It has been a winter of discontent as an eventful 2011 ended. faced with bleak business prospects, india inc expects the government to act and act fast.

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When Commerce & Industry Minister Anand Sharma went into a high-powered meeting with the joint task force of business leaders and government on industrial slowdown on December 19, 2011, he must have had some inkling of the unpleasantness in store for him. Barely days ago, India Inc. had publicly hit out at the policy paralysis that had visibly derailed the reforms agenda of UPA II. But any ideas that the Minister harboured to pacify the growing discontent in India Inc. were quickly put to rest. Peeved with the stubbornly high inflation, mounting fiscal deficit, the declining rupee, among a host of other negative sentiments, the meeting saw belligerent industry captains turn the heat on the government instead. Strident in their approach, industry representatives on the joint task force viz. JK Paper MD Harsh Pati Singhania, FICCI President Harsh Mariwala, Bharti Group Chairman Sunil Mittal, and HSBC chief Naina Lal Kidwai, urged the government to break the logjam with the opposition and end the policy paralysis in decision making and governance.

Lack of any major reforms since the 2008 global crisis coupled with spiralling inflation, worsening domestic finances and policy impediments in doing business (India ranks 137th out of 183 economies in ‘Ease of Doing Business’ according to World Bank), has not only slowed global investments into India to a crawl, but has also had a huge negative impact on Indian exports. Says Siddhartha Rajagopal, Executive Director of the Cotton Textile Export Promotion Council, “We are growing at 8-10% but lack of demand is a barrier. Besides, higher interests and capital costs are pushing up our manufacturing costs.” Ali Ahmed Khan, Executive Director of the Council for Leather Exports agrees that the order position has reduced drastically and bemoans government inaction and laments that the government has done nothing.

The latest nail in the coffin for the government’s reforms agenda has ostensibly been the retail FDI debacle. The government was forced to eat crow and shelve its decision to allow 51% FDI in multi-brand retail after key allies joined opposition ranks on the issue. But the retail FDI debacle perhaps was only the tipping point that brought the simmering discontent. In October last year, 14 eminent citizens including entrepreneurs like Deepak Parekh, Azim Premji and Adi Godrej issued a note of caution to the government in a joint statement. Their open letter to the Prime Minister drew attention to four failures of the government viz. growing governance deficit, galloping corruption, need to distinguish between dissent and disruption and environmental challenges. Only a few days later, India’s Comptroller and Auditor General Vinod Rai also delivered a stinging indictment stating, “Governance is at its lowest ebb,” adding that decision-making was the biggest casualty. In yet another embarrassment, the government had to revise its earlier projection of 9% growth. Barely three months after the announcement, the Prime Minister’s Economic Advisory Council cut the growth forecast to 8.2%. So much so that Dr Kaushik Basu, the government’s chief economic adviser, even conceded that there was a certain slow-down in bureaucratic decision-making. “Given the corruption scandals and subsequent witch hunt, some decision-makers are going slowly,” he admitted.

Clearly, the industry outlook for the future appears a tad disappointing and discouraging. While a fiscal stimulus would be a far cry, is there a way out of the current economic imbroglio? Dr Arun Singh, Senior Economist, Dun & Bradstreet, India highlights, “At this juncture, a marked improvement in business confidence and upturn in economic activity is heavily contingent on speedy implementation of big-ticket economic reforms,” he avers. Just implementing the long due GST (Goods and Services Tax) regime, with a simplified and long term direct tax code could electrify business prospects, feels D. S. Rawat, Secretary General, ASSOCHAM. “Investors must find a robust bond market and corporate debt market working in India. Early implementation of market driven pricing of oil products to reduce subsidy outgo and conserve oil and gas resources should be undertaken,” he adds.

And if implementing the GST seems like a far cry at present with opposition from BJP ruled states, then Commerce Minister Anand Sharma only has to go back and refer the notes of his December 19 meeting with the joint task force on industrial slowdown. Industry representatives had then suggested that the government identify 50 major (but do-able) projects, give them priority status and send out the right signals to the country and the world. The government may continue to maintain that it’s not about policy-paralysis, but they need to demonstrate their supposed non-inertia through action instead of merely paying lip-service to rev up the growth process.

With inputs from Karan Arora and Mona Mehta

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New-age old age

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Save your pity… old age homes are no longer the last refuge of the abandoned old folks. they are the newest hangout joints for the young at heart. TSI socialises with some happy and healthy souls...

New-age old age

Living in a modest home in the heart of the country, this is the story of a couple who was not very affluent to say, but solvent enough to keep themselves and their two sons happy. Striving to keep pace with the world with their busy jobs, the couple spent time doting on their children and dreaming for their future. Like every set of parents, this couple too placed their kids before them, and the children grew up with a lot of love and respect for their folks. Years went by and the two sons married, earned respectable jobs of their own and led comfortable lives. However, fate robbed them of their father and the mother resorted to a routine of alternately staying at her sons’ residences. They of course gave her a comfortable life, and gave her no opportunity for any complaints. And yet, the place where I met her wasn't either of her children’s abodes, but an old age home.

Mrs Murthy wasn't sent there by her sons; she chose it for herself. And surprisingly, she isn't the only odd case. The usual impression of an old age home is that of a refuge for the abandoned where pity pours for the senile disenfranchised, and bewilderment at the heartless ways of what they call blood. Not so here.

I visited one so-called old age home, but far from the gloomy hallways of a cold institution, this one was like one huge bustling joint family. "Coming here was a tough call," said Mrs Murthy, basking in the afternoon sun. "I lost my husband about three years ago and since then I had been dependent on my sons. They and their wives are very kind and gave me all the comfort." Then what made her choose this life away from family? "I found no purpose in my life there. After my husband was gone, I was suddenly left with no one to share my thoughts and feelings with. I wanted to be with people like me, those I would have common things to talk about," she said. Mrs Murthy wasn't the only one sailor in this boat of what she called 'choice living'. Two others I met had jettisoned all comforts and sought out this family for companionship.

While these ladies spoke of their desire to be in a place and with people where their hearts would feel at home, I wondered about the right steps to take for a son or daughter in the wake of a dilemma like this. Psychiatrist Dr Deepa Kaul helped me find an answer. "After a certain age, especially upon retirement from work and children’s marriage, people usually don't find any useful purpose of living. Also boredom sets in when one doesn't have a partner," she explained. Children might provide all the material comfort, but it has been observed that comfort and hours of watching TV doesn't really match up to a social life where mindsets match. In the face of such a request, Dr Kaul’s suggestions for the offspring are, "Don't take offense. Understand and don't force them to live with you due to emotional ties. At that age, it’s more important to help your folks keep frustration at bay."

The atmosphere at this old age home (name withheld on request) made me leave my sympathies at the door. There were also those sent away forcibly, but you couldn’t tell those from the ones there of their own accord. Everyone had smile on their faces. One of the office bearers of the old age home, Mr K Puri said, "It’s usually tough for children to send their parents away from them, and especially when they know that they can take care of the parents. But there's a certain sense of freedom that old citizens feel when here. Even those who had come feeling invalid, involve themselves in little hobbies. Most importantly, staying with people of the same age, talking and sharing experiences about being through similar phases in life, makes life interesting."

In the West, once 18, children are supposed to make independent lives; here, the interdependence – traditional and often voluntary – continues well into the grandparent-age of the parents. Surely a boon in most cases, and yet may be a little selfish to impose our expectations all over again in their twilight years. As long as it ensures health and happiness, let’s be open to it. 

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Real estate edges out industry

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One of India’s more prosperous states faces the prospect of turning into an industrial wasteland. The reasons are many

Until the turn of the millennium, Punjab was a highly industrialised state thanks to the many viable commercial ventures that flourished here and provided employment to lakhs of people. However, in the last ten years, the tables have turned and several big industrial houses like Hero, Vardhman, Saluja Steel and ND Garg Group have left Punjab and set up bases in other states.

Aarti Steel has moved to Orissa while the ND Garg Group has made Chhattisgarh its home. Even Avon Cycles is receiving offers from Bihar. Many small industrial units have shifted to nearby Himachal Pradesh. More than 1,500 factories could not start their operations in Punjab as they were not provided with adequate power supply.

RP Singh, general secretary of the Mohali Industrial Association, tells TSI: “The economic health of the state is under threat. A host of industries are moving to other states that are offering incentives. In Punjab, factories are getting neither electricity nor water supply.”

Singh, who owns a paper molding mill, adds: “The roads in industrial areas aren’t good enough. To make matters worse, more and more taxes are being levied. The apathy of the government towards industry has forced 90 percent of the units in Punjab to shift to the nearby Himachal town of Baddi.”

Singh asserts that the industrial environment in other states is infinitely better. “States like Gujarat, Himachal Pradesh and Rajasthan go out of their way to offer land to industrialists. In Punjab, it is almost impossible to acquire even a small piece of land from the government. In the other states, industry is given tax rebates. If Punjab continues with its current policies for five to ten more years, industry would be a thing of the past here,” he adds.

The Punjab government, which blames the Centre for every shortcoming, has been repeatedly saying that Delhi is not giving any industrial package to the state. In contrast, industry is flourishing in some states even though they have not been given any industrial package from the Centre.

In the last eight years, more than 50 big and small companies have shifted their new units to other states. Big companies have invested more than Rs 50,000 crore in other states in the process. Saluja Group has shifted a unit worth Rs 2000 crore to Madhya Pradesh while Vardhman has also moved to the same state. The Trident Group, too, has shifted many units to other states.

Badish Kumar Jindal, president of the Federation of Punjab Small Scale Industries Association, explains why industry is in a shambles in the state. “We use generators when power supply is frequently off. This costs us 12 to 14 rupees more per unit. If we purchase power from outside, it affects the manufacturing costs.”

As roads are in rather bad shape in parts of the state, industrialists are compelled to spend more on the transportation of goods to and from their factories. “In most places, we have to do without a proper sewage system or drainage mechanism,” says Jindal.

The mounting tax burden is one of the main reasons for Punjab's dwindling industrial stocks. Manufacturing costs in Punjab are 20 to 30 percent more than in the neighbouring states of Himachal Pradesh, Jammu & Kashmir and Uttarakhand. In Punjab, central excise is 10.24 percent, while Himachal and Jammu levy no excise duty.

Punjab-based industry has to pay 2 percent central sales tax while there is no such tax in Himachal and Jammu. Moreover, income tax is imposed in Punjab while industry in other states has to pay nominal income tax.

Chandershekhar, vice president, Punjab unit of CITU, says, “The policies of the state government have all but destroyed industry. Other states are offering cheaper power, state-of-the-art infrastructure and a host of rebates.

Why wouldn’t industrial units shift to these states?”

The CITU leader also alleges that ministers in Punjab are hand in gloves with real estate developers. The latter acquire land for commercial purposes and then use the plots to build residential colonies. “There is probably no minister here who does not have links with estate developers,” Chandershekhar adds.

About the labour crunch facing industry, he says wages are very low in the state. ”There is no labour crunch in Delhi and Ghaziabad. Workers are paid Rs 6,000 a month. In Punjab, the monthly wages are only Rs 4000. The state government has not increased the minimum wages for five years,” he says.

Vinod Thapar, president, Knitwear Club Ludhiana, says, “The textile industry has seen no growth for the last ten years. In Tripura, the annual exports are valued at Rs 18,000 crore while in Ludhiana, which has 14,000 textile units, the figure is merely Rs 9000 crore. Moreover, no special facilities are provided to us by the government. In such a scenario, industrial units are bound to move out to more industry-friendly states.” Veteran journalist ON Garg says, “The failure of the government lies in the fact that it could not create an industry-friendly environment. There is insecurity in the minds of investors. Both NRIs and big entrepreneurs fear investing in the state. Another reason is that the state has failed to provide required power supply to industrial units.” As industry flounders in the face of declining investment, the state government merrily spends public money to woo voters by organizing events like the Kabaddi World Cup and hosting glitzy Bollywood shows. How lopsided can a state’s priorities get?

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