An Indian Entrepreneur Talks Growth, Regulation and Corruption: BY MUDIT JAIN & ATUL SINGH

 A seasoned industry leader explains how India was and remains a hostile environment for manufacturing. Due to onerous regulations, entrenched corruption, feudal bureaucrats and venal politicians, India has failed to industrialize in contrast to China.

udit Jain is a third-generation entrepreneur and a manufacturer of industrial chemicals in India. He discusses the causes of India’s unnecessarily sluggish manufacturing growth with Fair Observer’s Editor-in-Chief, Atul Singh.

The British ran India with a colonial bureaucracy designed to extract wealth, not to create it. When India won its independence in 1947, many Indians expected the dividend of independence to come in quickly. In some ways, it did — during the 1950s and 1960s, India expanded into nearly all manufacturing sectors, save for high tech and aviation. But the expansion did not survive the 1970s.

While India’s first prime minister Jawaharlal Nehru espoused many socialist policies, inspired by the then-successful Soviet Union, he was still relatively favorable to business. When his daughter Indira Gandhi assumed power, she lurched left and decimated business. During her reign in the 1970s, India became a socialist state ruled by officers of the Indian Administrative Service (IAS) and their underlings. These sycophantic officials imposed onerous regulation, high taxes and extortionate bribes, suffocating industry and squeezing growth.

Socialism killed Indian business

Under Gandhi, India nationalized key industries and heavily regulated the others. The IAS became solely in-charge of formulating and executing policy. Note that the IAS is the successor to the British Raj’s colonial Indian Civil Service (ICS). The original mission of the ICS was to collect taxes and deindustrialize India. After independence, control over the economy gave politicians opportunities for graft and rent-seeking. Together with their bureaucrat lackeys, they created a system that was altogether hostile to business.

The infamous license-permit-quota raj decimated business. In this Kafkaesque system, entrepreneurs had to run from pillar to post and grovel before bureaucrats if not bribe them. Approval from dozens of offices was necessary to do anything. After months and, at times, years of running around offices, entrepreneurs received licenses that were narrowly tailored to specific activities with strict limits on productivity. If their production exceeded the limits imposed by their license, bureaucrats levied hefty fines and extracted heavy bribes.

Gandhi was voted out in 1977 but the hodgepodge Janata Party that took charge was socialist as well and business did not get a break. India’s socialist DNA permeates all political parties, including the ruling Bharatiya Janata Party (BJP). Having tasted blood, politicians and IAS officers cannot let go of the commanding heights of the economy.

Politicians have to appeal to a poor and uneducated populace. So, populism akin to the Latin American variety is always a temptation. Until recently, labor unions were affiliated with political parties, making manufacturing tricky. 

Change because of external shock

Despite the economy growing at the proverbial Hindu rate of growth, India did not change course. In the end, an external shock changed the Indian system. In 1991, the Gulf War increased oil prices. By this time, the Soviet Union was on the verge of collapse and could not send cheap oil to India to bail its socialist de facto ally out. This led to a severe balance of payments crisis and India had no choice but to turn to the International Monetary Fund (IMF) and embrace market reforms.

The IMF forced India to liberalize its economy, lower its tariffs and open its markets. Many expected Indian businesses to fold in the face of foreign competition. Instead, India’s economy grew faster than ever before. It turns out that socialism, not Hinduism, was holding back the economy. Foreign investment and capital goods flowed into India. Manufacturing got a second wind after the first burst after independence. 

The boost of 1991 petered out for manufacturing in 2001 when China entered the World Trade Organization (WTO). India liberalized trade but did not lift restrictions on domestic business. The government also did not invest in infrastructure. This meant that businesses like Jain’s manufacturing operations could not keep up with their Chinese competitors. 

Rare Story of a Global Indian Manufacturing Success

Chinese manufacturers were able to make things with speed and scale. Chinese imports flooded Indian markets. Even as this economic tsunami was hitting the economy, India’s bureaucrats sat on files forever, demanded nonstop bribes and strangled business with red tape. High costs on inputs such as water, power and transportation made it far more expensive to manufacture domestically than import from China. As a result, many industries collapsed entirely. Liberalization internationally and overregulation domestically proved to be an unmitigated disaster for the manufacturing sector.

The toxic politician-bureaucrat nexus

After independence in 1947, India’s economic model was inspired by the Soviet Union. In this communist Mecca, experts did the economic planning and engineers implemented their plans. In India, economic planning and execution are both in the hands of an omniscient and omnipotent bureaucracy with IAS officers as feudal barons and politicians as de facto rulers. The IAS officers are invariably generalists, with little professional knowledge or deep interest in economic policymaking or the sectors they control. Bureaucrats occupy their position not because of expertise but because of loyalty to politicians and are answerable to no one.

Politicians continue to see business not as a driver of the economy but as a cash cow to squeeze for personal fortunes and election funds. In spite of the rhetoric about pro-manufacturing policies and promoting growth, the Indian system is still essentially one in which politicians dole out freebies to get votes and squeeze industry to pay the bill with heavy taxes. Ultimately, the poor are not helped either, because they see these taxes get translated into higher prices. They also miss out on manufacturing jobs and increased productivity because Indian industry is cut off at the knees and cannot compete with its foreign counterparts. Ultimately, neither the poor nor the entrepreneurs are enriched. Only politicians and bureaucrats laugh all the way to the bank. In India, this Batman-Robin duo is not robbing Peter to pay Paul, but instead robbing both Peter and Paul.

Businesses routinely find themselves compelled to make campaign contributions to politicians, lest they punish business owners with bureaucratic harassment. Such is the convoluted and complicated law of the land that it is impossible to follow it even after making superhuman efforts. So, bureaucrats can shut down any business for alleged breach of the law. As innumerable entrepreneurs and manufacturers know only too well, every bureaucrat inspector finds some grounds to find an infraction, leaving them a choice between a bribe and a fine. Inspectors can also arbitrarily shut down factories. 

The Indian system does not allow corruption inadvertently. It is corrupt by design. Today, Indians impose a new colonialism on their fellow Indians. Indian politicians and bureaucrats operate in a system designed for extracting wealth, not creating it.

Here Is Why Indian Manufacturing Is Struggling

Unfortunately, Jain sees no change on the horizon. If things continue as they have, India will fail to achieve a manufacturing boom that emulates the 1991–2001 period.

Jain believes that India must take a page out of Japan’s book and outsource decision-making power to professionals. Boards of experts should craft regulations in consultation with industry in the interests of long-term growth, not short-sighted political gains. It is good governance, not natural resources or comparative advantage, that made Japan an economic superpower. India can be an economic superpower too if it enlists policymakers with expertise who act in the national interest instead of petty self-interest.

Courtesy: https://www.fairobserver.com/podcasts/an-indian-entrepreneur-talks-growth-regulation-and-corruption/#

Prevalence of Colonial Influence in India’s Bureaucracy: Unraveling the Legacy - Ashutosh Debata

 India’s colonial past continues to cast a long shadow over many aspects of its society and institutions. One area where this influence remains particularly pronounced is the bureaucracy. The bureaucratic system in India, inherited from British colonial rule, reflects deep-rooted structures and practices that have persisted over time. This article explores the prevalence of colonial influence in India’s bureaucracy, delving into its historical origins, examining its impact on governance and administration, and discussing the need for reforms to ensure a more inclusive and efficient bureaucracy. 

The roots of India’s bureaucratic structure can be traced back to the British Raj, when the British colonial administration established a highly centralized and hierarchical system to govern the country. The British bureaucracy was characterized by its rigid hierarchy, bureaucratic red tape, and a top-down decision-making process. These features have seeped into the Indian bureaucratic system, shaping its functioning even after independence.

One of the enduring legacies of colonial influence is the focus on rules and procedures over outcomes. The bureaucracy in India often places a disproportionate emphasis on adhering to established protocols and bureaucratic formalities, which can hinder efficiency and responsiveness. This bureaucratic red tape can be a significant barrier to timely decision-making and effective implementation of policies, leading to delays and inefficiencies.

Another aspect of colonial influence is the hierarchical nature of the bureaucracy. The British introduced a clear distinction between the ruling class and the subjects, and this divide often perpetuated a culture of elitism and a sense of entitlement among bureaucrats. This hierarchical structure can impede the free flow of ideas, discourage innovative thinking, and create a disconnect between the bureaucracy and the citizens it is meant to serve.

Additionally, the colonial influence is evident in the lack of diversity and inclusivity within the bureaucratic system. The British administration primarily recruited individuals from the privileged classes, perpetuating a system that was dominated by a particular section of society. Even today, the Indian bureaucracy struggles with issues of representation and inclusivity, with underrepresentation of marginalized communities and limited opportunities for individuals from diverse backgrounds to rise to leadership positions.

The need for reform in India’s bureaucratic system is apparent. Efforts should be made to streamline bureaucratic processes, reduce red tape, and foster a culture of efficiency and accountability. Reforms should also prioritize inclusivity and diversity, ensuring representation from all sections of society within the bureaucracy. This can be achieved through targeted recruitment policies, training programs, and mentorship opportunities for individuals from marginalized communities.

Furthermore, the bureaucratic system should embrace a more participatory and consultative approach to decision-making. Engaging with citizens, civil society organizations, and experts from various fields can bring fresh perspectives, promote transparency, and enhance the quality of governance. Decentralization of decision-making powers can also empower local administrations and foster a sense of ownership and accountability at the grassroots level.

The transformation of India’s bureaucratic system requires a comprehensive and multi-faceted approach. It necessitates a critical examination of the colonial influences that still permeate the system and a collective effort to reform and modernize administrative practices. By moving away from the legacy of colonial bureaucracy, India can build a more inclusive, efficient, and citizen-centric administrative machinery that aligns with the needs and aspirations of its diverse population.

In conclusion, the prevalence of colonial influence in India’s bureaucracy is a significant challenge that the country must address. The bureaucratic system, inherited from the British colonial era, perpetuates hierarchical structures, bureaucratic red tape, and limited diversity. Reforms aimed at streamlining processes, promoting inclusivity, and embracing a participatory approach are necessary to create a bureaucracy that is efficient, responsive, and reflective of India’s vibrant and diverse society. By unraveling the legacy of colonial influence, India can forge a path towards a more effective and citizen-centric administrative system.

Courtesy: https://timesofindia.indiatimes.com/readersblog/beyond-the-headlines/prevalence-of-colonial-influence-in-indias-bureaucracy-unraveling-the-legacy-54081/

THE LOSS OF RASHTRA-RNA: THE TIGHTER WE EMBRACE WESTERN DEMOCRACY THE MORE CHRISTIANIZED OUR OUTLOOK BECOMES by SANDEEP BALAKRISHNA (Dharma Dispatch)

A cultural commentary on key civilisational lacunae in the Indian constitution and how they have played out in practice for seven decades

The profound and irreplaceable loss of spirituality is the cost that the experiment of democracy over the last five hundred years has unarguably extracted from us. It is not mere loss, but destruction, and emotional desolation is the logical consequence of this destruction whose logical consequence in turn is that democracy as it stands, has become deeply dehumanising. In the name of being elected from among the people, the elected representative maintains a big distance after electoral victory or sulks or simmers or plots after defeat. The warmth after electoral victory becomes a façade and people are left guessing about the real meaning of the whim and mood of the representative they elected. This is called political analysis. The dehumanisation is complete both on the part of both the representative and the voter. Let’s aside the realm of politics. At a very fundamental level, this state of being is no way to live.

Neither are these my words. They were uttered and written with unmatched sagacity and spiritual depth by Rishi D.V. Gundappa about a century ago in the repeated warnings he gave, cautioning an India then in a haste to adopt democracy.

It can be argued that another major reason democracy evolved in Europe was to facilitate global plunder under relatively stable conditions at home. European monarchies were essentially oppressive despotisms and the fledgling but ambitious global trading enterprises couldn’t forever remain beholden to the whim of the currently reigning monarch to sanction expensive overseas expeditions. Bloody palace intrigues and succession wars only added to this commercial risk. 

Democracy meant that it was better to have a first among equals than a despot who has no equal. The other major factor was the industrial revolution which pretty much sealed the fate of monarchies. These points become clearer when we note that by the time India formally became a British colony, democracy had been well-established in the UK. And it was the selfsame democracy that sanctioned not only this colonization but passed “laws” for more effectively plundering India. The same democracy also produced several generations of racist academics who in turn fed policy raw material to their political masters.

This cannot be seen in isolation because of a logical question: what was the fundamental character of Hindu monarchies? Short answer: they were largely in tune with millennia-old, established customs, traditions and practices of Raja Dharma which is anything but despotic. Western democracy killed Dharma and “independent” India largely imitated the same democracy. Rajarshis like the Mysore Wodeyars, the Maharaja of Baroda and other truly enlightened rulers had, overnight, become subservient to a faceless democracy which in practice meant that they had to bow down to Congress vermin whose only distinction was Gandhian opportunism.

Civilisational suicide was never embraced with greater fervour.

That said, western democracy has its own intrinsic strength, value, and virtue, and it has endured in the west for so long while it has wilted in most of its former colonies. This is because it evolved over several centuries and was entirely home grown, in tune with the national soil, temperament, and had unique and specific precedents. The European model of democracy requires the constant practice, correction and reform of centuries. This is how DVG puts it:

The strength to govern effectively is a great strength in itself. It requires experience and practice to percolate in the administrative staff. The opportunity for both will be available only when a nation becomes truly independent. A people who are merely clerks cannot develop grand, noble, and lofty ideas and a sturdy work ethic.

This is perhaps the greatest indictment of the IAS. 

India had none of these western precedents and the manner in which we adopted democracy is the reason for the chaotic state we are today in: which writer of the Indian constitution could envisage that in less than seventy years, members of their own party would wage war not just against the constitution but the country itself? The basic trait of Bharatavarsha is Sattva to protect which Rajas is required, the absolute opposite of the west whose basic trait is an unhinged Rajas as a constant whose end goal is the uninhibited enjoyment of Tamas. You cannot outwardly adopt the temperament and tactics of a wolf and pretend that a cow is a wolf.

The other important reason for the chaos-seeded democracy we adopted was the background of the authors of our constitution. In DVG’s words, they were extraordinary scholars endowed with piercing intellect, erudition, logic, and were highly educated. But they were also great theory masters. The overall consequence was the untested imposition of theories like freedom, democracy, liberty, and federalism fashioned in the west on an entire people who lived their lives for more than three millennia based on a thoroughly divergent political, cultural and social inheritance. To put it bluntly, an all-encompassing and far-reaching change for the worse was thrust upon the entire population of the seventh largest country in the world without their consent. From being a duty-bound, participatory “Praja,” the Indian citizen became a mere voter. 

This is civilisational wrecking beyond comparison.

It was the constitution of an ill-informed elite whose outlook was barely Indian, a point which was repeatedly hammered with phenomenal foresight during the Constituent Assembly debates by Damodar Swaroop Seth:

this Constitution as a whole, instead of being evolved from our life and reared from the bottom upwards is being imported from outside and built from above downwards. A Constitution…in which there is not even a mention of thousands and lakhs of villages of India and in framing which they have had no hand, well you can give such a Constitution to the Country but I very much doubt whether you would be able to keep it long.

And Sri Damodar Swaroop ji was right. After a lapse of seventy-three years, we have a mutilated, defaced constitution, worse than just merely keeping it. What Damodar Swaroop meant was the following in practice. Of asking a few simple, rudimentary, every day questions before force feeding the constitution down our throats back then:

1. What are the food habits and diet of these proverbial villagers?

2. What are the unique local/village customs related to worship, traditions, rituals, marriage, death, etc, which they have inherited from time immemorial? 

3. What is their typical daily life?

4. How are disputes resolved at the local level so that satisfactory justice is delivered in the shortest possible time?

5. How do they spend their spare time? What are their typical modes of recreation, sports, etc?

These are the most accurate yardsticks that provide an almost unerring raw material for what is known as policymaking today. Doing this requires the old-fashioned Indian way: of spending time with these real people, eating with them, going to their temples, playing their games, interacting with their kids…But what do our policymakers who go to these criminally expensive schools learn? Numbers. Statistics. Graphs that only a student who pays ₹ 70 lakhs can decipher. But more dangerously, psyche-altering theories that have impoverished entire societies. The more insane the theory, the greater the chances of getting a Nobel. Ask Amartya Sen.

Needless, such warnings by enlightened minds like P.V. Kane, DVG and other such eminences went unheeded.

One fails to understand the meaning of the words, ‘fundamental rights’ in a constitution which took over two years of deliberations, if they could be changed within a year and a half.

P.V. Kane

But the damage had already occurred at the root level. Take the case of the cliché that several folks find it fashionable to utter today: that our constitution has no provision for Dharma, and merely stop at that, not bothering to actually study the details, which is where the real story lies. This is because investigating these details will reveal uncomfortable truths some of which are politically incorrect.

For example, all Dharmasastra texts unambiguously say that the king had no authority to meddle with Sastric rules governing local customs, which were invariably rooted in our conception of Varna. Does any public person today have the guts to call for a thorough rethinking of this fundamental point? The answer is no because the word “honesty” is inseparable from “guts.” What is the bedrock of these local customs, indeed the bedrock of Sanatana civilisation itself? Dharma. Which in daily life also means “duty,” which is what kept our civilisation alive, thriving and resilient for millennia. 

Now, where is the chapter on fundamental duties in our constitution, which has been made out to be some kind of sacrosanct document higher than Dharma itself? The simplest definition of duty is this: it is an attitude of inner life that makes most laws unnecessary because it is distilled spirituality applied in practical life. Because the simplest definition of law is that it is a barbed-wire fence that restrains base human passions. When Dharma is intrinsic to our inner life, we need no outer barbed wires. And an innate sense of duty keeps people from creating mischief in society. 

The Sanatana civilisation until the framing of this constitution was the most glorious, unbroken, glimmering, living jewel of this fact. Instead, by an unthinking emphasis on rights, we gave birth to a political system, which can most appropriately be called Rule by Factions.

At any rate, the injurious consequences were evident almost immediately owing to a rather common sense reason. After India attained “independence” – rather, after the British left in haste – we lacked sufficient numbers of elected representatives who had any degree of competence, capability, wisdom, erudition, and even plain guts to deserve such high offices. Instead of questioning this crater-like deficit, we embraced democracy as a universal good and magic pill. One outcome was that these representatives, deeply aware of their own incompetence began succumbing to mob blackmail. Panicked moves and appeasement replaced decision, the primary function of the elected representative and government. The most representative human specimen who made the most number of panicked moves was Jawaharlal Nehru whose knees turned to jelly at the mob-demand for linguistic statehood. It was all downhill after that.

Indeed, it is noteworthy that there are reams of provisions and directions in our constitution regarding the economic and social aspects of the country but not a word about the key foundations of the Sanatana civilisation: Rna, Rta, Dharma, Yajna, Svadhyaya, Lokasangraha, etc. Almost ninety per cent of urban Hindus wouldn’t have even heard of these terms. As the luminaries of our modern renaissance observed, a secular state cannot and should not mean a godless state.

One can list hundreds of such examples but the summary is this: our constitution is the very antithesis of the civilisation it was supposedly meant to protect. And with the benefit of hindsight, we can make a valid case that the farther we travel down the path of western notions of democracy, the more Christianized will our outlook become...has become.

One inescapable conclusion is that the Indian state, set up after 1947 is fundamentally designed to be an inside ally of a civilisational war against Sanatana Dharma than began a thousand years ago.

Think about something you see every day, something that has become a way of life of Indian politics and politicians. Take a person who is culturally a deep-rooted Hindu. He contests elections, gets into Parliament and almost overnight becomes an alien to his own former self. What remains of his deep roots become mere outward finery now meant to be worn during the five-year circus show called elections because the very constitution upon which he took oath constrains him from discharging a Rashtra-Rna for which the constitution has no provision.

When this happens over more than seven decades, the fault is fundamental: it could be that our political system at its core is still that craven Nehruvian conveyor belt that sucks in the best of people, sucks out the last atom of Dharma in their atma and spits them out after hacking their roots.

|| ॐ तत् सत् ||

Courtesy: https://www.dharmadispatch.in/culture/the-loss-of-rashtra-rna-the-tighter-we-embrace-western-democracy-the-more-christianized-our-outlook-becomes