From: narayana@psuvax1.cs.psu.edu (Kuram T Narayana)
Newsgroups: soc.culture.indian
Subject: Re: Should Indian states need more autonomy?
Date: 6 Sep 92 01:03:20 GMT
Organization: Penn State Computer Science

In article <92Sep05.211034.28032@acs.ucalgary.ca> kudu@enel.ucalgary.ca (Dr. GeeKay) writes:
>In article <Bu2vxx.239@cs.psu.edu> narayana@psuvax1.cs.psu.edu 
>   (Kuram T Narayana) writes:
>>In article <92Sep04.203911.11585@acs.ucalgary.ca> kudu@enel.ucalgary.ca 
>    (Dr. GeeKay) writes:
>>>But they are not allowed to let private industries start, operate, 
>>>restructure, raise equity inside and outside India, and allow foreign 
>>>participation without central intervention at every stage 
>>>
>>The  industrial policy resolution and the national planning commision
>>were an act of parliament. There are varied opinions even from private
>>industrialists on whether the control-permit raj was useful or not. 
>>Dr. Bharatat Ram, who was one of the Sriram brothers of DCM Industries,
>>[...] unfailingly supported most of the control regimes of the state 
>>but he only condemned on the production capacity licencing and
>>on licencing product mix of monopoly industries. He was ofcourse
>>critical of the MRTP for the then existing cap. 
>
>In the control-permit raj, industrialists who had contacts with the
>govt., stood to gain as much as the beuaracracy by not allowing 
>competition from both inside and outside. It is no surprise then that
>you would find some (successful?) industrialists praising the 
>old control-permit raj.
>
In the good old control-permit raj system, the monopoly houses were
comfortably faced to raise resources than anybody else. If they were
to come forth and say that the control-permit raj is particularly
suitable in protecting the development of nascent and native 
private industry, then there is some justification. Without
a competing indian born and indian bred private sector, we would
have got our freedom in one hand and sold it in the other to the
foreigners. Thank heavens for the notion of self-sufficiency
that the system encouraged.

>
>Prevailing theory of economic development at the time of independence
>did have a large component of government participation (as it is hotly
>debated even now). However, it was never a good idea to have government
>monopolies; if there were enough freedom for each of the states to run
>their economies, stated would have *evolved* efficient industrial
>structures. The rigid arm of central intervention saw to it that
>such *evolution* would not take place.

Again illfounded! All the developmental effort in the core areas
and in the building of the infrastructure during teh control permit
raj did acrue in the states. The center had no other piece of land
to take and invest upon. The states were never prevented from 
raising the Tax revenues and come up with their own developmental
plans for the state! Even now states submit their plan to the
planning commision before the planning commision decides the
over all plan outlays. Indeed if states do a good job of
identifying sector that achieve quick return on investment,
then the center will be too willing to oblige. 

Actually states had every oppurtunity to come up with
efficient industrial structures! Center did not intervene
in the states developmental effort. If at all the states 
were willing to drive some project from its plan oulays
to a national plan for reasons that they had a better
chance of getting funded. The Vizag steel plant is the
prime example of core sector development which the state
should itself have taken up but gave it to the center 
to pursue. 

>
>Infrastructure development is as much an industry as any other. Some
>misguided followers of the Nehruvian model, thought (and continue to
>think) that having private/foreign ownership of infrastructure (roads,
>railways, telecommunication, etc..) is equivalent to *selling* the
>country to foreign hands. My point is that even if we started with
>the Nehruvian model, if enough freedom were given to the states in
>interpretation and execution of the model, more efficient 
>industrial development would have *evolved*. 
>
Again let me point out that even in arch capitalist countries
like the united states, infrastructure development is in large
part in the government sector. There were days (very good old ones)
in which some profitable rail-roads and clay roads were under
private ownership. But that works only for a profitable routes.
It works in routes that can generate fast return on investment.
Being underdeveloped an economy, the jestation period for the
return on investment on even profitable routes would be too long.

In point of fact, even under Nehru many people who served in
the planning commision were not socialists; they were of course
nationalists. If they had seen that private industry can raise
capital to generate infrastructure, they would have allowed
them to do so. But there was no reason to yield highly
profitable routes like the Bombay-Pune section of the
grand-trunk road (i think it is part of the grand-trunk road)
to private sector, where such profitable routes can be used to
funnel profits into less developed areas. Please don't tell me
Bombay-Pune track is not efficiently run. It is run pretty
efficiently.

>>That states could attract foreign investment over and above the
>>shoulders of the center is a myth; this has been convincingly exposed
>>by NT Rama Rao's Vibhuthi and Locket trip to USA. Every chief minister
>>had similar experiences. 
>
>You would be surprised to know that even apparent idiots like 
>NTR and Bangarappa (the present chief minister of Karnataka), could 
>make recognizable difference in these matters. (Case in point: the
>recent trip by Bangarappa to US bagged three or four offers of 
>investement in power generation and distribution). Had the state 
>governments been doing this kind of thing for long, their ability
>to attract investment would have been a criterion for their election
>before long.

Yes! NT Rama Rao came back to India and said that Pravasa Andhras
are going to invest (promised to invest) upto $2 billion. It is
the same. If Bangarappa made it a success this year, it is 
because of the general improvement in the climate for foreign
investment and because of successful infrasector development 
in certain regions. Ten years ago, Fifteen years ago, we had
chief ministers who were more capable, honest, and atleast one
requires some amount of intraspection to call them thugs. They
were as good as you and me today! They drew blank.

>
>>The whole notion that states can independently
>>develop (become some sort Singapore) if only the center wasn't there
>>is simply questionable. 
>
>With twenty-odd number of states; even if a few states were successful, 
>they would have been a role model to emulate, or bench mark to
>compare with for the electorate. The key idea is allowing the states
>to find their own optimal policies. And the way to do that is by 
>granting them autonomy in every which possible matter.
>
>>...kt
There is autonomy for the states; if Bangarappa can come and ask
for foreign investment in his state, it is because of that autonomy.
State chiefminister's have unfortunately been poor marketeers of their
states culture, whether it is abroad or within India. Look at Tamilnadu.
What has it given to the country in the past half century: fascism and
terrorism. That shows what industrial investment climate it can have.
>
>
>
>
>-- 
>Dr. GeeKay (kudu@enel.UCalgary.CA)
Newsgroups: soc.culture.indian