Ethos of our economy

Regardless of our attaining a seven per cent GDP growth rate in the current year, the stark fact is that the innards of the Indian economy aren't working in the way they should. This is precisely what the central message of The Economic Survey for the current financial year projects, something which cannot make anyone with the nation's well-being in mind, happy.

Page 39 of the Survey puts it rather succinctly when we read that “while it isn't possible to outline all the separate areas in which action is needed, the basic principle is simple. The central driver of a modern economy is the contract. We need a system where individuals and firms are able to get into agreements and contracts quickly and, once they have done so, to be able to rely on these contracts. In the event of someone reneging on a contract, the signatory to the contract who did nothing wrong but is hurt by this should be able to get quick redress. Together, these features describe the ethos for ‘doing business' in a nation”.

UNIMPRESSIVE RATING

How, precisely, has India fared in the comity of nations in this very fundamental sphere of economic activity? If the country is on the threshold of an economic “explosion” so to speak, one would expect the rating to be impressive. Conversely, if the ratings are unimpressive, then it is safe to conclude that whatever is happening on the economic front in terms of GDP growth rate really doesn't count for much.

Sadly,

The Economic Survey says that by the measure of “ease of doing business”, the country has done poorly. To quote: “In 2012, WB's cross-country study ranks India 132nd among 183 nations. In terms of procedures to start a business, and get all the “permissions” needed, India ranks 166th. For getting construction permits, India ranks 181st, in the hassles of paying taxes, India ranks 147th, and in enforcing contracts, 182nd.” It is only when it comes to “protecting investors” that the country scores 46 which, the Survey says, is “creditable performance”.

ROLE MODELS

But this isn't all. It's not always the State Government which is involved in executing a contract the way it should be executed. Essentially, WB rankings measure the facility of a Government in arranging efficiently the way business is done in a country. But the Government can only be as good or bad as the people it governs. As The Economic Survey clearly implies, the situation in India at the micro level is far from being comfortable, which is one more reason to suggest that the “heart” of the nation's economic effort is weak.

Page 44 the Survey says that, in everyday situations, the “main guarantor has to be people's personal integrity and trustworthiness,” adding that the societies that have done well for themselves “have successfully nurtured these qualities” and those which have fallen “have done poorly in terms of economic progress”. While it is difficult to agree with the Survey when it says that “it isn't known precisely how these values can be inculcated in society,” one couldn't agree more with the suggestion that the ball could be set rolling if “political leaders and policymakers act as role models in terms of these qualities of honesty, integrity and trustworthiness”.

The question is: can such an example be set in a political set-up where someone with a number of serious offences against his name is appointed Minister for Prisons, as has happened recently in Uttar Pradesh?