It is time for India to accept change
Jan 29 2013
As I attended the World Economic Forum in Davos, there was one theme that reverberated in my mind — the one thing that India and Indians need more than anything else; and that is change. The world’s focus on India remains; it is still the place that makes economic sense for most businesses. India’s demographics are still attractive. There is recognition in the world when we do something exemplary. The Tata name was mentioned by a completely non Indian panel as a responsible business player in the global world. The world has high expectations of us. We need to respond, our growth story has been based on domestic demand, but we have to expand our horizons and look beyond ourselves into the world. We need to woo companies back in to India. We need to move beyond promises of support into action. We cannot rest on past laurels and we must not be complacent with the current rates of growth when there is potential to do much better.
Finally, the reform agenda is moving ahead, but it needs to move at a faster pace and it needs to move on all fronts. The government has taken a number of policy measures — they all need to come together to create an environment where we allow growth to take place. The entire ecosystem moving in the same direction will be the game changer that has an impact on the economy. Protectionism must stop; we have to be bold to open our doors to FDI in all sectors. We need to ensure that the spirit of entrepreneurship is allowed not only to survive, but also flourish. We need to give impetus to the manufacturing sector and take advantage of challenges that the globe is facing with China. New investments will bring with them; new technologies, new ideas and new processes. Being a late mover can be turned into an advantage by tapping into advancements that the world has made.
Execution is the key. We do make it difficult for companies to operate in India; we make it tough for investment to enter. The entire regulatory framework needs to be simplified. The lack of progress in the infrastructure sector is cited as one of the biggest obstacles to our growth. Yet regulatory delays have been holding up projects worth nearly Rs 2 lakh crores. A recent newspaper report stated that a typical infrastructure project requires clearances from 19 ministries and on an average 56 permissions on issues ranging from the environment to defence. The cabinet committee on investment promises to fasttrack approvals for infrastructure projects. We have to translate intent and announcement into action to make the world believe that we are changing. That is one lesson we can learn from China.
“Your reputation and integrity are everything. Follow through on what you say you’re going to do. Your credibility can only be built over time, and it is built from the history of your words and actions.”
It’s the same story on tax reforms. It is high time that all stakeholders come together and agree on the implementation of GST. The world is watching us and it is high time our regulators demonstrated to the world that this country is capable of being governed with sense and maturity. The single mantra that tax reforms have to follow is — simplify. Clarity and consistency is needed in tax law and its application. There are only 35 million taxpayers in a country of 1.2 billion people. The focus should be on expanding the tax net — something that successive regimes have failed to do. Existing taxpayers should be treated with respect and not with suspicion. Before the government thinks of taxing the rich, it should also consider whether an existing taxpayer enjoys any benefits by paying taxes and funding the government machinery. Accountability cannot be one sided. Mindlessly increasing taxes on those who are already paying taxes will only encourage flight of capital.
The New Companies Bill has made CSR mandatory and introduced provisions, where companies unable to meet CSR norms, will have to give explanations. Non- compliance will be disclosed in annual accounts and companies could face action including penalty. In principle, all good measures for a good cause. Resources are needed for social development and it is good to get corporate and the government to work together. But the same principle should be applied in public spending. Where is the accountability for development funds given to the MPs or MLAs? There should be public disclosure of how a taxpayers’ money is being spent. It is high time we stopped tolerating mediocrity in public service. The need of the hour is to bring professionalism into the running of our government. There is no lack of talent in India — what is required is a change in mindset capable of moving away from the beaten path.
“A nation or civilisation that continues to produce soft-minded men purchases its
own spiritual death on the
—Martin Luther King Jr.
As recent outbursts and protests in India have shown, the citizenry, and particularly the youth, is losing patience with archaic systems that do not function and ancient mindsets that are trapped in Stone Age. We need to unshackle India. The focus at the political and bureaucratic level is on creating an ecosystem, which makes it easy for companies and individuals to function. We need youthful and energetic leaders who will lead with innovative ideas; leaders whose integrity is unquestioned and who can put the country ahead of any other interests. India is at an inflection point and can gain supremacy if it plays its cards right.
“Men make history and not the other way around. In periods where there is no leadership, society stands still. Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better”
—Harry S Truman
(The writer is CEO of KPMG India)