Bharat Rakshak

Top industry leaders have moved into plain-speak mode with Prime Minister Manmohan Singh about the worsening investment climate in the country. Speaking at Thursday evening's meeting of the Council of Trade and Industry, they impressed upon the prime minister that foreign direct investment (FDI) wouldn't flow into a country where policies keep changing and reforms are in peril.

"We unanimously reiterated the urgent need to press forward with reforms and improve the investment climate in the country," Rajya Sabha MP and council member Ashok Ganguly told ET.

FDI inflows into India have dipped by 25% in the period from April 2010 to February 2011, compared to the same period of 2009-10. Reform measures such as allowing foreign investment in multi-brand retail and raising the FDI ceiling in other sectors have been on the anvil for long, but the government hasn't taken a final decision yet. Global investors are also wary of delays in government clearances, both for greenfield investments and sell-outs like the Cairn-Vedanta deal.

Bajaj Auto chairman Rahul Bajaj told the prime minister that if the reforms process stays derailed, the country would slip back into the pre-1991 era. "This would hurt entrepreneurship and increase corruption further," he said.

While asking the prime minister not to spare the guilty corporates and officials in scams like the 2G spectrum case, Bajaj added that it was equally important to remove the climate of fear prevailing in the bureaucracy so that innocent officials can go about their work without worrying.

A slew of scams in recent months, with investigations launched against several officials, have paralysed administration to such an extent that even routine decisions are being dithered over. "Almost everybody raised these issues, not just me," Bajaj told ET. Officials present at the meeting confirmed that HDFC chairman Deepak Parekh, MS Banga (former head of Unilever's India operations) and National Advisory Council member Anu Aga articulated concerns about the investment climate.

"One member, in particular, was quite forthright," a senior government official said. "He asked the government how it expected FDI to flow in, if it kept changing its policies all the time and promising reforms that never happened," the official recalled. Parekh and Banga are learnt to have pointed out that India is no longer in flavour as an FDI destination, thanks to a downturn in global investors' perceptions that were positive till a few months back.

While Parekh spoke about the need for financial sector reforms, Bharti chairman Sunil Mittal called for opening up FDI in multi-brand retail enterprises. Kumar Mangalam Birla pointed out some issues plaguing the manufacturing sector, which is important for inclusive growth and employment generation.

Some of the Council members, such as Aga, Parekh and Ganguly, had co-written an open letter to the country's letters to express alarm at the widespread governance deficit, extraneous influences affecting decision and corruption. The apparent governance deficit wasn't explicitly raised at this meeting though, as the prime minister's opening remarks had already reflected these concerns.

So the most convincing explanations for India’s nutritional failures probably lie elsewhere. Women are the most important influences upon their children’s health—and the status of women in India is notoriously low. Brides are deemed to join their husband’s family on marriage and are often treated as unpaid skivvies. “The mothers aren’t allowed to look after themselves,” says Mrs Khan. “Their job is simply to have healthy babies.” But if mothers are unhealthy, their children frequently are, too.

India is also riven by caste and tribal divisions. It is no coincidence that states with the most dalits (former untouchables) or tribes (such as Bihar and Orissa) have higher malnutrition rates than those, like Andhra Pradesh and Kerala, with fewer of these excluded groups. So-called scheduled castes and tribes are more likely than other Indians to suffer the ills of poor diet.

But that cannot be the whole story. Astonishingly, a third of the wealthiest 20% of Indian children are malnourished, too, and they are neither poor nor excluded. Bad practice plays some part—notably a reluctance to breastfeed babies. There may also be an element of choice. Long ago, a study in Maharashtra showed that people spend only two-thirds of their extra income on food—and this is true whether they are middle-income or dirt-poor. That may seem perverse. But a mobile phone may be more useful to the poor than better food, since the phone may generate income during the next harvest failure, and good food will not.

Leave aside the budgetary implications, which are awe-inspiring. Such a programme would hugely expand the terminally dysfunctional PDS. It would do little or nothing for neglected castes and tribes. It would not raise the status of women, or encourage breastfeeding and early nutrition. (As Mrs Khan says, “the crucial time is between the ages of nought and three, but we’re not really reaching them.”) Giving cash, rather than food itself, would be better. Better still, India should look to international experience and introduce a conditional cash-transfer scheme, such as Brazil’s Bolsa Família, which pays the mother if her children attend school. India hankers after “universal” benefits that would leave millions malnourished. It should instead learn from schemes that target those who need help—and which actually work.

Perhaps a blood test can be used to determine those nutritionally compromised, and thus deserving of special attention. If children are tested in school and seen to be suffering, then their mothers should get visits from social workers and any support the state is capable of providing.

I can't stress enough that most of the damage is done by Age 5. Adding calories or nutrition after that has much less effectiveness.

The GDP data is thought to be undercounting the size of the economy because new items are not included in the data collection exercise. See here and here for examples.

Is similar undercounting going on in the Census (don't know how), or is the planning commission being wildly optimistic?

This is ridicules! The oil bonds are defect through the back door. WFT, the UPA gets worst by the day!

Some more on the Census..

the other surprising bit is Andhra Pradesh, which is barely above the national average @ 75%..And also Karnataka, the "IT capital" of India is BELOW the national average, in fact well below @ 67%! On top, a decadal growth that is worse than even WB...Again, puts paid to some of the "south advanced, north backward" rhetoric that we have come to hear from time to time..

The really sad part with respect to AP's literacy rate is that none of the AP based news papers that I read where portraying the news as a travesty. They were actually all parroting the line that literacy rate grew from 60% to 67% as though it was a great achievement.

There is virtually no recognition in the public consciousness in AP that the low literacy rate is a serious problem that needs to be addressed. If the people do not identify it as a problem why will the leaders do anything about it. So no prominent leader in the state talks against this injustice. Unless there is a recognition of the problem how can it get fixed.

One of the reasons for low literacy rate is the per-capita expenditure on education in AP which is about half about what Maharashtra spends on its residents (based on figures from 2004-05) for example.
Karnataka is a middle level performing state while AP is really bad on some measures.

You flipped the states here. It is Andhra Pradesh which has a literacy rate of 67% (much lower than the national average) and Karnataka which has a literacy rate of 75% (just above national average

Yes, south India is as much a "Kerala" (and somewhat TN) story as anything else..

Kerala and TN lead in social indicators - but entrepreneurial flair is higher in Karnataka and AP.

Dunno. Kerala businesses outside Kerala are smash hits , Mallus are a pretty entrepreneurial people. TN as well.

The problem with AP is that shall we put it rather delicately , a big integrity deficit in business. I wouldn't touch most Hyd/AP promoted businesses with a barge pole, either as an investor or a prospective employee.

Columbia Uty prf take on Indian Economy

Panagariya's Pitch

Dunno. Kerala businesses outside Kerala are smash hits , Mallus are a pretty entrepreneurial people. TN as well.

The problem with AP is that shall we put it rather delicately , a big integrity deficit in business. I wouldn't touch most Hyd/AP promoted businesses with a barge pole, either as an investor or a prospective employee.

Dunno. Kerala businesses outside Kerala are smash hits , Mallus are a pretty entrepreneurial people. TN as well.

The problem with AP is that shall we put it rather delicately , a big integrity deficit in business. I wouldn't touch most Hyd/AP promoted businesses with a barge pole, either as an investor or a prospective employee.

They should start measuring literacy for only those below the age of 30 to get a more accurate figure. The overall literacy of the country will always lag international benchmark thanks to the illiteracy among previous generations. For kids below 12, the literacy rate in India is probably close to any developed country in the world.