandhi. The Reserve Bank of India has sliced away a least 2% from the rate of growth of the Indian economy .Another ministry that has fulfilled the same purpose ( of crippling Indian companies in their battle to win markets dominated by foreign companies) is the Ministry of Home Affairs. According to the MHA, investment coming from the GCC or East Asia (especially China) is suspect. Clearance for such projects takes months to arrive, if they ever do. In the meantime, if investors in these locations send their funds to London, New York or Frankfurt from where they get rerouted to India via the Muritius tax haven. Once the money gets rerouted through NATO-bloc entities (who claim a hefty commission for the service), the Ministry of Home Affairs withdraws its objections and permits the investment. It is as though capital from the GCC or from East Asia needs to get purified by getting routed through the NATO bloc in order to be deemed suitable for investment in India. Interestingly, executives of these NATO-bloc financial entities have free access to the highest levels of policy-making in India.

The other ministry that has chopped off 2% from the rate of growth of the Indian economy is the Ministry of Environment. This ministry has made it hell for companies to invest in India, an obstructionist stance that has gone on since Sonia-Manmohan team came to power in

2004. Of course, none of such obstructive tactics have actually improved the environment in India, which continues to he heavily polluted. The Ministry believes that those who are desperately poor must remain desperately poor, a view also held by the many foreign-funded NGOs who are given VIP treatment in Delhi. These NGOs operate in effect on behalf of foreign competitors, by preventing Indian companies from gaining access to minerals and to other requisites of manufacturing. The consequence has been a rise in both pollution and unemployment.

Together, the RBI, the Ministry of Home Affairs and the Ministry of Environment reduce the rate of growth in India by a total of 6% annually. They ensure that the people of this country remain poor and deprived, even as NGOs from countries such as Canada (where per capita consumption of energy is huge but which lectures poor countries on conservation) are staffed by expatriates who seldom venture far from their luxurious residences. With such agencies ostensibly looking after their welfare ,the people of India have no need of foes. Their so-called protectors are doing the job of destruction of their future more effectively that any outside foe can.

—The writer is Vice-Chair, Manipal Advanced Research Group, UNESCO Peace Chair & Professor of Geopolitics, Manipal University, Haryana State, India.

http://pakobserver.net/detailnews.asp?id=223107

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