Saturday, May 26, 2007

Ratan Tata advises Govt to help large projects

Ratan Tata is a pretty famous name in India, being head of a large business group that is well liked and does not have too many controversies around it. So, when he is appointed to be the Chairman of the Investment Commission, you would tend to think that the Government is somewhat serious about bring in investment in India. Unfortunately, bringing in investment in India is not something as simple as showing a rosy picture to investors and then waiting for money to flow in. Investors need assurance about stability of policies, and about simple procedures; no investor is in the game of playing how to beat the bureaucracy; they want preferably a single window clearance for processes. Given the number of countries liberalizing in Asia and other areas, such single window clearance is available elsewhere. Now, in a country such as India, there is a right to expect resistance, and to listen to people; but the present Government displays itself to be extremely weak willed. For one, there is an irrational belief that most measures of liberalization will adversely affect the aam admi (common man), and unless the Congress leadership (including the Madam) can
understand that building large manufacturing and infrastructure projets is a good way of economic development that will improve the conditions of the common man, there really does not seem a way ahead.
Unless they can get this belief and be convinced, they will be forever be held back by the likes of the Mani Shankar Aiyer and the central left (CPM) politburo. These gentlemen believe that all big industry is bad, that any move to increase liberalization is caving in to the Unites States and that our people are better off with the growth rates of the 70's and 80's, when everyone was suffering and hence united.
Anyhow, over with my rant, and back to the story of this article:

Leading corporate house Tata Group's chairman Ratan Tata has expressed concern over delay in various projects in the country in a letter addressed to Prime Minister Manmohan Singh.
According to sources close to the development, Tata in his letter, written in his capacity as head of the country's Investment Commission, said that some government policies were coming in way of some of these projects. Tata in his letter mentioned the ventures announced by Lakshmi Mittal and Korean steel giant Posco in India.

This is actually an article in page 9 of the Economic Times of 26 May 2007. In the paper version, there are actually projects that are held up, such as the steel projects proposed by Posco, Mittal and Tata Steel, with investments of $45 billion. There are energy projects that are being help up due to worries about coal. Some loosening of restrictions in the area of banking and insurance could lead to more money flowing into the country.
Many projects have been held up on account of policy decisions between various ministries, and others have been held up on account of coordination with state governments missing the level of support required to get these projects going. No matter what the specific reason in each case, most people recognize the benefits that would flow in terms of getting such projects. If not here, many of them will go to China, or to other countries. It is incumbent upon the Government to take quick steps to clear these projects or reject them, not leave them hanging in such a manner that the investor finally threatens to quit, like Posco recently did. The Government's flip-flop on the SEZ matter is a good example of where policies keep on rotating depending on who is applying the pressure and what the politics are. We don't need to be like china in terms of absolute decision making, but on the other hand, we should certainly not spend too much time debating endlessly (another example was the time taken on the decision about airport privatization and the contracts).

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posted by Ashish Agarwal @ 6:19 AM