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Study local, act global

Devendra Saksena |

Not very long ago, the exodus of talented people from our country was termed as “brain drain.” Persons leaving Indian shores for foreign jobs were branded as renegades if not outright traitors.

With time, accepting the inevitability of talent flocking to greener pastures, the term “brain drain” has been replaced by the more politically correct term “brain gain” and even Prime Minister Modi has labelled expatriate Indians not as black sheep but as assets for the country.

However, there is another side to the story. At the latest Pravasi Bhartiya Diwas the PM rhetorically asked the audience: “Are only foolish people left here?” What Mr Modi said in jest was not far from the truth.

Our country is not a place for super achievers or super talented people. Post-independence all Indian origin Nobel Laureates for science were US-based.

Though Indians virtually run the Silicon Valley as also technological behemoths like Microsoft and Google, there is no India-based tech firm of comparative value.

The first IITs were established in our country in the 1950s for the industrial development of the fledgling Republic. Modelled on the technical institutes of the USA, IITs prepared their graduates for engineering jobs but not for business.

For various reasons, industrialisation had a slow beginning in India and IIT graduates were hard put to find suitable employment in the country, and this prompted them to try their luck abroad.

Over time, IIT pass-outs discovered that management jobs were more lucrative so they started flocking to the IIMs, wasting their engineering talent in the process.

Since the number of businesses to manage was also limited, IIM pass-outs also headed for foreign shores. Thus the crores spent by the Indian State on educating these super talented youth have gone to benefit Western economies.

There is, however, a deeper reason why we cannot safeguard our talent. The pre-eminence of bureaucracy in society ensures that the Collector is the most important person in most cities (in others it is the Police Commissioner).

No wonder everyone wants to be in the Civil Service and there are few takers for other jobs. No one pauses to think as to why a genuinely talented person, who bested the Collector in studies in school and college, should play second fiddle to him? Why should an honest businessman be at the beck and call of officials? The answer is obvious.

All Acts have a residuary clause giving the Government all powers whereas in most democracies residual powers are with citizens, in peace time.

One would recall the Apple-FBI imbroglio, when Apple refused to give its phone encryption key to FBI in an ongoing investigation.

The higher judiciary refused to come to the FBI’s aid and the FBI had to withdraw its request to Apple. However, in India, a business can run smoothly only if its owners keep on the right side of the bureaucracy.

Otherwise, there are myriad laws e.g. labour regulations, fire safety, GST and finally income-tax to bring recalcitrant businessmen to heel.

The end result is that knowing the pitfalls of being big, many businessmen want to keep their businesses small. Reforms have been attempted in many spheres but there has been no attempt to change the feudal nature of our society where the Government is all powerful and the people have to accept its omnipotence.

With a view to retain talent, efforts have been made to provide gainful employment to educated youth like the flagship “Make in India” programme. However, as is the fate of most Government programmes, even after four years the fruits of “Make in India” are nowhere in sight.

Surprisingly, there has been no attempt to find out why a programme launched with such fanfare has floundered. Hazarding a guess, one can say that new businesses can come up only in stable conditions.

GST following Demonetisation in quick succession could have deterred many aspiring entrepreneurs but a more basic reason is the tremendous effort required to start a new business ~ which can only be done after complying with many Acts and getting all sorts of permissions.

Cheap loans, Single Window Clearance and many similar incentives have been tried by the Government but difficult legal requirements and visits by different kinds of inspectors quickly kill most businesses in their infancy.

For this reason, most of the new Industrial Parks remain unoccupied. Many entrepreneurs find that instead of starting a new business it is better to vanish with the loan.

A much better incentive to promote manufacturing could be to exempt all manufacturing businesses, started by new entrepreneurs, from the rigours of all Acts for a period of three years. Some revenue would be lost and some businesses would still fail but if a business runs continuously for three years it has a good chance to survive and contribute to society.

To make India shine, agriculture, which employs more than 25 crore people, needs to come out of the doldrums. Contrary to the promise of PM Modi to double agricultural income by 2022, the latest Economic Survey has predicted a fall of up to 25 per cent in farm income and has suggested an increase in productivity as an antidote to this eventuality.

This suggestion is contrary to economic theory. Nobel Laureate Paul A Samuelson had observed in Economics: An Introductory Analysis that years of good harvests often result in lower income for farmers because of abundant availability in the market.

At the ground level, one can easily correlate farmers’ misery with increasing agricultural production unaccompanied by adequate marketing facilities. The Economic Survey (Volume 2) has itself noted that agricultural production peaked in 2017 ~ the year of maximum farmer distress.

Obviously, rather than increasing production, better agricultural policies leading to easy credit and easy marketing of agricultural produce are needed to guarantee better returns for farmers.

The Government’s practice of importing agricultural produce and restricting exports when prices are rising has ensured that farming is never profitable. Then, the Government often resorts to Open Market Sale Scheme (OMSS) which depresses the prices of agricultural produce.

Similarly, we have a buffer stock of foodgrain of 20 million tonnes. Apart from the humongous cost of storage and the degradation in quality, it is easy to see that we would be have been better off by keeping a small stock as buffer and exporting the remaining surplus.

At a more basic level, today the average farm size in India is 1.15 hectares, down from 2.28 hectares in 1971. About 40 per cent of our farms are not viable, being less than 1 hectare in size. We need to motivate farmers to give up farming on unviable holdings by encouraging landless labourers and marginal farmers to take up occupations like horticulture, dairying, poultry farming or animal rearing ~ vigilantes permitting.

Vocational training and welfare programmes could be run to equip farmers to shift to other occupations. Instead of farmers perpetually being mired in ignorance and poverty, we should aim at developing farmer-managers for which agriculture should be taught as a subject at all levels.

Productivity and profit from agriculture can increase only when farmers understand the theoretical and commercial dimensions of farming. Non-farmers could also benefit by studying agriculture because they would, at least, understand agricultural issues better.

Lastly, to prevent “brain gain” a fundamental change in our education system is required. It should teach people how to strike out on their own rather than seek jobs in India or abroad.

This would mean teaching students to think for themselves and motivate them to pick up marketable skills rather than simply learn by rote. We can free ourselves from intellectual slavery and attain our true potential only if we have the ecosystem envisioned by Rabindranath Tagore:

Where the mind is without fear and the head is held high;
Where knowledge is free;
Into that heaven of freedom, My Father, let my country awake.


The writer is a retired Principal Chief Commissioner of Income-Tax