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Wednesday, 19 February 2014 00:00
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More clarity on economic policies would be welcome

The Aam Aadmi Party (AAP), Delhi’s 49-day ex-chief minister Arvind Kejriwal told the Confederation of Indian Industry, was not anti-capitalist, it was merely anti-crony capitalists. The party was not anti-business, but didn’t want it all to be about big business, life had to be made easier for small businessmen. Given how, the report on National Investment and Manufacturing Zones (NIMZ) points out, every firm engaged in manufacturing has to comply with 70 laws which require 100 forms to be filled each year—this takes up over a fifth of management time for small firms—this set of second generation reforms is long overdue, and if the AAP can make this happen, all power to it. The problem with these second generation reforms is that once they hit the wall of labour reforms—and they do very soon since firms are reluctant to grow with the current labour laws—most political parties chicken out, and it remains to be seen how AAP does on this score. But while improving the productivity of SMEs is critical for the growth of any economy, it cannot be anybody’s case that SMEs alone can take care of an economy’s needs. No SMEs have either the financial or the managerial muscle to take on, for instance, the role of either Anil Ambani’s power companies in the capital or Mukesh Ambani’s gas drilling operations in the Krishna Godavari Basin that have earned the ire of the AAP chief. And while it may well be true that AAP is not against all big business, the party needs to assure industry that it is willing to listen to their point as well, something that has not been obvious so far.

While doing so, not just the AAP but even those in other political parties railing against big business would do well to spare a thought for what this newspaper’s columnist Surjit Bhalla calls crony socialism, or the huge corruption each year in the name of the poor. There are two ways to calculate this, both give roughly similar results. Take spending like that on subsidised food and match this against what the National Sample Survey data tell you in terms of who got the benefits. The other way is to look at the number of poor and see how much money they need to be lifted out of poverty—this will be the poverty line expenditure minus what these households earn today. Bhalla’s exercise suggests India needs just R48,000 crore each year to eliminate poverty versus the R3 lakh crore spent each year to do this. Even at its worst, it has been no one’s case, not even the AAP’s or the CAG’s, that corporate India’s scams have reached anywhere near this proportion. Add in the delays in project execution or the hugely inefficient working of PSUs like Coal India—once again, this has a strong anti-big-business component to it—and we’re talking of a number that’s even larger. Crony capitalism is something to worry about, but crony socialism is an even bigger problem.

 

 

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