India may have created a competitive market by abolishing licence raj, but it has been replaced by an equally time-consuming "approval raj" fraught with potential corruption, Biocon CMD Kiran Mazumdar-Shaw has said.
India may have created a competitive market by abolishing licence raj, but it has been replaced by an equally time-consuming “approval raj” fraught with potential corruption, Biocon CMD Kiran Mazumdar-Shaw has said.
Sharing her thoughts on 25 years of economic reforms in India, she said, in the past, businesses had to contend with issue of licences which were time-consuming and cumbersome.
“Licence raj has been replaced by approval raj. Today, it is about approvals which are also time-consuming. Both licences and approvals are fraught with potential corruption and speed money. Hence, the only way to overcome this is self-regulation and deemed approvals on an online platform which removes the human element and thereby reduces corruption,” Mazumdar-Shaw said in an interview to PTI.
Biocon CMD Kiran Mazumdar-Shaw also is of the view that India Inc is over regulated and it is reflected in the country’s low ranking in the ease of doing business.
“We are burdened with far too many applications and approvals and therefore need to move to deemed approvals and self-regulation based on compliance with a stated set of rules,” Mazumdar-Shaw, a pioneer of India’s biotechnology industry, said.
“Such self-regulation needs to be captured on an online regulatory register which will provide transparency and traceability,” she noted.
According to her, today automation is boosting efficiency and GDP growth but not creating jobs.
“This is dangerous. We need to think of sectors and businesses that create jobs. Services are job creators. Manufacturing needs to be job-oriented too. Agarbattis and beedis create jobs but even these low-end sectors have lost their competitiveness and today India has been overtaken by Vietnam for agarbatti manufacturing,” Mazumdar-Shaw said.
Rapid economic change through automation and new technologies can be disruptive and can boost productivity, but they can also affect jobs market, leading to social tension, she cautioned.
“We need to be prepared to mitigate these challenges through innovative ways,” she added.
“If we don’t pay attention to pollution, industrial growth can backfire,” Mazumdar-Shaw, named among TIME magazine’s 100 most influential people in the world, warned and, giving an example, said Belandur lake in Bengaluru is a glaring example of unchecked pollution that it now posing a serious health hazard.
“Hence we need to ensure that we have policies and practices that are environmentally friendly in our development,” she said.
Stating that e-commerce is huge transformational economic opportunity for India, she said, its very nature involves a supply chain and management system that will create jobs.
Giving an example, Mazumdar-Shaw, a recognised thought leader, said if one were to buy a tooth paste from a ‘Kirana shop’, the choice would be limited, the inventory afforded by the shop-keeper would be small and the purchase would not involved a delivery process.
An online purchase would, on the other hand, provide greater choice, larger inventory and a warehousing management as well as delivery system that would involve packaing and transportation.
“For every one job that a Kirana shop creates, an online store would create at least a hundred. In future, Kirana stores will have to reinvent themselves into depot and delivery centres for online stores like Flipkart or Amazon. Everyone wins in the end and more jobs will be created”, she added.
Mazumdar-Shaw said among the set of reforms seen after the 1991 economic liberalisation was the onset of venture funding which in turn has catalysed the ‘start up’ economy which has witnessed a further boost in the last five years with the advent of e-commerce.
“However, greater and urgent reforms are needed in freeing up this new economy from restrictive and stiffling controls that the tech sector needs in order to thrive,” added Mazumdar-Shaw, Chairperson of the Board of Governors of the IIM-Bangalore.