For double digit growth, ensure triple digit freedoms (Sunday Guardian)
By Madhav Nalapat | 12 December, 2015
According to conservative estimates, more than $500 billion of illicit funds have flowed from India just during the previous ten years.
After 30 years of coalition governments, voters in India coalesced sufficiently around a single individual bearing the hope of change to give a Lok Sabha majority to the BJP. Narendra Modi promised a “new thinking”, which would sweep away the constraints of the colonial model of governance bequeathed by Jawaharlal Nehru and his successors. In this system, citizens have to pass through the eye of the governmental needle invariably if they seek to accomplish anything significant, in a context where only “grease” enables the navigation of that obstacle. Setting up and doing business in India, building a house, setting up a school or a hospital, each such activity needs to pass through an officially created obstacle course that is so tortuous that most give up in between, and many move abroad. According to conservative estimates released by international agencies, more than $500 billion of illicit funds have flowed from India just during the previous ten years. In any of the hyper-regulated bits and pieces of the economy, distortions and deliberately skewed priorities remain the norm, and yet more and more layers of legal and regulatory plaque get added to the veins of commerce and everyday activity, the latest in the form of penal measures recommended by a Supreme Court-ordered SIT set up in May 2014 to “abolish” black money in the country. Not even ten million dollars of illicit flows has been discovered and brought back by this constantly sitting body, which has been prolific only in recommending regulation after regulation to add on to the many already extant, and each of which would delight officials and politicians adept at using harsh laws to shake down HNI (high net-worth individual) citizens.
Just as in China, where the flow of money illegally leaving the country for offshore havens has multiplied as a consequence of Xi Jinping’s “anti-corruption” campaign, in India as well, all that has been affected by the SIT’s labours is not the actual generation of black money, but its spending within India on taxed items. In a context where only the CBDT and the RBI believe that even harsher regulatory measures, which in effect (given the level of grease in the official machinery) make the doing of ordinary business in India impossible, will reduce rather than increase black money generation, politically incorrect souls may venture to say that it ought to be made easier rather than more difficult to expend black money on taxed items in domestic markets and on occupations creating jobs in India, rather than drive the same offshore in the manner that is taking place now, thereby creating jobs abroad and wealth abroad through draining this country of both.
The web of laws, prohibitions and regulations existing in India under the Nehruvian system of administration has resulted in a situation where citizens willy-nilly break some law or regulation every day of their lives. A situation where it has become impossible to follow each law and regulation and still be able to conduct any kind of business or other activity. Eighteen months since the last Lok Sabha polls, India is still awaiting the dawn of the post-colonial “Minimum Government” promised by Prime Minister Modi, for only such a transformation can ensure the acceleration of growth to the double digit level needed to prevent widespread social unrest by 2019 as a consequence of galloping unemployment and bleak economic prospects for the young.
A century ago, Vladimir Lenin wrote about Stalinist methods that what was needed was “better less but better”. Similarly, what India needs is less law but better law, which reflect the needs, potentialities and priorities of the 21st century. More transparency in governance is not merely desirable, but inevitable in a context where technology is making concealment ever more difficult. Freedom of expression and the right to a lifestyle based on individual choice are essentials in the creation of knowledge clusters that would create in India rivals to Microsoft or Google. It is not accidental that Gujarat, whose government believes in the capacity of law to convert sinners into saints through denying even adult citizens access to spirit-based liquids and other diversions, is far behind trendy Gurgaon or Bangalore in 21st century Information Technology, ahead though the state may still be in 20th century manufacturing. Conducting an open dialogue in India has become hazardous to health and liberty, given the surfeit of laws and rules that can be used on the basis of complaints coming in the form of a postcard, yet there is no way domestic technology giants can emerge in India, absent the protection of freedom of speech.
Double digit growth needs triple digit freedoms in India, where for centuries a versatile people have been hobbled by the straitjacket of control systems created solely to extort money from them in some form or the other. We are seeing how the very Congress leadership which stood by as Manmohan Singh got passed regressive legislation and repressive regulations serially is now under threat of prosecution by application of the same laws nurtured by the Nehruvian system.
Narendra Modi, tear down this system before India joins those countries where chaos has become the only rule that is being followed. Such a situation is closer, much closer, than those in high positions in the ruling or opposition sides realise.