Licence Raj culture is back in India; impacting local manufacturing: RC Bhargava
Despite a slew of measures undertaken by Centre to improve ease of doing business, there are hurdles galore at state level, says Maruti Suzuki Chairman
- Sep 26, 2023,
- Updated Sep 28, 2023 6:04 PM IST
Since 2014, India may have risen through the ranks to feature among the top 63 countries (from 142nd in 2014) in the Ease of Doing Business index, but not much has changed in the functioning of its local authorities, thus impacting the growth prospects of its manufacturing sector. Despite a slew of measures undertaken by the union government to improve ease of doing business, the country’s bureaucratic hurdles remind us of the Licence Raj era, said RC Bhargava, Chairman, Maruti Suzuki on Tuesday.
“A whole lot of reforms have been effected by the Centre but unfortunately the results are not yet apparent. The reasons, I think, is a bulk of the interactions of the manufacturers and entrepreneurs is with the state governments. And in the state governments, the bureaucracy, the entire administration has still not changed the way the Centre has changed. The attitude of the administration is still what it used to be in the licensed and/or controlled days,” said Bhargava.
Speaking at an event organised by the All India Management Association in New Delhi, he further explained that while the union government, since 2014, has made sweeping changes like the introduction of the goods and services tax (GST), reduction of corporate tax rates and abolition of hundreds of old rules to improve ease of doing business, at the state level the administrations fail to grasp the importance of swift actions and continue to control activities instead of facilitating. “At the state level, the attitude of the bureaucracy is to control rather than facilitate. The change has not happened there," he said.
“Moreover, today’s entrepreneurs are having a mindset and maintaining practices that were developed during the licence and control raj. In those days, the private sector was not been able to grow or innovate because the licences laid down every aspect of their functioning. That resulted in development of various malpractices - like the growth of black money and ostentatious consumption,” he explained, adding that today ostentatious consumption, resulting from black money, is similarly flourishing in India.
Currently, people are more inclined to show their wealth by spending ostentatiously as that has become a priority for most entrepreneurs. According to Bhargava, today’s entrepreneurs are focused on building their personal wealth rather than growing their businesses and unless that mindset changes, manufacturing growth will remain muted.
Since 2014, India may have risen through the ranks to feature among the top 63 countries (from 142nd in 2014) in the Ease of Doing Business index, but not much has changed in the functioning of its local authorities, thus impacting the growth prospects of its manufacturing sector. Despite a slew of measures undertaken by the union government to improve ease of doing business, the country’s bureaucratic hurdles remind us of the Licence Raj era, said RC Bhargava, Chairman, Maruti Suzuki on Tuesday.
“A whole lot of reforms have been effected by the Centre but unfortunately the results are not yet apparent. The reasons, I think, is a bulk of the interactions of the manufacturers and entrepreneurs is with the state governments. And in the state governments, the bureaucracy, the entire administration has still not changed the way the Centre has changed. The attitude of the administration is still what it used to be in the licensed and/or controlled days,” said Bhargava.
Speaking at an event organised by the All India Management Association in New Delhi, he further explained that while the union government, since 2014, has made sweeping changes like the introduction of the goods and services tax (GST), reduction of corporate tax rates and abolition of hundreds of old rules to improve ease of doing business, at the state level the administrations fail to grasp the importance of swift actions and continue to control activities instead of facilitating. “At the state level, the attitude of the bureaucracy is to control rather than facilitate. The change has not happened there," he said.
“Moreover, today’s entrepreneurs are having a mindset and maintaining practices that were developed during the licence and control raj. In those days, the private sector was not been able to grow or innovate because the licences laid down every aspect of their functioning. That resulted in development of various malpractices - like the growth of black money and ostentatious consumption,” he explained, adding that today ostentatious consumption, resulting from black money, is similarly flourishing in India.
Currently, people are more inclined to show their wealth by spending ostentatiously as that has become a priority for most entrepreneurs. According to Bhargava, today’s entrepreneurs are focused on building their personal wealth rather than growing their businesses and unless that mindset changes, manufacturing growth will remain muted.