What terrifies Hanuman?

There is the fear of 'agencies' - the law enforcement agencies like the Enforcement Directorate, the income-tax (I-T) department, and the Central Bureau of Intelligence (CBI). The Narendra Modi government is accused of using these agencies for furthering its political purposes - an accusation that it denies. What is indisputable is that this has terrified businesspersons, who are afraid of not just making political statements (which they never do), but also not airing genuine grievances related to their sector

When Finance Minister Nirmala Sitharaman compared Indian industry with the mythological character Hanuman, she was not being very charitable to wealth creators despite comparison with a virtuous character. She was referring to a flaw in Hanuman's character which, in her opinion, also plagues the business class. Her arguments, as we shall see, are valid but her criticism of India Inc is not very accurate.

Tradition has it that Hanuman, though immensely powerful, often forgot his own powers and had to be reminded of them. "Is it like Hanuman? You don't believe in your own capacity, in your own strength and there's got to be someone standing next to you and say you are Hanuman, do it? Who is that person going to tell Hanuman? It can't certainly be the government," Sitharaman said at a function on Tuesday.

"I want to know from the Indian industry what is it that they are hesitant about… Since 2019, when I took charge of the Finance Ministry, I have been hearing industry doesn't think its (environment) is conducive. Alright, the (corporate) tax rate was brought down. I keep defending the industry even when people provocatively ask me what I would like to tell the private sector. We will do everything to get industry coming and investing here. Give PLI (production-linked incentives), we have given PLI. I want to hear from India Inc: what's stopping you?" she said.

The Finance Minister contrasted this with the attitude of foreign entities that want to invest in India: "I am hearing a lot more companies who are moving out of China wanting to come (to India) because they find the policies a lot more attractive, not just the PLI but overall the ecosystem is far more facilitative of such companies coming out to locate themselves in India."

She is correct in her government's support to industry. Corporate taxes have been brought down; the goods and services tax (GST) regime is in place; environmental clearances have been made easier; the PLI Scheme has been announce and is under implementation; micro, medium and small enterprises (MSMEs) were offered support during the Covid pandemic; the government is also keen on improving the ease of doing business. So, why isn't the industry still very enthusiastic about investing in India?

The answer is simple: a lot has been done, but still a great deal remains to be done. The Central government, for instance, has made many reform moves, but all state governments are not very keen on boosting industrial investment. Bizz Buzz mentioned earlier how a few states like Andhra Pradesh, Gujarat, Maharashtra, and Orissa get most of industrial investment, while others lag behind.

Secondly, investors are also wary of abrupt changes in policy, especially after change in state governments. This hurts them; they are discouraged to invest in the country.

Thirdly, despite over three decades of economic reforms, there are still too many controls that both Central and state governments exercise. Price controls are a case in point, especially in the healthcare sector. Also, there is the curious case of the National Anti-Profiteering Authority (NAA), which was supposed to ensure that GST cuts get transmitted to the customer. Set up in 2017, it was supposed to be wound up in three years, but has been repeatedly given extensions.

And last but not the least, there is the fear of 'agencies' - the law enforcement agencies like the Enforcement Directorate, the income tax department, and the Central Bureau of Intelligence. The Narendra Modi government is accused of using these agencies for furthering its political purposes - an accusation that it denies. What is indisputable is that this has terrified businesspersons, who are afraid of not just making political statements (which they never do) but also not airing genuine grievances related to their sector.

Worse, this has also triggered a kind of quit-India movement among the rich. Tens of thousands of wealthy Indians have reportedly moved out of the country. Finance Minister Sitharaman must realize that Hanuman could take on the demon king Ravana but not the ED and income tax officials.