There has been for some time a distinct chill in the investment climate at the State level as well as in the overall national context. In fact, FDI inflows into India from April 2010 to February 2011 were 25 per cent less than what they were in the same period of 2009-10.

First among the many and varied factors responsible is the unending series of scams which have driven the Government at the Centre to the wall and brought decision-making to a standstill. This has had the concomitant effect of disabling the Government from going ahead with the remainder of the economic reforms and thereby further disheartening the investors.

The interposition of the higher judiciary, with the Supreme Court in the lead, into the domain of the Executive, taking over many of the latter's functions, has created an unfamiliar and unpredictable situation in which nothing can be taken for granted and to which economic players are finding it hard to adjust.

The increasingly pugnacious attitude of the people towards land acquisition and environmental clearance, the dithering of the Central and State Governments on this account and verdicts of courts quashing actions already taken and in progress have exposed investors to unacceptable risks of loss of the invested amounts and hassles of criminal and other types of investigation.

Top industry leaders have been forthright in making known to the Prime Minister, Dr Manmohan Singh, during the recent meeting of the Council of Trade and Industry, the fast worsening investment climate and the urgent need to set afoot remedial measures to recreate investor confidence.

Churchillian flavour

In this depressing setting, the ringing call to investors by the Chief Minister of Tamil Nadu, Ms Jayalaithaa, at the Chennai meeting of National Council of the Confederation of Indian Industry on July 5, has come as a breath of fresh and bracing air.

Her speech touched inspirational heights, combining a realistic analysis of the challenges with a display of the spirit of determination to overcome them.

There was indeed a Churchillian flavour to many of her statements which, coming from her, were especially taken to heart.

Even a hard-boiled audience such as the one she was addressing must have been impressed with her quoting from Keynes (“Investment is an act of faith”) and Winston Churchill (“Empires of the future are the empires of the mind”).

Her firm commitment to make Tamil Nadu a new growth model and Number One among Indian States in all spheres of development and not to spare any efforts to act as a catalyst to fulfil the investors' dreams carried conviction precisely because she squarely and frontally admitted the “infrastructure deficits” and the prevailing “nervousness” of the corporate sector over power cuts without making any attempt to gloss over them.

Toning up bureaucracy

The people of Tamil Nadu as also India will eagerly wait for the Vision Document 2025 that she has promised to bring out, detailing clear-cut policies for promoting investments in power, ports, ship building and the like. The most welcome feature of the document is the special importance she proposes to give to the exploitation of renewable energy sources such as solar power and wind energy.

This stems from her realisation that the future of humankind is bound up with renewable and non-conventional sources of energy and not with fossil fuels.

All said, new investments will only mean throwing good money after bad and there will be no guarantee of expected returns on existing investments and flow of commensurate benefits to the people unless there is a vast improvement in the working of bureaucracy by way of ensuring effective implementation, assiduous maintenance, prompt service-delivery and responsiveness to people's concerns.

A committee headed by the Chief Secretary should be specifically made accountable for toning up the administration in these respects.

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