Governance issues holding back the Indian economy

Ask any common man in India about the problems facing India and you are likely to get the same answers. Those same answers are what he will get if he puts the question to people who do business in India, whether they are Indians or foreigners who are here to tap into India’s immense potential. The broad governance issues facing India can be classified into these categories:

• unhealthy policies: For decades after India gained its freedom from the British in 1947, India took a protectionist stance towards its own businesses. She made it extremely difficult for foreign companies to settle in India. India also rubbed shoulders with the Soviets, which directly influenced many of India’s policies. Although India had embraced a Western-style democracy, its early leaders were fascinated with Soviet-style socialism. This fascination eventually made India on the sore side of Western leaders and the losing side of the cold war. It was only in 1991 that the economic reforms were introduced and India opened its markets. The change was immediate! Within a decade, the landscape of India was completely transformed, forcing the world to sit up and take notice.
• Corruption: Asking anyone in India about their problems will give you the answer that India’s number one problem is corruption. It is a widely held belief that one cannot be born or even die in India without giving a bribe (for birth or death certificates) to some government official. The media (a very free and expressive Indian media outlet) reports shoddy scams one after another and provokes a public outcry. The office of the Prime Minister of India (the highest post in the country as well as in Britain) has been accused of corruption many times since the 1980s. The latest scam to cause a furor in the country involved a Minister of Telecommunications Union of the country that assigned Mobile Phone Spectrum contracts at nominal rates to various parties that these companies then sold for up to 10 times the price at which they had purchased the spectrum. The CAG (Controller and Auditor General of India) has estimated that this caused a loss of over $100 billion to the Treasury or in other words the taxpayer in India.
• A lethargic bureaucracy: Despite very severe criticism of the Indian bureaucracy and judicial system both inside and outside of India, they have not been reformed to keep up with the changing spirit of the Indian nation. Many are frustrated by the frustratingly frustrating ways of government office clerks and officials in India, the average Indian bureaucrat will refuse to file a document if he detects a single alpha mistake somewhere unimportant in a document, he will refuse to accept any improvisation in procedure, even when what you are suggesting is well within the bounds of both reason and established law. Combine this with the extreme amounts of time they often require to perform routine tasks (well, many government offices in India are overloaded) and the cash bonus entitlement they feel for doing even the most basic of their duties and you have an idea. how irritating it is to deal with the Indian bureaucracy.
• The Indian judicial system it has its own problems, although it is recognized to be quite impartial and fair, the time it takes for cases to be heard in Indian courts is unusually long. If you consider the ratio of judges to population in India, it is 6 judges per million people down from 10 judges per million a decade ago. Despite repeated calls and suggestions, the government does nothing about it. As for the delays, consider this, the verdict for the Bhopal Gas Tragedy case that took place 25 years ago (1984) in Bhopal, India, in which there was a leak at one of the American company’s plants Union Carbide. The methyl isocyanate and other chemicals that leaked that fateful day killed more than 10,000 people and maimed many more. Several of the affected people who survived, to date have only received paltry compensation for the horrendous tragedies they have suffered. International lawyers point out the loopholes in the Indian judicial system and even its poor enforcement so that India cannot obtain significant fines. India’s honorable courts take an average of 10 years to decide each case. How does the business suffer from this? Well, because disputes within or between organizations are not resolved quickly, the concept of copyright protection is a joke in India due to lack of enforcement, companies often have to suffer huge losses.

These are definitely not the ideal conditions for doing business in a country that has aspirations of being an economic powerhouse in the future. However, there is a positive side to this. Despite rampant corruption and all other problems, many Indian companies have continued to prosper and have shown extraordinary growth and eventually bought iconic brands internationally. The strength of India’s economic opportunity comes from its 500 million strong educated middle class. The other factor is that India currently has the youngest population in the world with over 50% of the population under the age of 30. In addition, there are other strong factors that make the Indian economy very promising. But again, there is no doubt that if India fails to fix its governance problems now, India will not be able to take advantage of these historic opportunities to be the third or even the second richest country in the world by 2050.