India: nosso aliado no Bric, sem visao politica de largo prazo

Talvez o mesmo possa ser dito do Brasil...

The New York Times, January 22, 2013

India Undermined by Lack of Long-Term Vision

By SAMANTH SUBRAMANIAN

NEW DELHI — Six years ago, the official Indian delegation to the World Economic Forum put together “India Everywhere,” a blizzard of promotions designed to lure foreign investment to the country. Guests to Davos were given free iPods loaded with Indian music and pashmina shawls “from the Himalayas to keep you warm in the Alps.”

The Web site for India Everywhere is still online, but — perhaps symbolically — it is riddled with broken links. Only the home page remains, cheerleading for “the world’s fastest growing free market democracy” and its imminent arrival “centre stage in the global economy.”

In 2013, the world economy is still waiting for India to live up to its billing. Foreign investment in India has continued to rise, reaching a record $46.8 billion in the country’s most recent fiscal year. But economic growth has slowed significantly. After flirting with the 10 percent mark in 2006, it cooled to an annual rate of 5.3 percent in the third quarter of 2012, the most recent period for which data have been released.

Admittedly, the past few years have not exactly been warm and nourishing for many national economies. But beyond the effects of the global slowdown, India’s economic progress has been undermined by the country’s internal politics — politics not as a grand ideological tussle, but politics as the more basic, spit-and-sawdust business of winning elections and retaining power.

The symptoms of this political malaise can be seen in the ways in which policy making has gone awry in India. The government, for example, tends to place populist projects ahead of more fundamental economic overhauls. It enacts legislation to guarantee poor people 100 days of employment every year, at a daily wage of 130 rupees, or $2.38, for example, but it does not equip these beneficiaries with the skills to break out of the cycle of poverty.

It decides to start delivering pension and scholarship payments via bank tranfers, instead of through government intermediaries, but it does not address the problems of corruption and bribery that made the change necessary to begin with.

Parties in power, as well as in the opposition, seem mainly to strive to be seen as champion of the common man. Last year, when the minister in charge of the money-bleeding Indian Railways announced fare increases amounting at most to 0.30 rupees (less than one cent) per kilometer of travel, the opposition and even his own party decried the move as anti-poor. The government recanted and rolled back the increases, and the minister was forced to resign.

The central government, headed by the Indian National Congress party, has also been hobbled by levels of disclosed and alleged political corruption startling even by Indian standards. Officials managing the 2010 Commonwealth Games in New Delhi were formally charged with awarding inflated contracts to close associates; memorably, rolls of toilet paper were invoiced at $80 apiece.

A former telecommunications minister was briefly sent to prison, and his trial is still going on, for selling radio frequency for mobile telecommunications at below-market prices, costing the exchequer $38 billion, according to India’s national auditor. Another official audit estimated that the allocation of coal-mining rights without a transparent auction process set the government back by $33 billion.

At the forum in Davos last year, Montek Singh Ahluwalia, the deputy chairman of India’s Planning Commission, brushed off the thought that these scandals had soiled the country’s image as an investment destination. “People will judge us on how we react with the investigation into the corruption,” he told the BBC.

The judgment does not look favorable at the moment.

Moreover, the exposure of corruption has frozen policy making even further. No government that is trying to make over its image in time for elections in 2014 will initiate changes like cutting fuel subsidies or opening sectors like retailing to foreign investment — moves that, for all their merit, are still contested fiercely in India.

Finally, the debate over overhauls and policy is muddied by mainstream political parties that have no clear economic vision. Instead, every party prefers to take stances that are inconsistent but that are perceived to serve it well in the short term.

In 1991, the finance minister Manmohan Singh opened up the Indian economy by relaxing many import and foreign investment restrictions and simplifying a byzantine licensing regime. But as prime minister since 2004, he has been far more timid in pushing through a second major round of policy changes.

Meanwhile, the Bharatiya Janata Party, which headed India’s coalition government from 1999 to 2004, used to pitch strongly for economic liberalization, promising to, for example, allow greater foreign investment in India’s retailing sector. Now that it is in the opposition, however, the party has resisted the passage of that very same measure for retailing — resisted it so strongly, in fact, that it refused to let Parliament function for days on end, claiming that big-box retailing chains would hurt small shopkeepers.

“There may have been some rationale for it in 2004,” Arun Jaitley, a leader of the Bharatiya Janata Party, said vaguely by way of not quite clarifying his party’s reversal on the policy.

Such policy reversals have drawn sharp criticism from both foreign and domestic analysts and investors. In 2006, the Goldman Sachs economist Jim O’Neill ranked India a lowly 97th in the world by potential risks to growth, below Brazil and the Philippines. In his 2011 book “Growth Map,” Mr. O’Neill said that the country’s problems boiled down to a lack of leadership.

Last April the steel baron Lakshmi Mittal said that India was “low on the investment priority list of countries.”

Ratan Tata, who recently stepped down as chairman of the Tata Sons empire, told The Financial Times in an interview that even though he was “bullish about India’s potential,” Indian companies could not help but look overseas, where “you wouldn’t have an eight-year or seven-year wait to get all the clearances for a steel plant.”

Late last year, in a rare moment of plain speaking, Mr. Singh, the prime minister, acknowledged that his government needed “courage and some risks” to see India through the policy logjam.

Pashmina shawls and loaded iPods will not do the trick any more.

Samanth Subramanian is the India correspondent for The National. He is working on a book about the Sri Lankan civil war.

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