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This is an archive article published on March 7, 2010
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Opinion Enemies of inclusive growth

The most important part of Pranab Mukherjee’s Budget speech this year was his candid admission that one of the gravest challenges before India “relates to the weaknesses in government systems,structures and institutions at different levels of governance”. He hit the nail on the head by saying,“Indeed,in the coming years,if there is one factor that can […]

Sudheendra Kulkarni

March 7, 2010 02:35 AM IST First published on: Mar 7, 2010 at 02:35 AM IST

The most important part of Pranab Mukherjee’s Budget speech this year was his candid admission that one of the gravest challenges before India “relates to the weaknesses in government systems,structures and institutions at different levels of governance”. He hit the nail on the head by saying,“Indeed,in the coming years,if there is one factor that can hold us back in realising our potential as a modern nation,it is the bottleneck of our public delivery mechanisms.”

I understood just how poor governance is throttling India’s potential,and undermining inclusive development—which the finance minister emphasised “is an act of faith for the UPA government”—when I visited the innards of an industrial estate in Mumbai the day after the Budget speech. I had gone to discuss a skill development programme for the workers of the furniture factory of a friend of mine in Andheri,a suburb that showcases the best and worst of India’s industrial landscape. Since the time Praveen Naik (name changed on his request) made a bookshelf for me a decade ago,I have been tracking the amazing growth story of this self-made entrepreneur who taught himself carpentry,began doing odd jobs himself,and is now a successful interior design contractor to whom even Godrej,India’s largest furniture company,outsources its manufacturing. What struck me,however,was the sharp contrast between the impressive elegance of his products and the utterly unimpressive—indeed,repulsive—environs of the industrial estate. Traffic is a nightmare. Factory spaces are unbearably congested. Air and noise pollution are so horrible,and rest and recreation facilities so completely non-existent,that few workers can remain healthy and productive for long.

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But far worse are the horror stories of harassment by the government itself. “Not a week passes without inspectors from one department or the other visiting us,” said Praveen. “They come not to inquire how government can better serve the small and medium entrepreneurs who populate this industrial estate,but to do hafta vasooli (bribe taking). Labour,excise,fire,police,octroi—we have to keep all of them happy. Otherwise,they make life hell for us. As it is,I pay through my nose for power,which is costliest in Maharashtra. How can I grow my business if half my time and a quarter of my profits go in managing the system? How can I bring new technologies? How can I pay my workers better and run a skill development programme for them even if I want to?”

Praveen’s neighbour is Shailesh Shah (name changed),who runs a fabrication unit so good that he gets to do supercritical parts for rocket launchers and other sophisticated defence equipment in outsourced contracts from reputed entities like L&T and BARC. “I am proud of doing this work for my country,” said Shailesh,before adding in indignation,“But the experience of being routinely robbed by government people often makes me think,‘Isn’t it better for me also to become a robber than remain an entrepreneur?’ They are pests,not government servants. And they have no shame in admitting that they do extortion because they have to share a part of it with their superiors.”

Praveen recounted his visit to China two years ago. “In Guangzhou,I saw a special zone of only furniture factories that was six kilometres long. They have every conceivable facility,along with an international furniture fair complex that’s the best in the world. Power is cheap,roads are excellent,and transportation is hassle-free. Workers live in dormitories that are far superior to our slums. No wonder,Guangzhou is called the ‘World’s Factory’ that exports ‘Made in China’ goods to markets across the globe. There is corruption in China,too,but government officers there first help entrepreneurs grow and then take bribes from them. In India,they force us to remain small by giving us no assistance whatsoever,and yet bite into our earnings. I am convinced that India won’t be able to compete with China for the next hundred years.”

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Exaggeration aside,Praveen’s last sentence felt like a hard slap on my face,causing a sense of humiliation akin to the memory of our defeat in the 1962 India-China war. When will we understand that to strengthen India means to strengthen all the limbs and systems of our economy,especially those that are weak? When will our governments—national,state and local—understand that inclusive development cannot be achieved simply by chanting it like yet another slogan,but only by improving the quality of governance? The Finance Minister said in his Budget speech that as many as 350 recommendations contained in the 15 bulky reports of the Administrative Reforms Commission constituted by UPA-I have been implemented and 450 are under implementation. Obviously,not even a whiff of reforms has touched the administration of India’s TSMEs—the ‘t’ in it standing for the tiny sector of our enterprises that employ the largest number of workers but which suffer governmental neglect far worse than the industrial estates of Mumbai. Haven’t you seen the routine daylight robbery of those poor roadside vendors by cops and municipal inspectors?

sudheenkulkarni@gmail.com