Bharat and Indian Government II

I am continuing my argument regarding to Mr. Prime Minister’s recent comments about conspicuous spending of rich Indians. I am throwing some facts that I got from recently published article of Mr. Guru Charan Das in Foreign Affairs. The facts and last Italic paragraph are of Mr. Guru Charan Das. The first three facts proves how much India has progressed in last 25 or so years. And, then how much of that progress is done in spite of Government of India rather than vice versa.

• The country's economy grew at 6 percent a year from 1980 to 2002 and at 7.5 percent a year from 2002 to 2006

• In the past two decades, the size of the middle class has quadrupled (to almost 250 million people), and 1 percent of the country's poor have crossed the poverty line every year.

• As a result, inequality has increased much less in India than in other developing nations. (Its Gini index, a measure of income inequality on a scale of zero to 100, is 33, compared to 41 for the United States, 45 for China, and 59 for Brazil.)

• For now, growth is being driven by services and domestic consumption.

• Consumption accounts for 64 percent of India's GDP, compared to 58 percent for Europe, 55 percent for Japan, and 42 percent for China.

• Only 10 percent of credit goes to the private sector in China, even though the private sector employs 40 percent of the Chinese work force. In India, entrepreneurs get more than 80 percent of all loans.

• Software and business-process outsourcing exports have grown from practically nothing
  to $20 billion and are expected to reach $35 billion by 2008.

• A recent national study led by Pratham, an Indian nongovernmental organization,
  found that even in small villages, 16 percent of children are now in private primary schools. These kids scored 10 percent higher on verbal and math exams than their peers in public schools.

• At government health centers, meanwhile, 40 percent of doctors and a third of nurses are absent at any given time. According to a study by Jishnu Das and Jeffrey Hammer, of the World Bank, there is a 50 percent chance that a doctor at such a center will recommend a positively harmful therapy.

Thus it is clear that privatization - one way or other - has helped the middle class carrying burden of growth. And sadly, Indian government failed in doing basic duties.

After India's independence, Nehru attempted a state-directed industrial revolution. Since he did not trust the private sector, he tried to replace the entrepreneur with the government -- and predictably failed. He shackled private enterprise with byzantine controls and denied autonomy to the public sector. Perhaps the most egregious policy was reserving around 800 industries, designated "small-scale industries" (SSI), for tiny companies that were unable to compete against the large firms of competitor nations. Large firms were barred from making products such as pencils, boot polish, candles, shoes, garments, and toys -- all the products that helped East Asia create millions of jobs. Even since 1991, Indian governments have been afraid to touch this "SSI holy cow" for fear of a backlash from the SSI lobby.

Fortunately, that lobby has turned out to be mostly a phantom -- little more than the bureaucrats who kept scaring politicians by warning of a backlash. Over the past five years, the government has been pruning the list of protected industries incrementally with no adverse reaction.

The last paragraphs proves the moronic ways the Labor Laws are administered in India. Since 1991 successive governments tried to dismantle these ‘legacy’ industries. The results were mixed until our beloved Mr. Manmohan Singh came to the power. The first thing his government did is to scrap the disinvestment commission that used to overlook the process of disinvestment under Vajpeyee government.