A cursory perusal of the newspapers will readily bring out the above as simple fact. It is there in just about every daily; in just about every magazine that you would care to pick up and read. Some articles glibly suggest an even more diabolical and dangerous viewpoint, that the correct method lies in a blend of the above - namely, market-friendly policies and reforms with a human face of support and intervention for the poorest of the poor. These are views that, regardless of which side of this debate you are on, sound good to the ears; and yet, are totally off the mark as they don't address the core issue that is currently facing India, that is threatening to engulf all of us; perhaps it already has swallowed all of us, for all we know!
The reality of Capital Flight is now there for all to see, as businessman after businessman invests abroad; as international investors give India a bypass; as our Current Account Deficit balloons; as inflation reaches stratospheric levels and as the exchange rate enters new territory almost every trading session! These are factors and realities that can no longer be ignored, or wished away. And neither are they unconnected; the glib reason aft stated for the slide of the Rupee - QE-related problems and developed market concerns, cannot explain away the sustained run on the Rupee, neither can they explain away the steady fall against all currencies; neither can they explain the steady decline for the past 2-3 years; and neither can they explain inflation, or investment decline or anything else.
Similar is the case with any other solution proffered - for example, that now-famous grand strategy statement named market reforms, a statement that can have the distinction of making a great statement while meaning nothing in real terms, a feel good statement that sounds good to everyone, as they can then sidestep the real issues that are confronting India, one that no one wants to confront, as it shows a mirror to us... and as in that mirror, we can see our own ugly, distorted faces.
Even the most cursory eye over the various sectors of the economy will throw up one inescapable reality: that nearly every sector from core to consumer goods, from services to manufacturing has been buffeted by scams, scandals and corruption. In the entire great debate being conducted in newspapers between eminent thinkers, editors, politicians, businessmen and economists - you will be hard put to find even a passing mention to this problem. You will, at best, find oblique references in the form of beautiful statements like "it is difficult to do business in India" - statements that mean nothing, while seeming to sound informed and full of meaning. Statements that seem to address the issue head-on, while neatly sidestepping the real issues very adroitly.
I would like to understand how can we possibly unlock our potential by mere market reforms / How can we solve the problems of the poor by interventionist policies - when 90% of the inputs don't reach the intended targets, be it investments or subsidies. It is like throwing good money away. You might as well collect the entire cash and throw it in the Indian Ocean, for all the real effect that occurs on the ground situation. This is also supported by hard-core data, as I have previously espoused on my blog on many an occasion.
No amount of policies and changes in them can make an impact, unless implementation on the field is looked at with equal, and perhaps greater emphasis. This is what the entire picture shows - when analysed from a 360-degree approach. Each round of "reforms" is accompanied by grandiose announcements of investments into the country; how many of those get translated into reality - and most critically, and in what time frame do they actually materialise? Furthermore, how many get cancelled due to various and sundry issues? How many get stuck in the red tape?
Corruption is a massive drag on the economy; it is also a brake that is stopping all development. In land issues relating to investments, in subsidies, in regulatory approvals - this is an ever-present brake that is acting on every economic activity. Projects get stuck as people don't get their dues, leading to protests. Projects get stuck due to laxity, acting as a further impediment. And the nation pays the price of the negligence of our so-called intelligentsia, who have so far not shown the guts, the courage, the audacity and the gall to take on this scourge.
Let alone corruption, these so-called great men and women in politics, universities and society have so far not shown any inclination to seriously link the other great scourge that is acting as a disk-brake that is threatening to bring the economy to a dead stop, and as a reverse gear that threatens to pull it back. And by that, I mean the total lack of accountability in our so-called public service, for which a pretty strong case can be made out for a renaming to Civil Disservice. The total lack of accountability on Government Servants, and the intertwined corruption is like a spreading cancer that has now engulfed the entire body of Mother India. The lack of accountability means that Primary Health Centers go unattended and unstocked; that medicines get diverted; that schools go unattended, that no genuine teaching occurs, that free books get sold, that projects get stuck and delayed for sheer lack of proper implementation... and so on and so forth.
And that is the real issue; we require someone with the bloody guts to link the two; sure we need market reforms. We sure as hell need to support the poorer section of our society. But we most of all need a strong implementation culture in our country, a work ethic and a corruption free atmosphere to do business in.
And judging from The Great Debate that has been on in the Media among Government Servants, Politicians, Economists, Thinkers, Strategists, this is light-years away from the minds of the people who matter. The article that talks of problems facing the economy will usually totally omit the real problems of implementation, while the anti-corruption brigade totally ignores this other side. There is no one that is linking the two; for they are connected and intertwined into one indivisible whole.
No one has shown the courage to take the real steps to tackle corruption and implementation - tame the Civil Service, include a work-ethic and culture, free the police from political control, improve overall policy implementation. Sadly, there is no debate on the national level on this problem either. All you hear is a deafening, all-engulfing silence, with intelligent people spouting grand strategies that translate into rubbish on the ground. Only Arvind Kejriwal has come close to this, with his Lokpal campaign... only he has shown the guts... I very much fear that even he has not gone far enough!
And I very much fear that if this is not done post-haste, India faces greater tension in the day to come...