|
From
earth sciences and public grievances to social justice,
urban poverty and the diaspora, the Indian government
has a ministry for everything and everyone.
Forming
a new agency is its way of legitimizing an activity or
an interest group by saying: “We care about you.”
That
explains why the Coal Ministry stands separate from the
Mining Ministry, and the New and Renewable Energy
Ministry can’t be merged with the Power Ministry.
Of
course, the number of ministries—there are 48 of them,
plus “independent departments” of atomic energy and
space—also reflects the compulsion of running a
coalition government.
The main
ruling party, which at present is Sonia Gandhi’s Indian
National Congress, has to satisfy a multitude of smaller
groups by giving them ministerial berths.
Including junior ministers, 79 politicians currently
hold high office in the federal government.
State
governments replicate many of the federal ministries.
Besides, they have some additional ones. Uttar Pradesh,
the most populous state, has a minister for gardens.
Amid
this plenitude, one office that’s badly needed and
remains missing in India is the “Ministry for Doing
Business.”
Various
federal agencies currently deal with commercial
enterprises. So why does one need to add to the
aggravation of the businessman by introducing another
layer of control?
Too many
cooks
The
reason India needs a “minister for doing business” is to
reduce the clutter and the confusion that have arisen
because businesses are forced to deal with a very large,
and growing, executive branch of the government.
Not only
that. The further one moves down the chain of
command—from the federal administration to state
governments, and then to civic management—the web of
control becomes denser, even as the responsiveness of
the officialdom turns less predictable.
Not long
ago, foreign investors cited bureaucratic delays as one
of the main reasons for not wanting to come to India.
Now, the
situation has changed. Large investments, such as a
$12-billion steel mill that Pohang, South Korea-based
Posco wants to construct in
India,
if only it can get the land, are coming. Domestic
companies, too, are investing heavily. In the three
months ended September 2007, net capital flows into
India amounted to $34 billion, or 14 percent of gross
domestic product. That compares with just 3 percent five
years ago.
Thinking
small
The
policymakers’ emphasis must now be on raising India’s
ability to absorb higher amounts of foreign capital and
local savings. Lifting the economy’s growth potential
will require a few big changes. One of them is easing
labor laws that dissuade companies from making optimal
use of India’s cheap manpower.
But most
of the changes that the government needs to urgently
implement are small ones that are falling through the
cracks because no one is pursuing them earnestly.
Someone
needs to take a look at all the hoops a business needs
to go through in India, compare them with international
best practice and cut out the time-wasting, irrelevant
parts. That’s all that the “minister for doing
business’’ has to do.
For
instance, the minister has to ask why it is that it
takes 224 days to get construction drawings cleared and
obtain the necessary permits, clearances and utility
connections for erecting a new building in Mumbai when
the same can be accomplished in Seoul in just 34 days,
according to statistics compiled by the World Bank.
When
something as basic as that takes this long, businesses
seek to speed up the proceedings by paying bribes.
Buying
improvements
There
are broadly two ways to seek an improvement.
One is
to wait for the entire system of municipal governance
and financing to modernize. That will take ages. The
other way is for the federal government to announce a
hurdle rate for completion of this specific task.
Say, any
municipality that can vet construction drawings and
issue building permits in 10 days on an average—without
cutting corners—will be entitled to a monetary incentive
large enough to compensate them for the expenses on
additional manpower and improved technology.
Some
Indian cities, such as
Hyderabad
in the southern Indian state of Andhra Pradesh, are
making progress in cutting down the time needed when
issuing building permits.
They are
also making the process more transparent by taking it on
line. The “minister for doing business” will put in
place an incentive structure that encourages such
endeavors to be emulated by other municipalities.
The
concept of the federal government “buying improvements”
from states has been tried successfully in moving the
country toward value-added taxation and in forcing
through some key policy changes required from
subnational administrations to boost electricity
generation.
It’s now
being attempted in urban renewal.
There’s
no reason the same template can’t be used to improve the
nation’s investment climate.
All
that’s needed is a minister who will become, to borrow
the title of Arundhati Roy’s 1996 book, a “God of Small
Things.” That, at this moment, is the biggest job in
India. |
