This one’s for Arun Shourie

Some days ago, while the audience at a CII session was in splits with Bibek Debroy regaling them with absurd "19th century laws in a ...

Some days ago, while the audience at a CII session was in splits with Bibek Debroy regaling them with absurd "19th century laws in a 21st century economy", this newspaper’s ex-editor and now a government minister, Arun Shourie, pointed out that the problem was more the lack of political will to change.

As the Congress’s Kapil Sibal also argued, for instance, politicians don’t allow electricity boards to charge economic prices from customers because they are scared they will lose their votebanks, not because there is a 19th century law (there isn’t any) which prevents them from doing so!With scores

of examples of how the country’s political class is taking it for a ride, Shourie told the audience that since politicians loved the status quo, it was up to them to educate politicians of the havoc they were creating, to tell the judiciary how its judgments were hurting the economy. Here are a few stark top-of-mind examples. These are for Shourie.

Though politicians haven’t allowed an exit policy to come about because of their professed love for workers, this has actually lowered employment growth. A CII survey of 210 firms in 1999 showed that labour regulations were a major reason for firms not expanding faster, and actual data shows that while industrial growth has gone up, employment growth in the organised sector has fallen from 1.44 per cent in 1991 to 0.46 per cent in 1998.

High import duties, ostensibly meant to protect the economy, have actually hurt it. India’s share in global exports fell from 0.61 per cent in 1977 to 0.47 per cent in 1986, but grew each year that import duties were reduced from 1991 to 1996 (cheaper imports of raw materials make exports more competitive). How important are expo-rts? To use just one example, if India’s textile exports had grown like China’s did, in 1996 these would have been $10 billion more, or a fourth higher than they actually were that would also have meant several million more jobs.

Fertiliser subsidies, such as the Rs 9,000 crore spent on urea, are meant to benefit farmers, but last year, according to Ashok Gulati, 55 per cent of this went to local fertiliser firms. And, for the past two decades, if fertilisers had been imported, with prices for farmers unchanged, the government would have saved a third of its total expenses of several tens of thousands of crores.

Anti-poverty programmes are meant for the poor, but not more than a fifth of this gets to the target section. Given the current level of spending of Rs 20,000 crore, that’s an annual waste of Rs 16,000 crore. Add to this the bill for equally mis-targeted subsidies of around 15 per cent of GDP, and look at what it’s doing to the fiscal deficit.

A recent World Bank study shows that states whose fiscal deficits have be-en completely out of control Bihar, Rajasthan, Uttar Pradesh are the ones who saw their per capita GDP growth rates fall dramatically in the ’90s, and consequently also had the lowest poverty reduction in the country.

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The public sector, eulogised for safeguarding the interests of the public, has actually raped it. In 1996-97, the return the government got on the Rs 2,02,021 crore invested by it in centrally-owned PSUs was Rs 10,258 crore.

Compare this to even the interest that the government pays on its borrowings and, according to Mohan Guruswamy, PSUs cost us Rs 14,000 crore that year alone that’s three times the total spending on agriculture.

Not allowing corporates into agriculture, even to set up cold storage chains, was meant to protect the fa-rmer. But this is precisely why he loses around Rs 50,000 crore a year with his fruits and vegetables rotting before they reach the consumer. Multiply this manifold, when you stop foreign seed firms who could help farm yields go up from today’s pitiable levels.

Having a vigorous judicial system is great, but think about the Sardar Sarovar project which was to have been completed five years ago, but is still stuck in court and whose costs have gone up three times, by around Rs 15,000 crore. Or how Cogentrix walks out of the country after spending six years and $27 million in courts. And it’s a sad day when banks are wary of giving loans to industry since it takes at least 10 years in court for a bank to be able to execute its collateral in a loan gone bad a study of 1,849 firms being liquidated in high courts showed that it took over 10 years for 59 per cent of them, and over 20 for 32 per cent of the cases.

One could go on all day with even more startling examples. In fact, one of my pet book projects is to write up 50 such examples, in the form of catchy advertisement copy that can then be used for a sustained campaign across the country, to revile the political class. Sadly, Raj Kamal Jha kind of advances haven’t been forthcoming, and the project’s remained stillborn. In the context of the dotcom economy, maybe a more viable alternative is to set up a site called whypoliticiansstink.com and invite citizens to post their experiences on it. That exercise will be for all of us.