In defence of lobbying

The lobbying industry must be allowed to function transparently within the ambit of the law.

This is an unedited draft of today’s column in Business Standard.

A famous Indian politician was searching for an issue that could energise his party cadre and move the masses. An group of businessmen produced a report on “making India self-contained in her supply” of a particular commodity. It had arguments on the rationale on consumption of the commodity, why it was necessary and why the poor needed it more than the rich. One of the politician’s close associates forwarded the report to the party leadership across the country while his personal secretary echoed the report’s arguments in an op-ed article the subsequent week.

The politician embraced the cause and triggered off a historic agitation, the basis of which, partly at least, was the output of corporate lobbying. The politician was Mohandas Karamchand Gandhi, the industry group was FICCI and the commodity common salt. The historic event in question, of course, is the Salt Satyagraha (see this post for details). It would be hazardous to suggest that a FICCI monograph singularly triggered off Gandhi’s famous march to Dandi. It would, however, be equally hazardous to discount the importance of lobbying on national politics then, as indeed in contemporary times.

The current debate over corporate lobbying conflates two separate issues: one, the legitimate persuasion of politicians on the merits of a certain policy measures and two, the illegal activity of bribing them in pursuit of this goal. The latter is wrong. The former is necessary. We might be in the throes of moral panic, but we should not mix up the two.

Lobbying is inevitable in a modern representative democracy: the more rules you make, the more complex the economy, the more the need for ‘specialists’ to intermediate between citizen, corporation and the state. That’s why we have lawyers, who help individuals and firms navigate the legal system. That’s why we have chartered accountants, who interpret the arcana of tax laws. These intermediaries play an important economic role by specialising in such matters and saving you and I the trouble of mastering law and the tax code when all we want is to go about our business.

Lobbying serves a similar function. It is far more efficient for businesses to hire public affairs specialists and lobbyists rather than involve the management in the byzantine world of Indian politics. If we consider lawyers and chartered accountants as legitimate professionals, why not lobbyists?

One argument against mainstreaming lobbying is that lobbyists risk making democracy a plaything of the rich. Those with deeper pockets will get to unduly influence government policies. This is reasonable in and of itself. However, isn’t it true that richer people can afford better lawyers and bend justice in their favour? Isn’t it true that richer people have smarter accountants who can find ingenious ways to pay less tax? More importantly, isn’t it the case that richer people already influence government policies, but in opaque, shady, dubious or wholly illegal ways? Those who doubt this can contact Mr Kejriwal for details.

Hey wait! What about the Niira Radia controversy? Doesn’t that connect shady corporate lobbying to high corruption? Yes, it does. However, that controversy arose in a country where lobbying is not only unregulated by perceived by many as a dubious activity. Had lobbying been a recognised as a legitimate profession, bound by its own norms and governed by a set of rules—like law and accountancy—we might have been spared some of the scandal.

This is, in fact, a good time to have a public debate over lobbying. Before 1991, most corporates would line up outside government offices as supplicants pleading for licenses, quotas and permits. After 1991 and until the exposure of big corruption scandals of 2010, canny businessmen sought to create legislative loopholes that would allow them to squeeze through, but keep their competitors out. This approach is becoming untenable.

Economic growth, globalisation, the Right to Information (RTI), urbanisation and the penetration of social media have changed the nature of how India’s corporations and governments engage each other. Businesses that try to create and exploit loopholes have a greater chance of being exposed, with the attendant loss to reputation and valuation. Like their counterparts in mature democracies, Indian businesses will have to engage in public affairs in cleaner, more professional, and transparent ways.

This can only happen if we allow the lobbying industry to function within the law. It is far better to regulate it rather than drive it underground. Indian democracy will be better served by placing the lobbying industry in a regulatory environment that requires companies to declare their lobbying activities and expenses, lobbying firms to disclose their activities and lobbyists to adhere to professional codes of practice. This is what the United States does. It’s not a silver bullet, but certainly an improvement over hypocritically persisting with a sanctimonious moral blindfold and pretending to be surprised that odious things happen in our country.

Copyright © 2012. Business Standard. All rights reserved.

Return and reforms

Will Manmohan Singh’s return to the finance ministry result in some reforms?

Pranab Mukherjee, an over-rated, over-respected and over-portfolioed cabinet minister presided over the finance ministry at a time when the results of UPA government’s gross mismanagement of the Indian economy began to show. His remedies worsened the malaise—not only has the economy slowed down, domestic and foreign investors have been given reason to believe that India’s economic managers are not only unserious, but also nearly banana. Retrospective taxation—Mr Mukherjee’s gift to economic policymaking—is an abomination and exemplifies how awfully perverted the UPA government’s thinking has been.

So, with Mr Mukherjee out of the cabinet (and undeservingly heading for Rashtrapati Bhavan) and Manmohan Singh taking over the finance portfolio, what are the prospects for reforms? None at all, argues the astute Swaminathan Anklesaria-Aiyar. Quite a lot, contends Sanjaya Baru. The truth may be in the middle, but despite Mr Baru’s valiant cheerleading, the odds are stacked up in favour of Mr Aiyar’s prognosis.

Samanth Subramanian sought my views for his report in The National. Here is my full response to his questions:

Q. Do you think the PM has the political capital he needs to make bold changes? Do you think, for that matter, that the government will risk making possibly unpopulist changes with the elections less than two years away?

Whether or not there will be any reforms depends on how much Manmohan Singh is willing to face down the Congress party establishment in order to secure his own place in history. It’s not so much about political capital but as he said in his 1991 speech “Sarfaroshi ki tamanna ab hamare dil mein hai/Dekhna hai zor kitna baazu-e-qatil mein hai.” Does he have Sarfaroshi ki tamanna?

Q. How much can any possible economic reforms redeem Manmohan Singh’s otherwise awful leadership of this UPA government?

What Manmohan Singh can do at this stage is revive the narrative of reforms, by setting out a long-term road map and by implementing the ones he can. The signal this will send will help set the economy back on track and hopefully redeem his own record.

Q. If you had to make a short, three-item wish list of reforms you hope he could enact, what would that list be?

Liberalise education, liberalise labour laws and start fixing land acquisition. Toying with fuel subsidies, reversing GAAR etc is mere signaling…the fundamental strengths of the economy can be reinforced only by liberalising education, labour and land acquisition. Playing around with financial markets and FIIs is mere tinkering. He must do what is necessary to revive direct investment, both domestic and foreign.

Everyone loves a good outrage

The reform agenda must be defended from Montek Singh Ahluwalia’s attackers

As far as op-eds go, this one marks a new low from P Sainath. It is not uncommon for him to frame grave issues in a divisive manner by conflating them with unrelated matters—like, for instance, agrarian crises and beauty pageants. This technique seeks to arbitrage outrage, as if decent people cannot be anguished at a tragedy without having to contrast it with an unrelated celebration. But when Mr Sainath links the poverty line, expenses incurred by the Planning Commission chief while traveling on official business overseas, the lavishness with which some tycoons spend their private funds and dubious dealings of crony capitalism, it can’t merely be his usual, unfortunate and misguided conflation.

Make no mistake: Mr Sainath’s hatchet job on Montek Singh Ahluwalia is part of an internal campaign against reform-minded individuals within the UPA government. This week’s manufactured controversy over renovation expenses of toilets in the Planning Commission’s headquarters is another manifestation of the same campaign.

Let us examine Mr Sainath’s cleverly framed allegations. His case is that at Mr Ahluwalia’s travel expenses are exorbitant, at an average of $4000 per day abroad. You would think he would give you some comparable data to prove Mr Ahluwalia has been unusually proliferate in spending public funds. Say, for instance, the average daily expenditure when cabinet-ranked Indian officials travel abroad on official business. Or for instance, the average daily expenditure incurred by Mr Ahluwalia’s counterparts from other countries. These would be like-for-like comparisons. Mr Sainath, however, does not do that. He compares these to a income of a person on India’s poverty line. All this proves is that $4000 is much higher than Rs 28. It does not even come close to proving that public funds were misspent, nor does it show that Mr Ahluwalia was unusually liberal with his expense budget. The onus of doing this research is on Mr Sainath, the person making the argument.

How Mukesh Ambani spends his personal wealth is irrelevant to the argument—he is free to spend his money as he pleases, even if it does not suit our tastes—, so is a discussion on cronyism and corruption in IPL. You don’t need to read the Planning Commission’s response to conclude that Mr Sainath’s allegations are sensationalistic nonsense.

But why choose Mr Ahluwalia at all? Mr Sainath’s arguments against profligacy would have been worthy of respect if he had compared the travel expenses of the top officials of government—from President Patil to the lowest ranking minister of state. How much, for instance, does Sonia Gandhi, as chairperson of the National Advisory Council, spend on her foreign trips? Whatever her political role, she’s an official of equivalent rank. How much do the members of the National Advisory Council spend on their foreign and domestic trips? Unless we have some numbers to compare with, we can’t say anything about Mr Ahluwalia’s trips.

What we do know is that Mr Ahluwalia is among the few people known to be advocating economic reforms in the UPA government. Singling him out with a view to making him the lightning rod for public outrage has all the signs of a political hatchet job. The objective is to discredit the reformist agenda by associating it with imaginary wrongdoing. After running the Indian economy to the ground, the socialists that haunt the UPA government’s policymaking are now trying to bury the narrative of reform, liberalisation and markets through subterfuge and intellectual dishonesty.

It’s no different with the renovation expenses of public toilets in Yojana Bhavan, the Planning Commission’s headquarters. One of the earliest reports on this, in the Times of India, again compared toilet renovation expenses with the the poverty line. Few in the mainstream or social media bothered to ascertain the scope of the renovations and compare it with similar renovations conducted in New Delhi’s public and private buildings. The purpose of the revelations was to insinuate wrongdoing on the part of Mr Ahluwalia, rather than to establish whether there was any wrongdoing at all.

Mr Ahluwalia is guilty: of not throwing his credibility on the line to compel the UPA government to launch the second-generation reforms, and to prevent it from engaging in monumental fiscal irresponsibility that has put India’s future at risk. Like his mentor Prime Minister Dr Manmohan Singh, he becomes complicit in the UPA’s misgovernance. He will have to answer these charges both to the nation and to history. This does not mean he’s lavishing public funds on unnecessary foreign excursions, building gold-plated toilets or taking a cut from the renovation contractor.

It is fair for the Opposition parties to politically exploit the situation to their advantage. However, it is in the national interest not to allow a campaign of unfair personal calumny to discredit the reform agenda—or indeed, to prevent Mr Ahluwalia from a chance to redeem his reformist record—to succeed. The Acorn completely agrees with Mint’s editorial defence of Montek Singh Ahluwalia. Mr Ahluwalia has “done far more for the poor than the busybodies and peddlers of poverty porn who are now attacking him.”

Mostly dogmas

More of the same gives you more of the same

One of the positive outcomes of the controversies sparked by General V K Singh is that it has, even if it is ephemerally, triggered a public debate on defence policy. Carrying it forward is important. In today’s Business Standard, Ajai Shukla responds to my arguments for reform in defence procurement.

Mr Shukla raises two broad points. First, that we ought not to throw away indigenisation while reforming the defence public sector; and second, that economic liberalisation that gave us a modern, competitive automotive industry cannot give us a modern, competitive defence industry. Let’s consider them in turn.

The argument, as I explicitly state in my article, “is not say indigenisation is an unworthy goal. Rather, it is to suggest that the longstanding approach to indigenisation has not only met with limited success but also that the same goal can be achieved using different means.” Mr Shukla shows how reliance on foreign technology causes problems of denial, interoperability and sabotage. The answer, however, is not a “sharper focus on indigenisation” which can easily become wrapping paper for the reform-resistant status quo. No amount of tinkering with the structure and management of India’s defence PSUs can make them competitive enough to provide for our defence requirements.

In fact, the Mr Shukla’s own points support my argument that PSUs have captured our defence procurement policy. “DPSUs,” he writes “notably BEL and BEML, have undermined indigenisation by serving as fronts for the back-door induction of foreign technology through partnerships with foreign vendors.” The political economy of the Indian public sector enterprises will not make them do any better if they are given a sharper focus or placed under a different ministry.

Next, the argument that the defence industry as a whole is different from the automotive (or any other industry) is untenable. Beyond the point that the defence industry has fewer customers than other industries, they are all made of the same people, have the same economic incentives, draw capital from the same economy, react to competition in similar ways and so on. It is unfathomable why Mr Shukla should consider this naïve. Of course, you can’t expect a private sector defence industry to emerge if the government creates disincentives for it, or if it refuses to purchase from it, as happens today. I recall similar charges of naiveté being thrown about when telecommunications, banking and insurance sectors were liberalised. People deeply involved in an industry feel that their industry is different. Well, it’s not. The laws of economics apply to defence as much as they do to the vada pav industry.

Similarly, it is not at all strange to see arguments that free trade or entry of foreign players will weaken the domestic private sector. That is an argument that has been made since Nehruvian times, much to the detriment of the nation. Sadly, it continues to be made despite being proven wrong. Did allowing foreign automobile manufacturers, telecom companies or insurance providers hurt our car makers, telcos or insurance companies? The reality is quite to the contrary. You can have a debate on whether or not Indian consumers should be allowed to purchase from multi-brand retail chains owned by foreigners. But how can you have a debate on whether the Indian armed forces should be prevented from having the best possible equipment to protect us?

The danger with the kind of attempted middle-ground approaches suggested by Mr Shukla is that they end up as a cover for inaction. The onus is on those who prefer mild variations of the status quo to explain why persisting with policies that have failed us for decades will suddenly begin delivering promised results now.

The dogmas that undermine our defence

Reforming defence procurement, mindset first

This the unedited version of my op-ed in today’s Business Standard.

Why is it that on the one hand India is the world’s biggest arms buyer, and on the other, the outgoing army chief has complained that we are short of basic war-fighting equipment like tank ammunition and field guns? Why is it that our defence procurement takes years to complete and can be halted or reversed by allegations of corruption? Is corruption so rampant within the top echelons of our armed forces that the both the army chief and defence minister could shrug off a brazen attempt to bribe the general in his office? How come the defence ministry has spurned and blacklisted vendors from countries whose geopolitical interests are aligned to ours?

It is easy to treat these issues as merely the failings of individuals and the shortcomings of the latest procurement rules. It is easy to park the unholy affair under the general head of how corruption is undermining our nation. To do so would be to ignore the underlying causes of why things have some to such a pass.

The first is the dogmatic pursuit of indigenisation, a mindset that pervades the defence establishment. It has resulted both in policy capture by public sector unit (PSU) network and introduced layers of complexity in procurement rules. Ordinarily, as end users, the armed forces would want the best possible equipment for the rupee, but they too are prisoners of a narrative that involves the pursuit of a chimerical indigenisation. For in New Delhi, it is still nearly heretical to suggest that an enemy killed by a foreign-made bullet is as dead as an enemy killed by a partly-indigenous bullet.

This is not say indigenisation is an unworthy goal. Rather, it is to suggest that the longstanding approach to indigenisation has not only met with limited success but also that the same goal can be achieved using different means. Back in the 1970s and 1980s the government couldn’t produce an indigenous passenger car no matter how many it purchased from Hindustan Motors and Premier Automobiles. It was only after the liberalisation of the economy and the entry of foreign competitors that Tata Motors, Mahindra and others could produce automobiles that are not only indigenous but also in the same league as their foreign competitors. The route to effective indigenisation, therefore, is counter-intuitive. We must open our defence sector to foreign investors so that Indian industry can acquire the capabilities to produce the equipment our armed forces need.

This cannot be achieved by offsets that require foreign suppliers to spend part of the contract price in India. Offsets might re-inject part of the defence expenditure into the domestic economy but will not result in the transfer of knowledge, skills and human capital that are essential for India to build a modern defence industry. The most effective way to get there is to open doors for foreign direct investment in defence manufacturing. Capping the foreign equity at 26% has attracted few investors. Instead of arguing over another arbitrary level at which to set the cap, we should do away with it altogether.

The second is the equally dogmatic anti-middleman mindset. Going by the statements of the defence minister, it would appear that middlemen—like their lobbyist cousins—are uniformly evil and therefore ought to be banned outright. Yet middlemen are not the cause of corruption. Rather, both middlemen and corruption are the twin offspring of the same parent—complex procurement rules.

The more complex a set of rules, the more the need for ‘specialists’ to help navigate through them. The reason lawyers and chartered accountants exist is because the law and the tax code are complex. Middlemen exist because they perform a useful economic role. There’s nothing intrinsically wrong or immoral about them. It is our rules that make them so, driving underground a genuine economic activity.

Why do we have complex procurement rules? Because we have overcrowded them with multiple, sometimes conflicting objectives. Changing our approach to indigenisation as argued earlier can simplify them to some extent. Even so, it is unlikely that they can be simplified enough to eliminate the need for agents. That is why instead of prohibiting middlemen in defence procurement, a far better policy would be to create a regulatory framework under which they can operate legitimately.

Agents could be required to declare their past and current affiliations, and disclose relevant family connections. Former defence officers and their civilian counterparts could be required to serve out a cooling off period before getting into the business. The policy objective ought to be to align—to the extent possible—the economic incentives of the middlemen to the organisational interests of the armed forces. We don’t have to like lawyers and chartered accountants in order for us to let them discharge their economic roles. Why should it be any different with middlemen?

The final cause of the mess in our defence procurement is that we often ignore the geopolitical consequences of our purchases. Awarding the tender to the lowest bidder might be the best method to resurface parade grounds but not for billion dollar purchases of equipment. To treat both purchases the same way would be to lose strategic leverage that comes from being able favour a country which can give us something else that we need. Blacklisting companies from friendly powers exposes us to purchases from less friendly ones.

The biggest argument for indigenisation is that reliance on foreign suppliers is risky because supplies can be withheld in order to coerce us. That risk can be mitigated if we procure military equipment from countries with which we have extensive economic ties, and vice versa. Reducing the incongruence between our top trading partners and our top arms suppliers ought to be an important policy goal.

The ghost of Bofors continues to haunt our defence procurement. Avoiding stepping on the dung on the road is now more important than getting to the destination. As the defence minister admitted in parliament, the pace of modernisation is slow because every allegation of corruption is investigated. This leaves us with the unfortunate implication that that anyone, from an inimical foreign power to a disgruntled equipment vendor, can apply brakes on the modernisation process. The ghost must be exorcised by liberalising the defence manufacturing sector and getting rid of the superstition that passes off as strategy.

Copyright © 2012. Business Standard. All rights reserved.

Liability-shiability absurdity

Liberalise the nuclear power industry!

It is painfully hard to watch the ongoing drama over civil nuclear liability. So much is the political class—from the UPA government to the opposition BJP—engrossed in lawyerly detail, so much has the Congress party abandoned the idea of economic reforms which Manmohan Singh was once famous for, that the biggest policy issue is not even being debated.

That issue is the full liberalisation of the nuclear power sector. There is no good reason why only state-owned (or majority state-owned) enterprises should operate the engines that make electricity from uranium. Instead of quibbling over whether or not to limit liability to operators or to extend it to their suppliers, the political class and the strategic analysts who advise them should be setting their sights on amending the Atomic Energy Act to liberalise the sector and allow for a neutral regulator to supervise them.

During the thick of the debate over the India-US nuclear deal, this blog had argued that liberalising the nuclear power industry is necessary, and that the nuclear deal is an opportunity to accomplish that task. Instead, both the government and the opposition have tied themselves in a legalistic bind over the irrelevant issue of supplier liability.

Irrelevant? Largely, yes. Because in a liberalised environment, all the government needs to do is hold the operator liable, and leave it to the operator to decide how it wants to cover its liabilities.

Related Link: PRS Legislative Research’s M R Madhavan’s brief on the civil nuclear liability bill, in Pragati

General Electric

After the “clean waiver” in Vienna

According the the Nuclear Suppliers Group, its guidelines “are implemented by each NSG participant in accordance with its national laws and practices. Decisions on export applications are taken at the national level in accordance with national export licensing requirements. This is the prerogative and right of all States for all export decisions in any field of commercial activity and is also in line with the text of Article III.2 of the NPT…” To understand what this will mean in practice, just read this report from Bloomberg.

The waiver means that companies including France’s Areva SA, Russia’s Rosatom Corp. and Japan’s Toshiba Corp. will be able to export nuclear equipment to India. General Electric Co. and other U.S. companies will have to wait until Congress ratifies a 2006 trade pact backed by President George W. Bush and Indian Prime Minister Manmohan Singh.

General Electric, the world’s biggest maker of energy- generation equipment, said Aug. 25 that it may lose contracts in India to French, Russian and Japanese rivals if Congress doesn’t ratify a U.S.-India nuclear deal soon after the agreement wins approval from the Suppliers Group.

Rice said the U.S. has talked to India about the potential competitive disadvantage.

“I think they recognize and appreciate American leadership on this issue,” she said. “Because of that I think we’ll have ways to talk them about not disadvantaging American companies.”

Still, she said “the best thing would be to get it through Congress.” [Bloomberg]

It is understood that there is a tacit agreement that the first commercial deals will involve US companies…as long as the US Congress does not prevent it. The non-proliferation ayatollahs are up against the General Electrics on this one.

As for the Indian government, the real job begins once the party is over. Negotiating the nuclear deal with the United States, IAEA and the NSG was the easy part. The hard part involves liberalising the power industry. See energy security begins at home; Mr Advani sees the light and the uranium at home.

Related Link: The problems with India’s power industry regulations. The NSG saga covered at Idaho Samizdat.

After the fig leaf dropped off

Time to demonstrate those ‘reformist credentials’

Now that the Communists are off the UPA government’s back, let’s see how much reform Prime Minister Manmohan Singh and Finance Minister P Chidambaram can deliver. Ajay Shah writes

Assuming the PM and the FM decide they want new drafting work done for one piece of legislation, it takes roughly a month of focus for a small team to get a good quality draft done. This is parallelisable – so 10 new drafts could get done in a month. The question is then one of whether it’s possible to introduce a new Bill and get it passed within the short time available. There might be some pieces of legislation which are non-controversial, where this could indeed come about.

I wrote an opinion piece in today’s Financial Express titled What now, UPA? about these questions. Now that the CPI(M) is out of the way, what is the task ahead of us in building the financial sector that India deserves?

Here’s the quick summary. There is a big task ahead of us. A lot of it can be done without legislation. The pending Bills are on the right track. But they are only a small slice of the legislative agenda in financial sector reforms. The bulk of the work has yet to begin. For the fuller rationale about these issues in financial sector reforms, see the Mistry and Rajan reports. [Ajay Shah]

This blogger, though, is not holding his breath—but will find the greatest happiness if proved wrong.

The knave of bad times

They destroyed the paddle. Schitt creek* is coming up

Growth in industrial production fell to 3%, the lowest in six years, indicating that bad times might be ahead. There’s worse. As Niranjan Rajadhyaksha demonstrates, the UPA government has frittered away the opportunity to put the economy on the footing to handle the coming problems. In the “misery index” he constructs, among emerging market economies, only Pakistan and Egypt fare worse than India.

But there is little doubt that the economic fundamentals are deteriorating. The hole in the government’s finances is getting bigger. It could now be close to 1991 levels, if measured correctly. The current account deficit, too, is growing and could conceivably touch 1991 levels by the end of this year. The foreign exchange market has already picked up these worrying signs. The rupee has been slipping against most major currencies over the past few weeks. Somewhere in some tax haven, a few hedge funds must be seeing these trends and sharpening their claws.

It is unfortunate and inexcusable that India is now at a point when it seems far more vulnerable than most other emerging market economies. The government should have used the splendid five-year economic boom and soaring tax collections to slash its deficit and prepare the economy for an economic downturn. It did not.

History will not judge the United Progressive Alliance government too kindly on this score. It is distressing that some of the same people who helped pull India out of trouble in 1991 have done so little to prepare for the next round of economic turmoil. One expected more from a team led by Manmohan Singh.[Mint]

Mr Rajadhyaksha is being charitable to Dr Singh and the UPA government. Not only did this crew fail to prepare for the coming storm, but actually damaged the boat. It’s a sin of commission. [Also see Swaminathan Aiyar’s piece on fiscal deficit]

* Thanks to Chidanand Rajghatta for revealing the decorous use of that euphonious euphemism

How wrong Manmohan Singh is

He advocates a false morality to disguise his government’s failures

Dr Manmohan Singh the prime minister has routinely relied on platitudes (instead of on incentives) to motivate the UPA government’s policies. But he is getting even the platitudes wrong. In a country where the average annual per capita income hovers around an unacceptably low US$1000, he wants people to earn less. Why? Because, according to him, earning less, and expecting to earn less, is a national duty.

By equating a degree of self-sacrifice with national duty, the PM has tried to make a moral argument. He has said that this is what corporates and highly paid executives owed in the endeavour to contain prices and keep the overall growth momentum on track. While this has a populist touch and will appeal to an opinion that is ready to view corporates as “fat cats”, private employment is increasingly the preferred option for most educated persons.

Sectors characterised by “significant market power” in the hands of a few producers have a societal obligation to assist the government in moderating inflationary expectations, the PM rounded off. [TOI]

He has gotten it exactly wrong. The national duty of every citizen is to make as much money as legally possible. Anyone who suggests otherwise cannot have the best interests of the Indian people at heart. Oh, he’s only referring to the top executives, you say? Well, first, depressing wages at the top will cascade down and result in lower earnings for everyone in the pyramid (just as increasing wages at the top will increase wages for everyone). And as a matter of principle, just how does making the rich earn less help the nation? In fact, it does just the opposite. It would have been one thing for Dr Singh to call upon the rich to deepen the culture of philanthropy. But to equate “self-sacrifice” with “national duty” is dangerous nonsense.

Dr Singh shamelessly masks his government’s failure to ensure free, competitive markets—and prevent the build up of significant market power—by claiming that monopolists have societal obligations. That’s dangerous nonsense too. The solution to the build-up of market power is further liberalisation and effective regulatory oversight. Dr Singh’s admission that there are sectors where companies have significant market power calls for moving forward with the economic reform process. Just what happened to the privatisation (okay, disinvestment) agenda?

We have said this before, and we say again: Dr Manmohan Singh has done immense harm to India’s future. The evil that he has done will live long after him. The good was interr’d with P V Narasimha Rao’s bones. Corporate India would do well to ignore the shameless moral poseur. Yes, it’s late in the day for this government. But Dr Singh should go. [See previous calls.]