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Wednesday, April 21, 1999

The virtues of yes in reforms

Rakesh Wadhwa  
Tata and Singapore Airlines jointly wanted to provide airline services in India. The government said, no. Richard Branson's Virgin Airlines wants to fly between India and Britain. The government under pressure from Air India again said, no, though Branson has not given up yet.

The government did open up the telecom sector. However, instead of saying to all, ``come, invest, compete and provide us with a world class telephone system'', the government's only interest is in extracting the maximum possible licencing fees. Even as the government starts to collect thousands of crores from the beleaguered cellular phone operators, most Indians still lack simple phone services.

Why? Should it not be intolerable in this day and age, with the western world talking about universal internet and computer access, that we are denied basic transportation and communication facilities?

After all, what does our government have to do? Is it something very difficult? No, it is simply saying yes.

Yes, Ratan Tata, pleasecollaborate with Singapore Airlines and bring some real competition and price relief to our air travellers. Yes, Branson, we welcome you to India. We will be happy if you let Indians see London for less than what it takes to go from Delhi to Thiruvananthapuram. You have done it elsewhere, and we know you will do it from New Delhi and Bombay. When we travel to London for Rs 10,000, a lot more of us will be able to see another country.

Say an unconditional yes, also to all domestic and international telecom operators. When they are not burdened with restrictions and license fees, the charges for their services will be down to a level where, within a few years, most of us will use telephones freely.

What are the consequences of a bureaucratic no?

Saying no to such private initiatives means that the government does not exist for our good. It is saying, in fact, that maintaining Air India's monopoly and collecting fees is more important than letting people enjoy the benefits of efficient and cheap air travelor telephones. It is saying that it would rather pour our poor country's resources into preserving its businesses; businesses which it should not have been running in the first place.

Saying no to free competition in telecommunications means that we will continue to pay three times more to call the USA than anyone who calls us from the USA. No wonder 90 percent of the calls between India and the US originate from the US. Saying no means our rural poor will have no chance of using telephones in the foreseeable future.

More than this, it means that those who might have been employed by these potential new business will not get the opportunity. They will not even be ever aware that, but for our government, they would have been working for a Tata-Singapore Airlines alliance, Virgin Air or a vastly expanded telecom sector.

Airlines and telecom merely illustrate what is wrong with our government policies. Repeat these government bans, restrictions, regulations, excessive taxes or levies on mines, insurance,banks, railways, post and telegraphs, airports, roads ..., the list is endless, and we may begin to comprehend why we are poor. This is why we had to, after independence and upto a few years ago, suffer the ignominy of our GDP growing at 3.5 percent annually -- termed the Hindu rate of growth.

What would happen if we were to remove restrictions, eliminate taxes, and open out all economic activity to free and fierce competition. India could see its annual per capita growth rate zooming upto 10 percent -- Singapore, Japan, Hong Kong and even China have all achieved these rates, for many decades between the '50s and '90s.

Wadhwa is the author of ``India, The Third World: Why?''

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.


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