If 9 per cent growth is possible despite time-consuming decision making processes, imagine what we could do with more efficient governance!
The World Bank periodically publishes studies titled "Doing Business" which rank different countries in terms of the difficulties in doing business. Last year we ranked 116 out of 155 countries covered; in the latest report, we have slipped to 134 out of 175 - China is 41 places ahead of us, and Singapore is number 1.
Clearly, despite all the liberalisation, doing business in India is not becoming much easier. Quite apart from bureaucratic hassles, procedures and corruption, the want of stability, consistency, and completeness in policies and regulations, also add to the difficulties.
Take the case of special economic zones. The act was passed back in 2005 and the rules framed in 2006. There is a "National Policy on Resettlement and Rehabilitation for Project-Affected Families" since 2003. A couple of weeks back, the 'empowered Group of Ministers' came out with new norms on some of the basic issues, when a few hundred SEZs are at various stages, but not one is functioning.
Most of the parameters now specified by the eGOM seem to be numerical compromises rather than coming from an analysis of the issues. The area earmarked for processing (that is, actual manufacture) has been increased to 50 per cent (Why? Why not 60? Or, the earlier 35?). The size has been limited to 5,000 hectares. This would mean that we would have,
Inshaallah, a large number of small zones.
Our policy does not seem to take into consideration the administrative cost, hassles and inefficiencies which a large number of small zones, many of them inland, would lead to; the need for world scale enterprises with room for expansion, and world class infrastructure. (Incidentally, earlier there was only a lower limit of 1,000 acres).
One positive feature is that state governments should not acquire lands on behalf of private developers who should directly negotiate with the landowners. (Then why the limit on size?) While this is welcome, the eGOM has left unanswered thorny but crucial questions like what to do if a small minority of landowners refuse to sell, tax issues and labour laws.
It also calls for a new relief and rehabilitation package to be announced soon. What happened to the 2003 one?
A letter from Sonia Gandhi, questioning the use of agricultural land for SEZs, was the provocation for the appointment of the eGOM. Shouldn't somebody have pointed out to Gandhi that the total farmland in the country is in excess of 1.5 million sq km, and that only 1750 sq km (or just about 0.1 per cent)