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Vested interests, pulls hurting reforms: Tata

Vested interests, pulls hurting reforms: Tata

Author: Sunil Shivdasani & Rakesh Pathak
Publication: The Indian Express
Date: August 27, 2005
URL: http://www.indianexpress.com/archive_full_story.php?content_id=77067

Voicing concern over strong ''behind-the-scenes'' manoeuvering by vested interests in the private sector, Ratan Tata, chairman of Tata Sons, said it hurts the country's progress, stops reforms and makes the policies ''toothless and ineffective''.

''India is suffering from a very strong influence of vested interests, regrettably sometimes this is more often than not from the private sector...Vested interests and political pulls are the two things that today I think, are hurting the country's progress (and the reforms process),'' said Tata, who is also chairman of the Investment Commission.

''Because what then happens is the policy gets modified, manipulated, changed so that it either serves vested interests or hurts the people, which eventually makes that policy sort of toothless and ineffective.''

Tata, who has navigated the group's rise since 1991 and was instrumental in increasing its turnover eight-fold to Rs 80,000 crore, regretted that ''there is behind the scenes stopping (of) reforms in a spurious manner, because reforms help some, hurt some.''

''If you are truly a nationalist,'' he said, ''it should not matter whether it hurts you so long as it is fair and moves the country forward. But, regrettably, human nature is not that way.''

Analysing impediments to the reform process, he said, ''What we are doing is a lot of back-stepping and rolling back. What is happening is sometimes the policy is being compromised to an extent where it had no strength or is ineffective.''

A major shortcoming in the policy was the absence of a holistic view, he said, adding: ''We are just treating things based on sometimes knee-jerk, sometimes short-term views. Sometimes it is worthwhile to look at the whole policy and re-write that policy since things have changed.''

Asked about the situation in the labour sector, role of Left and handling of the oil-pricing issues, Tata said, ''I think certainly we cannot keep the subsidies at a level where government deficits become huge, endangering the prosperity of the nations. I think sometimes along the line there has to be hard recognition of some facts.''

Advocating a realisitic decision-making process, he said there has to be a recognition that all things cannot be subsidised forever.

If the crude oil prices go up in the international market, it should find reflection in the domestic market and to offset the huge subsidy burden, kerosene prices should rise a bit, he said.

However, he was confident about the vision of Prime Minister Manmohan Singh, considered to be the harbinger of economic reforms in India, saying, ''What I think needs to be done is already being advocated at the level of the Prime Minister or at the level of the Finance Minister.''

Commenting on the labour situation in India and its implications on the manufacturing sector while competing with China, Tata said: ''We must not lose the benefit we have from abundant and low-cost labour. There's a great deal India can do, which it has lost to a country like China.''

To salvage the situation, the country needed to recognise and improve labour productivity, he said.

Tata was skeptical about India's position in the global manufacturing scenario. He said the country needed to do ''other things'' if it had to gain position in manufacturing. Elaborating, he said, ''For manufacturing, to be the factory of the world if you like, we need inputs which are at international rates, which India does not have.'' - PTI

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