Monday, April 26, 2010

India needs a more equitable legal framework

This is in response to the article that appeared at:

Except for a few "सर फिरे ", nobody believes that democracy will fail in India.

Facts are disputable on both sides (Activists and the government). They are often manipulated for their own agenda. But as I mentioned elsewhere, India remains largely a country of conglomerates where existing business families hold sway in a crony capitalistic way. There is a dearth of self made business icons in the country barring some examples in the IT sector. (These success stories were possible because the product in this case was 'invisible' to the bureaucrats and also because the markets were abroad).

Some may argue, what about Dhirubai Ambani? Well, Dhirubai was already a wealthy man when he returned to India from the UAE. So he wasn't really self made entirely in India. Back in India, he was more a product of crony capitalism - the most undesirable form of capitalism. His sons Mukesh and Anil Ambani are anything but self made men. My point is that truly capitalistic societies have mechanisms to ensure that every generation has to toil to make it big and I believe that we should have those mechanisms in place.

As we take the capitalist route, we have an opportunity as a nation to adopt appropriate policies that would create a more equitable society. Otherwise, wealth will be concentrated in few hands and they will control everything else in the country.

On the issue of tribal development:

I am all for development, but if you take a headcount of people in the tribal lands where industrial development has taken place. Tribals have become a minority in their own land. All jobs have gone to the settlers. (Barring a few, tribals are mostly unemployable). If sophisticated Maharshtrians can be miffed about it, why not tribals?

Industrial development isn't having much effect on their lives. For that to happen human development is required. Human development of tribals requires a missionary zeal which a corrupt administration cannot offer. The British administration in conjunction with the missionaries had such a zeal and the results are 85 to 90 percent literacy rates in some of the North Eastern states.

Clearly, the government needs to move ahead from the current legal framework that has resulted in crony capitalism and concentration of wealth in the hands of the few, to one which would enable a more equitable capitalistic society. Therefore, laws need be tweaked to create a more level playing field for the emergence of new business icons from each generation. We need to investigate the legal framework which exists in the US and most other developed nations which allows the rise of first time entrepreneurs like Bill Gates who goes on to become the richest man on earth and then creates a foundation to give back most of his wealth in charity. Apart from philanthropy, what is inducing this behavior? Here's some hint.

I bank on charitable foundations to deliver human development more than the government because of their efficiency. And I mean Charitable foundations created from individuals' personal wealth not corporate social responsibilty. There is a difference.

No comments: