Date:02/05/2007 URL: http://www.thehindu.com/2007/05/02/stories/2007050212680100.htm

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`Are we encouraging crony capitalism?': PM

Ashok Dasgupta

RAISING QUESTIONS: Prime Minister Manmohan Singh speaking at the Institute for Studies in Industrial Development in Delhi on Tuesday.

NEW DELHI: Bewildered over "persisting regional imbalance" in India's industrial development and urbanisation, Prime Minister Manmohan Singh on Tuesday sought answers to doubts whether the policies of the Centre, in the name of protecting domestic enterprises, had actually nurtured "crony capitalism".

Inaugurating the new campus of the Institute for Studies in Industrial Development (ISID) here, Dr. Singh made it clear that the country's industrialisation could not be dependent only on large corporate groups and it required small and medium enterprises (SMEs) for both growth and employment.

"We cannot depend only on a few large industrial houses and capitalists for driving our industrialisation process. The employment-intensive nature and the greater regional spread of SMEs makes them an attractive option for industrial growth," he said. Alongside, credible policy solutions were required to help reduce such regional imbalances, he said, while pointing out that the process of industrial development "must spread to new regions, especially in northern and eastern India".

The Prime Minister was particularly concerned over certain media reports that the country's top business leaders operate in an "oligopolistic" market and in certain sectors where the Government had conferred special privileges on a few. "This sounds like crony [monopolistic] capitalism," Dr Singh remarked and, in turn, raised a host of questions.

"Are we encouraging crony capitalism? Is this a necessary but transient phase in the development of modern capitalism? Are we doing enough to protect consumers and small businesses from the consequences of crony capitalism... ? Have we, in the name of protecting them, encouraged crony capitalism? Do we have a genuine level playing field for all businesses? What should be done to inject a greater degree of competitiveness in the industrial sector?" he asked.

Another challenge, the Prime Minister said, was to generate new jobs on a large scale in the industrial and manufacturing sectors and still remain "competitive not just globally but also within our own region of South Asia and South East Asia".

In this context, he wondered whether the country's labour laws were inhibiting the growth of new businesses. "If so, where and how?" he said, "How do we create not just skilled jobs but unskilled ones to help agricultural workers make the transition to industrialisation? What kind of industries must be encouraged to grow and what can public policy do to help in their growth?"

India, Dr. Singh maintained, was destined to emerge as an important industrial power and it was only through rapid industrialisation that the country could find meaningful solutions to the problems of unemployment and underemployment.