Cleanliness before reforms.

Faced with economic slowdown Indian companies are looking to sell off non-core assets. Lured by low interest rates and a growth driven by temporary factors they have diversified into areas in which they have no competence and have huge loans on their balance sheets. Real estate was an obvious attraction as prices were rising by 50% a year so every company, no matter what their business, built residential and commercial properties with loans. Rich people bought properties, not for personal use, but for speculation. Prices have now reached such levels that buyers are becoming scarce. Videocon group, which is in electronics and energy, wants to sell land in prime locations in Delhi and Mumbai. Infrastructure projects were grossly mismanaged by the government. Construction companies were promised 30 years of monopoly toll collection from roads they would build. So enthused were they that they paid the government to be awarded such projects. The annoyance of having to stop at toll stations every 20km, the expense of paying toll and the rise in the price of petrol meant that few people would dare to drive for long distances. Now companies are looking to sell $10 billion worth of completed roads. India has 100 billion tonnes of coal reserves but has to import 70 million tonnes every year. The Comptroller and Accountant General reckons that the government has lost Rs 1.8 trillion by not auctioning coal blocks. But auctioning mines for development will escalate costs and raise cost of electricity. Best way would be to allow coal to be mined on a revenue sharing basis or to collect a small tax per tonne. The problem is that inspectors will take bribes and allow companies to pocket most of the money. These are not difficult things to do. Germans were building autobahns at one mile per day during WW II. Australia earns vast sums of money from mining. The technology and knowledge is there; all we have to do is allow foreign collaboration and we could have world class infrastructure without cost overruns due to delays and shoddy planning. The problem is that the Congress is still set in a socialist mindset of high taxes and social schemes. Appeals against Rs 860 billion of tax demands are being heard by various courts and tribunals. TOI, June 10. The tax department wins only 10% of such cases while companies win between 40-50%. This shows - 1. Civil servants are ignorant of tax laws or 2. They file frivolous demands to scare companies into paying bribes to settle claims. 3. Tax laws are poorly framed. Companies, with millions of rupees of claims hanging over their heads, have to set money aside in case verdicts go against them which means they cannot invest in new projects. The old methods of crony capitalism, blatant stealing, tax and spend to bribe the electorate and fantasising about growth have to stop. But that can only happen if politicians have any shame and patriotism.