THE BILLIONARIES CLUB

Times of India, June 12, 2004

During the past year the world has begun to see us differently. In the nineties, China occupied centre stage, but increasingly Western commentators have begun to club India with China as future economic powers. This image received a jolt with the change in government, but it will recover because our economy is strong.

We owe this new respect, in part, to the outsourcing controversy as the West has begun to think of India as a competitor for its service jobs. The changed perception has also made global investors look at us once again, which is why I received an invitation from a group informally known as The Billionaires Club, organised by the respected investment firm, Goldman Sachs.

Gathered in an elegant room in Chicago last month were 15 soft-speaking individuals whose collective net worth exceeded a hundred billion dollars. First, they listened to the now famous BRIC report, which projects India to be the star performer over the next fifty years, ahead of Brazil , Russia , and China . Next, I got up and unabashedly sold India for 45 minutes. Before concluding, I asked these worthies why they preferred to invest in China . One of them gently corrected me, ‘‘Forget China , we have much greater investments than India in smaller countries like Thailand , Malaysia , Vietnam .’’ I asked,

‘‘Why? Don’t you like us?’’

‘‘We love India , but we hate your red tape.’’ Over the next thirty sobering minutes I bit the dust, as I heard one horror story after another about India ’s officialdom. The owner of one of the world’s largest hotel chains described how it took 5 years to get land access to his hotel in Mumbai. Another spoke about his humiliation by the Reserve Bank. ‘‘In other countries we deal with banks, but why are we forced to deal with the central bank in India ?’’

Someone described how his factory was delayed by two months because he refused to bribe the engineer from the SEB. Another complained about our central excise and customs officials. The owner of an FII said, ‘‘Portfolio investors don’t take the Mauritius route to evade Indian taxes — we do it to avoid dealing with your tax officials.’’ To drive the point home, the group contrasted the welcoming behaviour of Chinese officials, who they said were also corrupt, but had created a business friendly environment.

A second reason for India ’s weak FDI performance, they pointed out, was our infrastructure, a point that Jeff Immelt, G.E.’s boss, also made in Bombay recently. ‘‘In the nineties, China ’s energy sector grew 20 times that of India , and transport market 8 times,’’ he said. On the other hand, the billionaires were hugely impressed with India’s human capital, and one of them recounted how Indians had upgraded Russian planes brilliantly with Indian avionics, ‘‘and this has impressed the hell out the American defence establishment.’’

‘‘Face it, Mr Das, Indians are a great people, but your red tape is the killer,’’ was the conclusion. I had tried to put up a brave front in the meeting, but as I trudged back to my hotel I had a sickening feeling in my stomach. I consoled myself thinking, why does it matter to India ’s poor what 15 rich Americans think? But I knew in my heart that it did matter — if these men invested, others would follow. And this would create jobs, bring technology, make India competitive, bring revenues to the government, and this in turn would make it possible to invest in village primary schools and health centres. This is how China has been lifting its poor, and this is why P. Chidambaram so desperately wants foreign investment.