Monday, 10 October 2011

Shooting from the Lip

Has law and justice minister Salman Khurshid done a service to Corporate India by his statement reported in the Indian Express: “If you lock up top businessmen, will investment come?”
He has not.
Worse, he has only ammo to the opponents of liberalization, who will cite this as yet another example of the government caving in to `neo-liberal forces’ and how opening up of the economy has only encouraged big-time corruption.
Remember Arundhati Roy and Prashant Bhushan saying the economic policies post-1991 were the reason for corruption becoming pervasive.
When will these Congress ministers learn to zip their lips?
The following is the exact context of his statement: “What will affect the functioning of the government is if other institutions do not understand the kind of political economy we are faced with today: what is needed to encourage growth and investment? If you lock up top businessmen, will investment come? What optimal structure should be put in place for investment to come?”
Obviously he was talking about corporate biggies – notably Unitech’s Sanjay Chandra and D B Realty’s Shahid Balwa –  currently in Delhi’s Tihar Jail facing trial on corruption charges in the 2G case.
But what does investment or the lack of it have to do with businessmen being in jail for corruption charges? If they are innocent, they will come out free. If they are not, they deserve to be in jail.
The Indian investment scenario isn’t suffering because of corruption charges against businessmen. It is suffering due to a poor investment environment – lack of policy clarity, squabbling ministers affecting both policy and its implementation in areas like mining, red tape, corruption (petty as well as high level) and now rising interest rates.
And, yes, corruption.
India ranks 134 in a list of 183 companies in the World Bank’s annual Doing Business report. Taking action against businessmen for corruption is not a criterion. The categories are starting and closing a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders and enforcing contracts.  Go to this link to see how India fares on all this.
And in 2010, India slipped four notches in the global Corruption Perception Index – from 84 to 87. Ask anyone – this is a dampener for foreign investment.
Has no action ever been taken against corrupt businessmen in the United States or the United Kingdom or any other free market economy? Nowhere in the world will a minister go out and say taking action against corruption will discourage investment.
Khurshid will probably come out and clarify that he meant businessmen being jailed without proof. But that is what the trial process is about – to decide on whether someone is guilty or not guilty. Or is it his case that in corruption cases, it is okay for receivers of bribes to be jailed but not those who pay bribes? (I am not pronouncing a verdict on those jailed in the 2G case).
Corporate India can do without such supporters.
Instead of telling the courts to go easy on businessmen facing charges of corruption, it might be better for Khurshid to tell his Prime Minister, his party leader and ministerial colleagues to do something to improve the investment environment.