Professional Documents
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Many moons ago, in October 2004, this column had suggested that
while the Left idea was all right, it was the Leftists who were a
problem.
As much, I now think, can be said about reform and the reformers.
In the old days gifts would be exchanged. Now greater market access
is given.
They wanted much more. They also attributed the slow approach to
the government's desire to protect Indian capital, as if that was
somehow wrong.
If big Indian business houses want to get into retail first, before the
even bigger American ones like Wal-Mart are allowed in, is it not the
government's duty to let the Indians have the first bite at the cherry?
What is so wrong with that?
But that does not mean that reformers should always take an un-
nuanced and crude view, like they often do. And this practice, I think,
is what has given reform a bad name in India.
For example, one way or another, the case the mullahs invariably
make is pro-foreign capital. But the truth is that FDI doesn't come to
India for any number of reasons. Corruption is a major problem, for
one thing.
But then may I point out: it is not as if FDI is not coming. Indeed, it is
increasing. So are all these investors idiots?
If we reformed our labour laws, I am told, even more would come in.
But how is it that those who have invested are earning a better return
here than in China, where there is no labour law to speak of? And
this, without always hiding behind high tariff walls?
The railways and the power sector are excellent examples of the
breakdown of economic theory. Both have consistently lowered
prices in real terms and increased output. Economists get very shirty
when I point this out.
However, there are two cases that prove competition works: airlines
and telecoms. Earlier, the government monopolies in these
businesses did keep output down and charge outrageous prices.
So, surely, the right question to ask is what is different between the
railways and power, on the one hand, and telecoms and airlines, on
the other? To the best of my knowledge, no one has done so.
But has any financial sector reformer in India examined how difficult
the US makes it for Indian banks to operate in the US? Or Japan? Or
anyone else, like China?