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'Recasting' India's Economic Policy For The Free Market

It takes almost a month to get permission to start a business in India — a feature of the country's four-decade experiment with centralized, state-controlled economic planning.

India began moving away from its old policies and opening up to outside investment in the early '90s — but that movement towards a free market economy has happened in fits and starts, and is far from complete.

Hindol Sengupta is an editor-at-large with Fortune India, the magazine's India arm, and he's written a new book about the policy shift: Recasting India. When I sat down with him in New Delhi, he told me that India's greatest economic battles "are being recast, the debate is being reframed" away from the longstanding idea that India's protracted problems can only be solved by its government.

Sengupta says that while it has an important role to play, "the government is not the only institution that can solve India's problems. Society and enterprise have a huge role to play. But the role of enterprise and entrepreneurs has never been given its rightful place. So I went looking for the extraordinary enterprise of ordinary people."

One of the "extraordinary enterprises" in your book is run by a Kashmiri woman who has restarted an ancient form of carpet weaving, traditionally done by the lower castes.

She can't tell her parents that she is doing this, yet she is being recognized by the government as an entrepreneur. The young woman is battling and breaking barriers that are old and hardened. That's extraordinary. What we need to do is allow these small entrepreneurs to flourish. Especially since, as my book shows, entrepreneurs are tackling and trying to solve some of India's most vile problems — from militancy in Kashmir to domestic labor and caste.

Are these enterprises going to recast India because they're reaching sections of society — like this woman in Kashmir — that would not be reached otherwise?

I would say, with qualifications, yes. Look at our history: India has always been an entrepreneurial society, except really during the colonial period. Such businesses have always existed. Enterprise in India is an integral part of our story, except we've forgotten that story.

I am arguing that there is an inherent entrepreneurial drive in India which is stifled by the state, and the state should continue to play its role — but the state should also allow this entrepreneurial drive to come out.

I argue that in India you cannot be against the state. That would be madness ... But the state should not be running five-star hotels, which it is still doing.

How should the state do that?

By getting out of the way. It takes 27 days to get permissions to open a company in India. The new government has said it will bring it down to one day. Why are we ranked 142 in the World Bank's "Ease of Doing Business" ranking? That's not necessarily because there's corruption in India but because there are processes that have not been changed.

Does that favor big business over the small entrepreneurs you write about?

Absolutely. In fact, I would argue that if government wants to stand for the poor — and government after government in India argues it does — it should get out of the way. For example, booking railway tickets. This was once a protracted process.

You stood in line for hours.

Days, sometimes. I remember my cousin saying, go stand in line from 8am in the morning and when you come home for lunch in the afternoon, we'll send someone else to keep your place in the line.

By setting up an online booking system, it's the simplest thing in the world to do today. In every way we have simplified processes of these sorts, the poor have benefited.

What role do you see for the government in India?

The number one role of the government in a country like India is to implement laws fairly, to protect people from exploitation. You do that by ensuring that the justice system works. Instead we have a justice system that has entirely collapsed. At last count our courts had more than 30 million pending cases!

So instead of trying to monitor new enterprises and trying to make it difficult for them, ensure that the same laws and regulations are equally applicable to the biggest companies of the country and the smallest companies of the country.

I argue that in India you cannot be against the state. That would be madness. Of course, the state has a role to play in a country that has as much poverty as we do in India. But the state should not be running five-star hotels, which it is still doing. Or running a watch-making company, which it was 'til earlier this year.

Nishant Dahiya is NPR's Asia Editor

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Nishant Dahiya