[1]The first thing the new finance minister should do is get back to basics. Simple basic things and then think of other things. He has to get the confidence of the business community in India and internationally back, deliver on commitments and improve the confidence and the perception of the nation. He would also have to first finish pending initiatives.
Perception is very important. Today a lot of Indian corporates are not willing to invest in India and are going abroad. They say if you want to play the percentage game we can make a higher return elsewhere. If Indians are not keen and don’t find the atmosphere conducive to invest here why would foreign investors invest? How do we restore confidence in foreign investors?
It is a confidence issue whether it is for the people of India or foreign investors. Look at the rupee. At the end of the day the present policies have not allowed dollars to be invested in India and we are now in a race with Brazil to see whose currency gets devalued faster!
There are four things that need to be done on a priority basis. I am all for him encouraging foreign direct investment and increasing it in areas like insurance and aviation. We opened up insurance several years ago but there has been no increase in the cap after that. Similarly in aviation, they allow investment upto 49% but from those who are not in the aviation business! Does this really make sense?
Definitely not, as the most likely companies or individuals who will invest in a sector are those that are already in the sector or have a skill in that sector. Very rarely does one find companies who are not in a sector investing in an international business where they are not involved in nor have the skill. We need policies which make common sense. Not policies which hinder growth.
The next is infrastructure. Good roads make a big difference. Chinese workers for instance are more productive because in China a 400 kms journey can be done in five hours whereas in India it takes ten hours. Think how much more work the Chinese can do because of the extra time they get! If one can reduce the time of travel automatically, our productivity will increase.
Now imagine if the whole nation has this? Wouldn’t our productivity increase and therefore our GDP? We need quality infrastructure as it will improve our GDP. Things will move faster. There will be for instance, less wastage of food, fruits and vegetables which means increased availability and prices would come down and this would lead to a drop in inflation. For instance a farmer today has a cell phone. He can phone the mandi and say he is bringing his wheat. But how fast can he deliver this wheat, with infrastructure developed sporadically and so unplanned?
The new finance minister must lay emphasis on higher and skilled education. He will have to do something about the quality of manpower, managers, and leadership ability of our Nation for the future as there is a dearth of quality managers and leaders today and this will only get worse as time progresses as the level at which we will have to perform will only increase. Over the years Indians have shown their capabilities abroad. But the next generation, I am afraid, may not have the volumes of people who can take us to the next step of development. So we need not only basic education but also higher education.
Something that the finance minister will have to tackle is the issue of corruption. Fitch and Moody’s while downgrading India have talked about corruption in India being a stumbling block to growth. Further, corruption has made the rich richer and the gap between the rich and the poor even greater. How long will the common man tolerate this relentless greed and display of wealth by those in Corporate India! These same corporates should focus on building the nation and not just their own families and business!
How many of them are actually contributing to the development of our nation?
Do any of them really care? Does it take Bill Gates and Warren Buffet to educate us (the oldest nation in the world) on how to give back? This selfishness must stop and inclusion of the development of our nation must also be the responsibility of the private sector and not just the Central and state governments who frankly take short cuts and lack clarity on policies which are mainly driven by the private sector and its selfish greed.
The new finance minister, whoever he is, has to allow the economy to grow, help infrastructure to develop and make India a place where people want to come and invest. The problem is our minds run much faster than the body allows. We are great with words but no action, no delivery and if these are not there doubts set in and the only way to clear these doubts will be through action. India is no longer the only attractive destination.
There is Vietnam that is going all out to woo investors as well as Burma who is a recent entrant. The new finance minister will have to remember that he is the caretaker of the nation. I am not qualified to judge whether he should be an economist or a politician but the nation’s reputation and credibility are at stake and he needs to bring back the confidence, step by step, by delivering on promises and commitments. Infrastructure along with FDI education, social welfare and tackling corruption will have to be his priority.
Like I said, he will have to go back to basics. India is now a country that the world and the Economic Powers are looking at very closely and everything we do is being watched microscopically. We must realise and take cognisance of this by ensuring that we rise to the challenges that are in front of our historic and great nation. Acceptance is the first step and adaptation, the second. If we want to have any chance of competing with the developed world, then it is high time that we realise that we need to develop ourselves with a different mind-set and approach.
Ness Wadia Managing Director Bombay Dyeing
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