‘Controlling Mindset’ Still Hampering Reforms: Narayana Murthy

Narayana Murthy says there is a long road ahead to ease of doing business in India, thanks to a “controlling mindset”

Infosys founder Narayana Murthy tells Sagarika Ghose that Make in India, Start Up India are good ideas but change takes time in India, in an interview published in The Times of India. India’s original startup entrepreneur says there is a long road ahead to ease of doing business in India, still crippled by what he calls a “controlling mindset”.

Reforms, Slowly but Surely?

In a reference to the long-awaited Goods & Services Tax (GST) Bill that’s pending approval in the Rajya Sabha, Murthy said reforms in India are invariably a slow process because of the distribution of power between the Centre and states and the consequent need to get all stakeholders on board before pushing through with reforms.

So a lot of the reforms that are required will have to be taken up by the states. It’s not possible for the Centre to alone bring about reforms. It’s not proper for us blame any one entity. But yes, there is an air of wanting to do things in Delhi. 

The chief ministers of all states and the central government must sit down and work out together what can be done to make the lives of entrepreneurs easier. Co-operation of states is key.

Murthy, in particular, is enthused by the government’s recent announcement that startups will not pay taxes for the first three years, as part of the Startup India Scheme.

Need to Shift From Control to Regulation

On the role of the government, Narayana Murthy advocates a shift from the “current method of control to a different method of regulation.” While conceding that a lot of progress has been made in making it easier for businesses to grow, Murthy says there is more to be done. To substantiate this, he cites the example of the Foreign Contribution Regulation (FCRA) Act.

Everybody and his brother who receives any donation even from within India has to obtain FCRA approval. Now this is not necessary. Instead what should happen is that anyone who is to receive a donation from abroad should provide the details to the government and they should on a random basis, carry out checks. Today the FCRA has become a bottleneck for organizations. How will small NGOs obtain FCRA clearance? 

Lesson From China: Focus on Low-Tech Jobs

The Infosys founder is relatively sanguine on the 7-7.5 percent growth in India but says that unemployment is a big area of concern. He advocates low-tech manufacturing as one area which could create enough jobs, especially for the not-so-well-educated. In this, he provides the China example.

China is only country in the world that has created 150 million jobs in last 25 years. No other country has done that. On its eastern seaboard, China created cities dedicated to exports. They created lots of export processing zones, gave them autonomy to accelerate growth.

Budget Must Focus on Controlling Deficit

As a last word, Murthy mirrors the stance taken by RBI governor, namely, the need to control spending.

It’s important to use whatever money we have in an efficient, honest and transparent way and get the best bang for the buck. We have to be careful about spending, otherwise our deficits will go higher and higher.