New Delhi - The Indian newspapers are now relegating the political news to the inside pages, and headlining business developments instead. In the last month, Tata took over Corrus, Indian-born Arun Sarin's Vodafone's now owns Hutch, and Aditya Birla Group's Hindalco bought up Canadian firm Novelis for over $6 billion plus.
More and more Indian firms are on the lookout for global acquisitions, and in the last year, investment by Indian firms outside India has surpassed Foreign Direct Investment (FDI) in India. And this is the same country which, during its 'license raj' days of the 70s and 80 s made access to foreign capital so difficult that Indians flocked to Nepal in order to convert their currency.
India is reaping the benefits of opening up its economy. More jobs have been created in the past decade than ever before, and people are better compensated.Workers aren't jostling to join unions, but to get their finances together for a car or an apartment. Political forces are realising that rather than promoting rent-seeking in the private sector, they ought to leave it to build up the capacity to compete on the global front. Sure, there are still some politically-motivated or opportunistic moves, such as the Tata land acquisition in Singur, West Bengal, but these are far fewer than before. The need to build globally-marketable competencies is forcing firms to abandon dual bookkeeping to evade taxes.Meanwhile, the government's leveraging of technology is making it easier to pay taxes. India will need to develop more CEOs to run businesses, more managers, and more employees to fill new, global positions.
In Nepal, Pushpa Kamal Dahal continues to spew his 'nationalist capitalist' theory, perhaps in the hope that the 'voluntary' contributions from the private sector continue, and can be repaid with favours when the Maoists are finally in ministerial positions. Global companies, of course, shy away from donations, and for the Maoists keeing FDI at arm's length for the next decade or so is a way to protect their base of 'loyal supporters' in business (whose 'support' was forced at gunpoint). Nepal's intelligentsia and other political parties too have taken to criticising and opposing private investment in infrastructure as a way of demonstrating their love for the country's sovereignty.
Our first round of reform in the 1990s is bearing fruit now. But it's time for Nepal to open things up further, to allow more private capital to come in, and to build the confidence of local investors. Let Nepali companies invest outside Nepal. After all, scores already have businesses outside Nepal. If the government can't regulate them, can't it at least legitimise it? It's a simple equation: the more Nepali companies there are outside, the more chances Nepalis have to refine their management and entrepreneurial skills. This is what builds real capacity among educated Nepalis, not writing reports for the government or NGOs.
Economic history shows that the prosperity of a country depends on the growth of its private capital formation and its leveraging of investment opportunities. The USSR and the East Bloc took decades to realise that equality of wealth and opportunity is a mirage. No need for us to do the same; there are more worthy models much closer home.