Wednesday, May 10, 2017

How can same policies have different outcomes?

Some Indian companies are "tigers abroad, lambs at home", wrote Sundeep Khanna. Tata Motors is very successful with its Jaguar Land Rover business and is the fifth-largest truck and fourth largest bus manufacturer in the world but its car business in India is failing. "There are companies in sectors like pharmaceuticals, auto components and textiles that have succeeded in finding scale and margins abroad but not made much of a dent within the country." "The IT services industry is a perfect example." While they service global customers, large outsourcing contracts in India are being taken by foreign multinationals. "Last year, for instance, Ericsson snagged a $500 million pan-India managed services deal from Bharti Airtel." Why? Because of stifling regulations, enormous difficulty in starting a new business and a fragmented market. Then there are wage pressures. As opposed to other countries government employees in India get much higher salaries than in the private sector. An average employee of a public sector bank was paid 27% more than in the private sector, wrote Huzaifa Husain. The cost of a railway employee has risen 11% from 2010-16 and that of State Transport Undertakings has risen by 12% from 2010-15. There is no data of housing stock, sales or holdings. India used to be a leader in population surveys and data collection, wrote Prof Abhijit Banerjee et al, but now data is confusing and contradictory. Accurate data could be inconvenient. India has been vocal in its opposition to protectionism in developed countries. "India must oppose surging protectionism," wrote an editorial in the Mint. It quotes Adam Smith,"Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss." Preaching to other governments is easy but the Indian political class "still harbours unreconstructed predilections towards statism and government command and control", wrote Prof Vivek Dahejia. Speaking at leading universities in India he found "how fundamentally anti-free market the prevailing intellectual currents run and how strong remains the faith that the government knows best". And "professors are often worse". Politicians have no incentive to change previous policies, which they see as vote winners. The Prime Minister promised a Congress-mukt Bharat, meaning India free of the Congress, but he is following the same policies. "In a sense, the Congress party has succeeded more than it thinks. It has succeeded in making the Bharatiya Janata Party (BJP) a mirror image of itself," wrote Anantha Nageswaran. A nation does not become rich by wishing. Needs guts.

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