One day an investor said this on a show when asked about investment in India: “How can it be considered safe to invest in a country that has trouble keeping the lights on from one end of the country to the other?” Little did anyone know that the comments made in jest would actually become reality and later that week a massive power blackout left more than 700 million people in India without power in India for 3 days as not one, but three regional electrical grids failed. This gives “light” to the fact that India has a long way to go before it achieves the global superpower status it seeks and a dominant position in any big investor’s portfolio.


Why So Gloomy?

India and China started their economic journey in nearly the same decade. The result is clearly evident. China’s GDP per capita is nearly 6 times that of India (Source: World Bank Data Report) and the investment in China is nearly 10 times the investment in India and that gap is rapidly increasing. The most dismal fact is that though Indians are at the heads of so many companies worldwide, we still can’t get any substantial amount of investment and have fallen down from the top 10 in Asia itself (if China and Hong Kong are taken as 2 separate nations) and to the Top 20 in the world. What do we need to do? What is it that China is doing and we are not? Why is China, which has a population more than us and not a very smart population either, getting more investment and is being considered as the safest destination for investment than India, which is considered as the heartland of smart people?

1)      India Needs to Put its Own House in Order

We live in a country where more FDI comes in with the help of lobbying rather than through the legal way. Why does this happen? Corruption and Political Paralysis are the key issues. We need to put governance first. No decision should be taken in a manner where it will cause chaos and commotion. Economic matters should be thought about, considered and consensus should be gathered before bringing the bill into the Parliament without anyone having any knowledge about the bill. This just makes our government a mockery in front of the world. Do away with corruption and chaos and bring in consensus. And that is the need of the hour.

2)      Make Investment easier, not more and more complicated

Our country is ranked 132nd out of 185 economies on the basis of “Ease of doing business”. To open the most simplest business possible more than 30 licenses are required and more than 10 clearances. It is time we do away with this ‘license quota system’ and replace it with the single window system. Let our system be investment friendly. I heard a politician from the ruling party once say “Bhai sirph mommbatti jalane se kuch nahi hoga, kuch kar bhi toh dikhao”(By just lighting a candle no problem is solved, do something and contribute).  Today we need to tell him that “Bhai sirph kanoon banane se kuch nahi hota, implement bhi toh karo” (Just making the laws does not work, get them implemented also).

3)      Control the Market.

Inflation is at a 10 year high, factory output is rapidly decreasing and the rupee soon will eclipse our honorable Prime Minister’s age. Our GDP growth forecasts are dipping faster than ever expected and growth forecasts have now gone down to just 4.4%. Some signs of recovery are beginning to surface with the new RBI Governor, Raghuram Rajan’s appointment and the easing of the Syria crisis. However, India still needs to take quick control of the situation. Contract credit, increase internal loan takings and float easy saving schemes. Just taxation won’t help. We need to think beyond.

We need to grow, we need to develop, we need to advance but all that can only happen when we can keep our lights on…

Thank you for reading.