Get Cracking

Updated: Aug 26 2004, 05:30am hrs
Prime Minister Manmohan Singhs first speech at an Assocham meet must have been music to the ears of India Inc.

Not only did he promise to address the critical aspect of infrastructure development under his direct supervision, he also undertook to end the tyranny of over-inspection.

Weve seen many a Prime Minister starting from HD Deve Gowda, IK Gujral to AB Vajpayee promising a turnaround in infrastructure development. But nothing substantial has happened.

It remains a bottleneck for economic growth. This cannot go on if were aiming for growth rates in excess of 7%.

By appointing the Planning Com-mission as the executive arm of the committee on infrastructure, Dr Singh hopes to ensure better coordination between various ministries for major projects to ensure that a world class infrastructure is in place.

Unfortunately, progress so far in this area is limited to telecom and roads. There is a long way to go on other equally critical areas starting from water, power, transport, urban infrastructure, airports...the list goes on.

Some of these fall directly under the control of state governments. Consequently, even with the best of intentions there is very little that the Centre on its own can do.

In the circumstances, the best option perhaps is to adopt a carrot and stick approach with the states.

Giving them funds on a matching basis provided they set their house in order by levying appropriate user charges could be one way of doing this.

In addition, the Centre has to be more pro-active and identify issues in advance rather than address them only when they become problematical.

Harassment of industry by petty bureaucrats is a common enough occurrence. Consignments get delayed, speed money is routinely demanded, procedures are long and cumbersome.

The net result is that doing business in India is an uphill task. It is no exaggeration to say that for all practical purposes licence raj has merely been replaced by the inspector raj.

As Dr Singh himself pointed out, 30 inspectors visit an establishment in India in a year. The comparable figure for China is only 6. While this kind of regime affects small and medium scale industries adversely, MNCs too suffer as a consequence.

Problems at the grassroots level deter people from taking risks and more importantly, douse the spirit of enterprise.

To address these important problems, the PM proposes to reconstitute the Council on Trade and Industry. Dr Singh has clearly identified the right priorities for action. Its time for the UPA government to get cracking on implementation.