In this week’s selection for #ThrowbackThursday, we have a piece by Prof. B P Adarkar. The following is an excerpt from an essay he wrote titled ‘Our Mixed Economy–Blessing or Curse’, originally published in 1972 by the ‘Forum of Free Enterprise.’
The Private Sector is, indeed, the ‘Cinderella of the show’ – suppressed and circumscribed on all sides. While the Public Sector is unable to meet the nation’s material requirements, it functions like the dog in the manger and it will not let the Private Sector do the job either. In other words, ‘neither you shall have it, nor shall I have it-let the dog have it!’ The fault, therefore is not of the Private Sector that the Mixed Economy has given rise to various evils, but simply that the Private Sector has not been even allowed to function freely and properly. In fact, the boot is on the other leg: it is the mismanagement and incompetence of the Public Sector that is responsible for the poor performance of the nation’s economy as a whole. Also, the Private Sector industries are being run mainly by experienced people, who have a stake in the success of their business, and are, therefore, naturally more efficient and (by definition) less corrupt than those who operate the public sector industries. I do not mean to say that there are no ‘black sheep’ in the Private Sector but they are few and far between.
Unfortunately, in the name of the socialistic pattern of society and planning control, all kinds of impediments are being constantly placed in the way of the private sector industries. The Government has tied itself and everyone else into knots with red-tape and dilatory (even arbitrary) procedures which are contrary to all tenets of business management and to the basic interests of economic progress. Only Big Business seems somehow to survive all this and, in some cases, actually even to thrive on it! On the other hand, the small business man and the newcomer are neatly thrown overboard!
The wild growth of rules and regulations can be seen, for example, in the “Red Books” for Imports and Exports–not Mao’s ‘red books’, but of the Chief Controller of Imports and Exports! These are clogging the avenues of trade-like the water hyacinth overwhelming and destroying vegetation. The corridors of Secretariats and of their subordinate offices have become like dharamshalas for mendicant business men loitering for beggarly bits of licence worth a few thousand rupees, while a new class of touts and agents has arisen living like parasites on the blood of applicants for licences! Here is indeed a paradise for the little bureaucrats who simply thrive on the Red Books and their endless addenda and corrigenda, with corruption, delays, increasing costs of industry, and inefficiency, frustration and bad blood all round.
Concentration of economic power and the growth of monopolies are the direct results of these licensing procedures and policies-and this has been admitted by the Government itself–because only Big Business has the staying power and the resources to cope with the exorbitant demands of procedure and corruption. However, instead of removing the root causes of concentration and monopoly, the Government has been tinkering with measures to control what are basically the results of its own policies!
As regards industrial licensing, the Minister for Industrial Development, Mr. Moinul Haque Choudhury, at a meeting of the Central Advisory Council in November 1971, said that after taking charge of his portfolio, he had cleared many old cases of industrial licence, but that he was helpless, ‘when the administrative machinery concerned’ (i.e., not only of his own Ministry but of other Ministries also) ‘sat on the fence.’ He disclosed that no less than 334 licence applications made in 1966 were still pending.
He did not mention what the position was regarding applications made in 1967, 1968, 1969, 1970 and 1971. The figures for these years must be even more revealing! Still, Ms. Choudhury has the sang froid to ask, why in spite of his efforts, ‘a faster rate of investment and production,’ has not taken place!
With stringent monopoly legislation, procedural delays, exorbitant demands of corruption, heavy income and wealth taxation, and ceilings on property, who can have the energy and the heart to work and earn in the Private Sector now?
Take the case of West Bengal, where an energetic Governor, Mr. A. L. Dias, has been trying to rejuvenate its economy with a ‘package of incentives’ to be given by both the State Government and by New Delhi. It was stated in the Press, however, that the Writers’ Building had lost its credibility with the investors on various counts. Firstly, the slow-moving bureaucratic machinery, it is pointed out, takes months, at times years, to even forward applications of investors to New Delhi, where further delay also awaits them. Secondly, in the small-scale sector, even raw materials promised were not received in time, but got immobilised somewhere in the State administration. Thirdly, a large amount of installed capacity remains idle in most of the engineering concerns, about which little or nothing is being done by the State. All this points to the urgent need for the State and Central Governments to set their own machinery in order, in the first instance.
That reminds me of Professor Parkinson’s new ‘Law of Delay’, in which he defines delay as the ‘deadliest form of denial’ -a speciality of P.P. (the prohibitive procrastinator), who instead of saying “No” says: “IDC” (i.e. in due course), hoping to bury a scheme with sheer exhaustion and continuous frustration! I am sure Professor Parkinson will find in India a vast scope for his Ingenuity in producing new ‘laws’, if he spares some time to spend here.
The opinions expressed in this essay are those of the authors. They do not purport to reflect the opinions or views of CCS.