By Aravind Sitaraman

Aravind is editor of web-based think tank The Indian Analyst.  He can be reached at editor@whatisindia.com 

The recent comments by former Prime Minister Deve Gowda on a proposal for infrastructure change from Mr. Narayana Murthy, Chief Mentor of Indian IT major Infosys Technologies has brought the focus back on the state of IT infrastructure in India’s so-called IT capital Bangalore. The latest volley is best termed indifferent and even markedly disrespectful of Mr. Murthy’s comments. Instead of debating the merits of the proposal, Mr. Gowda questioned the promoter’s qualifications on the subject of governance as also his knowledge of rural India that his party allegedly represents.

To understand the issue, it is important to delve into the history of this spat between industry and the State Government.

HISTORY OF THE PROBLEM

It is for the second year in a row that Bangalore is agog with angry emotions between the State Government and the Bangalore Chamber of Commerce and Industry (BCIC). The context is that several Informational Technology (IT) companies, including many multi-national companies (MNCs), with large engineering base and population in Bangalore have threatened to boycott the IT.in (formerly IT.com) yearly event that showcases and brands Bangalore as the “IT capital” of India. The business leaders threatened to walk out last year too, but a combination of back-room deals, threats, and promises brought relief to the standoff. This year, business leaders say that the State Government has not fulfilled any of its earlier promises and the infrastructure continues to crumble under the weight of newer companies and burgeoning business.

The repartee from the State Government ranges from a conspiracy theory to a demand for a quota for Kannadigas in these companies. Business leaders are quick to point out that this is not about IT but about the state of the city itself. They have provided the state with a set of demands that need fixing on a war footing if they are expected to participate. Top of the lists are better roads, a traffic management plan, water drainage, garbage disposal, and better amenities. They say that business will flee Bangalore if the State Government does not invest in the city’s infrastructure. The State Government’s claim is that there is no real problem since the number of businesses continues to grow. They point out that, year on year, there is a 10% rise in investments, 26% rise in foreign investments, and 48% rise in investments in small and medium enterprises, and export revenues from IT companies employing over 285,000 engineers have grown six-fold since 2000. Armed with such statistics, they do not see any problem with infrastructure becoming a bottle-neck or being the cause for a flight of capital. In addition, the Congress-led Government is facing immense pressure from its coalition partner to de-emphasize IT and instead invest in the rural Agricultural sector. The State Industry Minister, belonging to the Janata Dal (S) coalition partner, pointed out that Rs. 6,000 crores have been allocated for improving drinking water supply, building a new international airport, roads in and around the city, and a new Metro Rail project. 

Industry leaders and analysts point out that the problem is not in the large allocation of funds or grand-scale plans. The issue is implementation of these plans. Many say that the implementation is short-term focused like pot-holes being covered with mud only to be washed away with new rains. Garbage being taken out of the city is being dumped on National Highways including the Old Madras Road, from K.R. Puram to Hoskote. The lack of meaningful restrictions on politically-powerful automotive users such as auto rickshaws, freight trucks, and agriculture half-tracks plying in areas at peak times in busy locales often with no regard to traffic rules or safety. Finally, there is a lack of transparency into how their tax money is being spent. 

A case in point is Whitefield where most of the expatriates and IT community live and perhaps collectively contribute the most taxes in Bangalore. It is also the location of the much-showcased information technology park and many MNCs and large Indian software houses. Roads, like the Old Madras Road to Whitefield road built just over a year ago, coincidentally right before the previous elections, have large craters because heavy vehicles often with several tonnage over the limit ply on this important artery. They often get through check posts and police stations by paying them a nominal Rs. 10 so the cops would turn the other way. Just a month ago, the road connecting the Outer Ring Road to the Varthur Lake was built through generous financial contribution by software companies. These roads have also developed large craters essentially rendering the road and the investment useless. The road from Varthur to Sarjapur, housing three international schools and ferrying the children of IT workers have two foot drops on either side making the commute risky for children. When corruption has turned more into an institutionalized entitlement scheme, questions raise as to who is benefiting with the Rs.6,000 crore allocations? Echoing this sentiment, a national study held Karnataka as one of the most corrupt states in India! 

Hence, the way to look at this problem is not through the political glass. This is a cry for help from the public at large. The Chief Minister was gharroed by crowds that faced the ire of what is turning out to be a 100 year rain. Bangalore is already no longer the IT Capital of India; it has now been overtaken by Gurgaon. The Federal Minister for Information Technology has warned Chennai not to fall in the Bangalore trap but to proactively invest in infrastructure. 

”This is not at all about IT. This is about the citizens of Bangalore demanding basic rights” said the country chief of Support Soft. Actually, this is the larger issue. 

A NATIONAL ISSUE 

The tax-paying people of India, read employed citizens in the organized sector, are dying to find a forum where their voice will be heard. In all other democratic societies, such unified protests from influential individuals and institutions will bring about change. Instead in India, what happens is that the Government goes over-drive into official harassment manifesting the form of customs restrictions, mobility of resources, and increased taxation. As seen from recent World Bank sponsored reports, doing business in India is very difficult. Moving businesses from one state to another is excruciating. Archaic anti-industry labor laws, lease agreements, gestation time to restart operations, political uncertainties, etc. make it impossible for businesses to move capital and resources to greener pastures within India. Since high technology industries depend on available labor force, they continue to seek areas where they will find them. Since Bangalore has the highest populations of this sort of labor, newer companies continue to start operations in that city making the problem worse. 

What is required is a stable policy from the Government. The former State Government from the Congress party promised many things to the industry and relentlessly wooed IT and Biotech industries. The good weather, access to labor, friendly Government policy attracted many MNCs. Now with a change of Government although from the same party but with support from a regressive political partner has essentially destroyed all that the previous Government had done. And, it is not just at the State level. 

Even at the national level, the continued intransigence of the Communist parties that supports the Congress Federal Government has arrested all progress in fiscal, monetary, and economic reforms. By frightening people into thinking that economic reforms means benefits only for the wealthy, bringing down administrations of the Government through illegal strikes, inciting labor groups to rebel against MNCs, the Communist parties are creating an environment that will have long-term debilitating effect on India’s economic progress.                       

NEED A LARGER SUCCESS 

Interestingly, despite all these negative factors, the country’s economy counties to grow at a breath-taking pace. The stock market, perhaps in an irrationally exuberant manner, is reaching new heights. Foreign Institution Investors are increasing their stake in Indian companies. Indian corporations are buying foreign companies to expand markets, to buy production capacity, and expand their skilled workforce. More MNCs are moving large business process operations to India than evermore. There are more inward remittances from overseas Indians. 

With all these good economic news, India is still a pale second to China which sees an annual inflow of US $50 billion compared to India’s US $5 billion. Our political leaders may be rejoicing with the new found success as they result in increased revenues for the Government and they can show some success in governance in time for the next election. It will also translate to more opportunities for corruption and nepotism. 

We should all demand that the political leaders turn this golden opportunity into an environment where there are increased jobs, social spending, infrastructural upgrades, and poverty alleviation. Instead of setting the stage for a global expansion of Indian businesses, interests, and commerce we are seeing a curtailment of everything that is good or working for the Indian nation. These unprecedented advances by Indian companies and foreign investments will raise the Net National Product (NNP), reduce poverty, and create national wealth. However, all labor, cost, location, and built-in advantages of India are being frittered by politicians with limited imagination or capabilities. 

The protest by the business groups in Bangalore must be seen from this perspective.

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