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19 January, 2016

Start-up plan raises hopes

BRP Bhaskar
Gulf Today

Even as the flagship Make in India programme which sought to attract foreign manufacturers is languishing, Prime Minister Narendra Modi last week launched a “Start-up India, Stand-up India” programme to help domestic entrepreneurs.

The programme, announced last August, has come with a 19-point action plan, which includes a tax holiday, access to new technology and exemption from regulations.

Finance Minister Arun Jaitley said there was no alternative but promotion of domestic entrepreneurship as environmental clearance procedures and other constraints are making it difficult to attract foreign investors. The government, he added, did not want to interfere in the work of entrepreneurs. Its role would be that of an enabler or facilitator.

Under the new plan, entrepreneurs will get a three-year tax holiday on profits, self-certification rights with regard to compliance labour laws and an 80 per cent rebate for patent registration.

The government has committed Rs 100 billion over the next four years for the programme which is expected to create a favourable climate for newcomers to enter the world of business. The Stand-up part is designed to help women and the underprivileged Dalit and Adivasi communities.

Women have reached the top in some private corporations through inheritance and in some public institutions on the strength of their professional record, but they do not figure significantly in the ranks of entrepreneurs. Lack of resources has kept the Dalits and the Adivasis out of the world of business all along. The provisions made for these sections are, therefore, a welcome feature.

However, the programme also has several provisions that will work to the disadvantage of large sections.

The government has already abolished or relaxed legal provisions designed to protect workers from exploitation and prevent destruction of the environment. Given businessmen’s propensity to cut corners to augment profits, the self-certification procedure can harm the interests of the people as a whole and of the working class in particular.

The Harvard Business School used to display on its website a confession by one of its alumni, Rahul Bajaj, who is a third-generation Indian industrialist. In it, he said: “Ignoring a government regulation, I increased my volume (production) by more than the permitted 25 per cent of my licensed capacity.” It has now taken the post off, possibly to protect the image of Bajaj, whom it had honoured as a distinguished alumnus in 2005, as well as its own.

Dhirubhai Ambani, father of Mukesh Ambani, who is at No. 1 in the Forbes list of rich Indians, and Anil Ambani, who is at No. 29, was a first-generation businessman who rose to rival the established industrialists of his time. Such was his clout that journalist Hamish McDonald’s 1998 book The Polyester Prince, which narrated how he negotiated his way around regulations, could not be sold in India.

The Ambanis, however, made no attempt to block a later, revised version of the book, titled Ambani & Sons, presumably because the family is now quite confident about its place.

The Supreme Court has been holding Subrata Roy, a Kolkata businessman, in Delhi’s Tihar jail for about two years to force him to return to small investors about $5.4 billion they had put into a scheme of his Sahara group, which, according to the Security Exchange Board of India, was illegal.

All this raises the question whether the interests of workers will be safe under a self-certification regime.

Enthused by reports of sound industrial growth driven by manufacturing, signs of a pickup in investment and good indirect tax collections, the government claimed last October that the economy might be about to turn the corner. “We are on track. Acceleration switch has been pressed. We are pushing ourselves towards a high-growth trajectory,” said Department of Industrial Policy and Promotion Secretary Amitabh Kant.

However, as the financial year draws to a close, there is little room for optimism. The rupee has fallen below the level at which it was when Modi took office. The stock market is erratic. Exports have declined due to the global slowdown, and the year may well see a record fall of 13 per cent.

In the circumstances, the Start-up programme assumes importance. It has the potential to help in creating jobs, improving skills and boosting production. Many states have evinced keen interest in it, and some have already set up incubation centres for young entrepreneurs. However, they may need time to produce results. -- Gulf Today, January 19, 2016.

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