12 Jul 12 India – Policy Paralysis or Malevolent Mismanagement

Media and analysts have been wanting to describe the inability of the Congress government to pass important bills as “policy paralysis”. A large part of the economic mess we’re in has been ascribed to this paralysis.

Unfortunately this play on words is misleading and actually, quite off the mark.

Sure, better policies and laws are needed. But, a more fundamental problem is not in new laws, but in upholding and implementing existing ones.

  • Vast parts of India are without power for hours every day because there isn’t enough coal.
  • Coal is the near monopoly of Coal India, which is inefficient and prone to theft and pilferage.
  • The movement of agricultural goods across state borders is restricted.
  • Years after the policy announcement, still no sign of the unified GST.
  • Highway projects are stuck for years because rival politicians want more of the surrounding land.
  • Food is rotting in the warehouses of the Food Corporation of India, even as millions go hungry.
  • Large public sector units and institutions do not have a Chairman for months on end – most notably Life Insurance Corporation (LIC) and Unit Trust of India (UTI).
  • In certain districts of India, non-existent government has ceded control to Naxal rebels.
  • Water is scarce and the water table is falling, but politically connected, rich farmers are given free power to suck out water from the ground.
  • The electricity boards are bankrupt but they still sell power at less than cost.
  • Diesel prices are subsidized, and taxpayer money is spent on funding SUV owners.
  • Millions of children are not being educated, and government schools are lousy and insufficient. Despite this, government wants to control supply.
  • Anywhere from 30-90% of government dole-outs are siphoned off.
  • Getting a driver’s license is an ordeal without an agent – as are many other government services.
  • Outdated and complicated rules allow government agencies to harass citizens.

This is a very, very small list – and I’m sure any Indian can think of hundreds more.

Fixing most of our problems doesn’t necessarily mean new laws or policies. If we deliver services, decisions and inputs expeditiously, transparently and painlessly, India can grow much faster and poverty levels can be dramatically reduced. New policies without on-the-ground implementation are meaningless.

Unfortunately, the reality is that the government and political machinery and their allied vested interests don’t want that. The confusion, excessive bureaucracy and arbitrariness help all of them make more money and buy more votes. Who cares about the country or the economy?

Malevolent Mismanagement might be more appropriate than Policy Paralysis.

Arun Jethmalani

Arun is one of the founders of ValueNotes. Apart from trying to build a high-quality research business, he has spent the last 27 years researching, analyzing, and dissecting companies and industries. He has worked with clients of all shapes and sizes, from all parts of the world – in providing them insights that make a difference to their business.
Prior to ValueNotes, he was an equity analyst/advisor, and wrote extensively on investing – including a column titled “Value for Money” which ran for 10 years in the Sunday edition of the Economic Times. To this day, he remains an avid “value” investor.
He has also been published in several other publications, and is a regular speaker at events related to technology, investing, competitive intelligence, business process management, Internet, etc. See: Valuenotes Events
He has been instrumental in developing a community of research and intelligence professionals in India, and is the founder and current chairman of the SCIP (India) Chapter. Arun holds a B Tech from IIT, Bombay and an MS from Duke University, NC, USA. LinkedIn Profile

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