BackBurnished by economic reforms
For Saru Copper's Sanjiv Jain, liberalization ended the Inspector Raj and monopoly of state-owned firms, but he feels there's a need for a second wave of reforms
PremiumMeerut: Lines of motorcycles, at least three layers deep, will greet you upon entering Saru Nagar in Meerut’s Sardhana Road.
The place is home to an array of factories engaged in work like copper smelting and shielding, and they are all run by different branches of the same family—the Sarus.
The offices of Saru Copper Alloy Semis Pvt. Ltd are at the end of the compound with the manufacturing unit behind it. “Our family has been in this business for years now, since before Independence," says Sanjiv Jain, director of Saru Copper Alloy Semis. The motorcycles, he says, belong to the staff.
“There was a time when there would only be cycles; now everyone owns a vehicle. For me, this is one of the most tangible examples of the economic change over the past 25 years."
Jain is speaking of the economic reforms launched in 1991.
“We knew that India was in a bad state economically— foreign reserves, gold mortgage—I was familiar with the situation but did it impact daily lives? Not really," he says sitting in his office, which is insulated from the noise from the factory.
Jain talks about the days of control.
“Getting dollars from the open market was a headache; so I asked a cousin of mine. He lent me money but on the express condition that I return it to him in dollars. No question of giving him the rupee at the current exchange rate."
Jain’s company manufactures copper alloy products. In the days when he joined the family business, copper was sourced only from Hindustan Copper Alloys Ltd, a government-owned corporation.
There was a quota system, which Jain laughingly admits, was determined by a variety of factors—including “good relations with the gentlemen of Hindustan Copper Alloys".
Post reforms, businessmen such as Jain could buy copper from other sources, such as private companies like Birla Copper. Today, Hindustan Copper Alloys sends its representatives to units like Jain’s seeking business.
The bulk of Jain’s business in those days was with the Indian defence establishment. “They were very protected days. We had no idea about the international market or what really was ‘quality’. When we first started sending out samples to foreign buyers, they were returned to us saying the finish wasn’t good enough." So, Jain procured other samples in order to see the difference for himself.
“We used Rin soap (a popular detergent) as a compound (to polish copper), which is good enough but there were better options. The polish, the shape, everything was miles ahead of us. This is when we heard about imported dyes, etc. The opening up of the economy opened up avenues for us—not just for business but also quality enhancement."
For Jain, the real importance of liberalization lies neither in the increase of business opportunities nor in the new access to international machinery. (Jain’s father had imported one machine from Germany in the 1970s and he remembers it to be a very complicated process.) Rather, it is the decline of the so-called Inspector Raj that strikes him.
“The inspectors were here almost every week. One would drop in, inspect your unit and then declare you were in violation of some rule or the other. There would be threats to shut you down on no grounds whatsoever, and we all know what that was a prelude to."
He means bribes.
Inspector Raj refers to supervision of factories and manufacturing units by government labour inspectors.
Not that India has completely got rid of its “inspector." There are still central laws and state laws that are seen as hampering ease of doing business. The ministry of labour and employment in its draft The Labour Code on Wages Bill, 2015, has proposed replacing the term “inspector" with “facilitator".
But Jain is not much bothered with such face lifts. From corruption to infrastructural issues, there are several factors that still impede business practices here, he says. “There will be a strike and material will not load on to the ship. Or there will be floods, the track will be submerged, and again, the material will not reach the ports. It’s reached a stage that our foreign buyers must think that Indian businessmen are liars. Delay in shipments is very unprofessional. This never happens in China, never."
For Jain, the benefits of the first wave of reforms have been reaped. What is left behind are the hurdles. “It’s time now for second generation reforms so that growth can begin all over again."
This is the 21st part in a series marking the 25th anniversary of India’s liberalization.
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