With reference to the column ‘My View,’ Mint, 2 March, we wish to state that the context in which certain words from the Budget reaction statement of GM India’s president & managing director, Rajeev Chaba, have been quoted is misleading. The Budget statement issued by us clearly mentions that “Imposition of additional education cess is a step backward.” However, the context in which we had mentioned this was qualified by the preceding lines stating, “more thrust on infrastructure development like roads, highways, power and ports etc” in the Union Budget. Your column has utilized an extract from GM India’s statement and quoted the same in context with a larger interpretation, which has no direct correlation with our statement.
Balendran, vice president, General Motors India
S. Narayan in his column, Policy Track—‘A story of missing reforms’ Mint, 1 March, has regretted that the finance minister has presented Budget 2007-08 without even touching the word reforms. It may as well be that way, instead of burdening the already tired Indian citizens with more cliche and empty rhetoric. India does not need as much reforms in areas that Budgets usually deal with as in the areas of governance. True, certain areas of the economy need higher allocations. But, a small improvement in governance, say, in the public distribution system, will mean much to the sections of society who’ve been simply ignored for the last six decades of independence. Similarly, a single step of freeing the law and order (read POLICE administration) from the clutches of the politicians and making it independent will restore rule of law that is more vital for the survival of democracy than even adult franchise. Then, politicians and their budgets will lose their relevance for ever.
Re Café Economics—‘Truth About FDI’ Mint, 8 March, your comment on the impending decision of the Chinese Communist Party to bring about parity in corporate taxation rates between domestic Chinese companies and the overseas MNCs operating in China is very perceptive. However, the Chinese political establishment is also becoming aware of the structural weaknesses of the economy and these are being addressed at the top decision-making levels.
There is growing realization in China of the dangers of over-dependence on foreign investment and of large-scale imports of critical commodities such as coal and ore, and several policy initiatives have been taken to improve domestic competitiveness. But, you have correctly said that FDI inflow into China, which is unfavourably compared to that into India, has more to do with the past “failures” of China’s predominantly state-controlled economy to achieve global competitiveness and generate (or efficiently allocate) adequate capital flows in the economy. India’s failure to do so with its inherent micro-economic advantages begs many questions. In particular, India seems more ill-equipped politically to deal with FDI issues, given a medley coalition of interests and perspectives.
Many overseas enterprises that set up shop in China now feel that the Dragon country indeed lacks adequate institutional framework and is riddled with poor market mechanisms. But there’s growing awareness of these weaknesses, and the macro-level market reforms now being fine-tuned by its government will eventually percolate to the micro levels and induce a larger change in the current equations. The effort to legalize private property is a move in that direction. From a dynamic perspective of changes taking place in both these Asian economies, it is more important how far such changes will bring widespread improvement in the standard of life of their people, than who will overtake the other.