Getting to the Big 11 | india | Hindustan Times
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Getting to the Big 11

Finance Minister Pranab Mukherjee won’t do it tomorrow, but it is time for the government to really get out of India’s way, writes Samar Halarnkar.

india Updated: Feb 25, 2010 00:11 IST
Samar Halarnkar

Don’t you just love the food, the smiles and the full services on Indian domestic airlines? It’s such a relief from the $5-pretzel-packet flights in the US or the surly service you often get on some European carriers.

Yet, till as late as 1994, India forced private airlines to call themselves ‘air-taxi operators’, barred from printing flight schedules or otherwise granting them airline status. When they were finally allowed to become proper airlines, the protection to Indian Airlines and Air India, continued, such as reserving prime airport space.

It didn’t work. The share of private airlines surged from 0.4 per cent in 1991 to 68.5 per cent within the next 14 years; today, it is 82 per cent. India’s great aviation revolution was finally a piecemeal affair, with business interests and barons pushing the government towards a reluctant, often messy, deregulation.

Today, the government still does not fully appreciate the Indian ability to innovate, endure and prosper. As Pranab Mukherjee presents tomorrow his coalition’s first budget since it returned to power, it is no longer enough to consider just how far India has come. It is time to consider how far India needs to urgently travel, for government to truly unshackle the economy and the Indian spirit.

The government predicts that India’s GDP growth could hit 9 per cent this year, but that is an underestimation of what could be. India is capable of growing at 11 per cent. If it can do that, the government can then focus more fully on what it really needs to do: fix our atrocious urban and rural infrastructure, physical and social, and ensure no Indian goes hungry.

Like aviation, India fiddled endlessly with its mobile and automobile sectors before they reached inflexion point, a stage beyond which continuing restrictions, official whimsy and meddling don’t matter: the country adds 10 million new mobile customers every month; in January 1.1 million automobiles were sold.

A large part of India’s growth has come not from finely tuned deregulation but because regulatory models often collapsed, as the tangled litigation over mobile licences since the 1990s has revealed.

It is time now to truly give India free reign, to intentionally collapse many regulations and create a million new inflexion points. For instance, why do we still allow no foreign direct investment (FDI) in supermarkets but 100 per cent FDI in industrial explosives and hazardous chemicals? If we can reach 9 per cent despite still being hobbled by bureaucratic fancy, the possibilities are endless.

Along the way, the Indian State has certainly learned some lessons. To stay with the aviation sector, we may now struggle to remember that less than seven months ago, eight Indian airlines threatened a strike (hastily withdrawn) unless the government they so abhorred bailed them out. “All of us are bleeding, all of us need help,” Jet Airways Chairman Naresh Goyal pleaded in August 2009, seconded by a subdued avatar of Kingfisher’s otherwise flamboyant Vijay Mallya. Wisely, a country prone to succumbing to the woes of the rich and powerful did nothing of the sort.

This resolve to stay away from crony capitalism was evident last week when Union Textile Minister Dayanidhi Maran refused government sops and criticised the export-dependent textile industry for fishing out its ‘begging bowl’. We’ve given you the stimulus, you come up with the ideas, Maran said. Look at the domestic market, look beyond the US and Europe to new markets.

Nothing showcases the ability to withstand hard times better and stand firm than India’s star global performer, the information technology sector.

The National Association for Software and Service Companies predicts that the IT export growth rate will drop from 16 per cent in 2008-09 (29 per cent the year before that) to 7 per cent in 2009-10.

Yet, the few results we’ve seen indicate that things aren’t as bad as we feared. How else could Tata Consultancy Services (TCS), India’s largest software company, think of adding 40,000 new jobs this year?

In part, this is because Indian IT has begun the tough journey of innovating, adapting and expanding into emerging markets. TCS now boasts annual revenues of $1.2 billion, or roughly a fifth of total sales, up from $160 million when it opened its first operations in Uruguay and China eight years ago. It’s been difficult going beyond the English-speaking world, not least because in Latin America Tata means “daddy”, something that TCS’ Latin American CEO had a hard time explaining to bemused new clients who had never heard of Tata. Over the next five years, TCS will grow its staff in China by 500 per cent to 5,000, and in Latin America it is adding 1,000 people every year.

India’s IT sector revenues last year were $59 billion. It’s hard to imagine that in 1991, when then Finance Minister Manmohan Singh first released India’s latent entrepreneurial energies, the IT sector was a piffling $150 million.

In India’s growth story, no sector has grown quite so spectacularly in terms of revenues and global imagination as the IT sector, almost all of it outside India.

No one imagines that India’s government can remove its inequities overnight, that its stifling bureaucracy will be transformed any time soon. But the energies now restlessly swirling among its people can be given full expression if government simply gets out of the way.

Mukherjee may not take India to new inflexion points tomorrow, but it is a good day to start thinking of 11 per cent.