Has India Lost Its Way?

By Shlomo   Maital   

Indian dancer 

   I am very fond of India. I’ve visited it several times, have a dear friend there, and chose to publish my recent textbooks there.  This is why I am saddened and perplexed by what is happening to India. I fear India has lost its way.

  During 2003-8, India’s economy boomed, because private capital spending rose from 10% of GDP to 17% ! (source: The Economist, Dec. 1).  New factories and infrastructure dotted the land.  Then, after the global crisis began, capital spending slumped to only 10-12% of GDP.    India has two deep-seated problems: debt and graft.  As one senior Indian boss told The Economist, “most business houses have whole departments dedicated to getting things done no matter what the cost (in bribes)”.    Investment projects are backlogged, but any attempt to fast-track them leads to cries of corruption. 

    India’s capital-intensive firms are highly leveraged.  Between 2007 and 2012, net debt among India’s biggest firms doubled as a per cent of operating profits.  There are zombie firms, alive legally but dead in practice owing to heavy debt.

   India’s image abroad has suffered greatly, with the horrifying rape and murder of the young 23-year-old medical student.  A nation’s image does impact its ability to attract foreign businesses and foreign investment. 

    Doing business in India is very difficult. I know this first-hand from those who have tried.   According to the World Bank, India ranks 132nd in overall ‘ease of doing business’ (2012).  Everything related to doing business there is tough.  Registering property, trading across borders (rank 109), getting a construction permit (181st!), enforcing a contract (182nd!), paying taxes (147th), even getting electricity (rank 98th).   There is no reason for this.  The young women who was raped and beaten was sent to Singapore for medical care.  Let India benchmark Singapore, one of the easiest places in the world to do business. 

    India’s Prime Minister Manmohan Singh is a brilliant economist, whose reforms in the early 1990’s provided the foundation for India’s economic boom. Today, he seems tired and dispirited, defeated by a moribund political system.  The possibility that a Gandhi scion will take over, simply because his name is Gandhi, is simply unbelievable. 

     I grieve for India, which gained independence around the same time as my country Israel.  I love India’s resilient people, and their spirituality.  I wish a leader would arise who could cut through the Gordian knot of India’s deep-seated problems and start afresh.   

Advertisements