Unpredictability has been one of the key characteristics of the
incumbent Indian government ever since it assumed office in May 2014. The
government, especially the political leadership, has taken numerous decisions
that have surprised most of the citizens and global observers.
Overnight decision to replace all large currency notes in
circulation (demonetization); surgical strikes in PoK; air strikes in Pakistan
territories; abrogation of article 370 of the constitution and bifurcation of
the state of Jammu & Kashmir to carve out Ladakh as a separate union
territory; criminalization of the practice of triple talaq; amendment in the
citizenship law; abolition of planning commission; restructuring of corporate
tax rates; and most recently the decision to impose a total lockdown in the
country to control the spread of COVID-19 virus etc are some of the examples of
unpredictable decision making.
The tendency to surprise the stakeholders has not remained
limited to the powerful political establishment alone. Bureaucracy has also
borrowed abundantly from their political master. It has been issuing
administrative orders, which have been often described by the stakeholders as
"draconian" and "incongruent" the stated policy objectives
of the government.
Under these circumstances, attracting major new foreign
investment could be a challenging task. Many global businesses are certainly
lured by the size and potential of Indian markets, availability of skilled
worker at comparatively lower cost; improving physical infrastructure and
abundance of natural resources. However, unpredictability of policy;
corruption, law & order issues; judicial overreach (in recent years); and
dogmatic bureaucracy have so far kept them from making larger commitments.
In past few years, thus, the FDI in India is mostly focused on
stressed infra assets (roads, airports, renewable energy, etc); digital
platforms; services like telecom and retail, and assembly plants for
electronics and furniture etc. Investment in IT, automobile & pharma sector
that started in 1990s has mostly saturated and new investment now is just a
trickle.
Over the years, India has been turned into back office and
assembly line of the global corporations. Many of these businesses shall lose
their relevance in the emerging world driven by artificial intelligence,
dematerialized transactions, and xenophobic nationalism.
The rising unpredictability of policy is making even the current
flow of investment, which is much below the potential of Indian economy,
uncertain. Many global banks having their mission critical back offices in
India are wondering whether they should work on alternate plans, given the
onerous lockdown conditions. God forbid, if the second wave of COVID-19 hits,
as many experts are emphasizing, and another round lockdown becomes necessary,
these contemplations may certainly be brought to drawing boards.
Unfortunately, we have so far failed in attracting any
meaningful foreign investment in social infrastructure like education,
healthcare, skill development, water, sanitation, traditional food, promotion
and development of local culture & languages, etc. - the things that will
make India a self reliant and developed economy. Investments in these areas
will be India specific, profitable, and sustainable for long duration. The
employment opportunities in these areas will be far greater, rewarding and
sustainable as the local people will be engaging in these activities from the
position of their strengths. A cursory stroll through YouTube will show you
thousands of young and middle aged housewives, from small towns and metropolis
alike, sharing their culinary skills with the people. Many of these women are
celebrities in their own right followed by thousands of enthusiastic cooks.
There are thousands of household women entrepreneurs who supply homemade lunch
Tiffin to office goers and hostel residents.
Investing in these experts of local cuisines could be far more
rewarding & sustainable than investing in a food delivery platforms and
junk food outlets.
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