In the latest study from World Bank “Ease of Doing Business in India 2011” India is ranked as 134 out of 183 countries. Table 3 summarizes India’s ranking in “Doing Business” for key indicators. Though India has been ranked fairly for two indicators namely “ Getting Credit” and “ Protecting Investors”, it has secured embarrassingly in “Enforcing Contracts” in which it has been ranked 182 out of 183 countries and “Dealing with Construction Permits” as 177 out of 183 countries. According to the details in “Enforcing Contracts” India takes almost 1420 days and involves 40% cost of claim which is way above the OECD countries that takes just 518 days and 19% cost of claim.
Nowhere is India ranked this low by the WORLD BANK report except for ENFORCING CONTRACTS. Why is this so? The reason is neither hard to find nor is it complicated. The reason is EACH INDIAN’S UNDERSTANDING OF SOCIALISM AND THE EFFECTS OF SUCH UNDERSTANDING. What does SOCIALISM mean? It had been inserted in the Preamble to the Constitution of India along with “Secularism”. Secularism could be given a clear definition- that the state shall not discriminate nor appropriate any taxes and allot the same for any particular religion. But “SOCIALISM” is undefinable and carries a meaning dependent on the facts of each case, therefore no cogent PRINCIPLE can emerge. It is this AMORPHOUS philosophy which had been included in our constitution without defining the parameters of its operation.
This idea of SOCIALISM is enshrined in Article 39 (c) of the Constitution of India under the DIRECTIVE PRINCIPLES of STATE POLICY:-
39. The State shall, in particular, direct its policy
(c) that the operation of the economic system does
not result in the concentration of wealth and means
of production to the common detriment;
So in effect, the State shall ensure that even legitimate gains under a Contract shall not go to the beneficiary of the Contract. Secondly, the party who wants to resile from the contract files a suit in a civil court and by the time the Decree is passed, even if the verdict were to favour the defendant, the monies due would be received by the Defendant’s great grandson! By the time, INFLATION at the rate of 6% per annum would have eaten up the monies due, leaving merely the chaff for the great grandson. Incase the defendant is the state, there is every likelihood that retrospective laws could be enacted to ensure that the state appropriates the amount.
Here is an excerpt from an article which appeared in THE OUTLOOK dated 21/02/2005 by one paromita shastri (http://www.outlookindia.com/printarticle.aspx?226537)
For some, it was as if the Ides of March had arrived a month early. On January 25, the government passed an ordinance amending the Central Excise Act to wipe out the Rs 803 crore excise relief awarded to ITC by the Supreme Court last September. Instead of recovering Rs 350 crore from the government which lost a 17-year-long dispute, ITC will now have to fork out an extra Rs 450 crore by end-February.
As expected, ITC went into a shiver and a huddle.
Industry was outraged and shocked. Overseas investors dropped their jaws. Then, on February 3, the government announced a revert to the old Employees’ Provident Fund payout rate of 9.5 per cent, upping the reduced 8.5 per cent interim rate declared last August. Both the labour ministry and the EPF organisation are now in a state of shock, wondering how to say yes to a decision that will cause a deficit of Rs 927 crore and how to bridge that gap without any government support!
So, here we have a clear case of the State not submitting itself to a judgement and using its powers to evade repayment! So this is the inherent SOCIALISM which is prevalent in out country. But we do not care. We as a nation keep our word only as long as it is “convenient” for us. So The Indian Contract Act 1872 has all the provisions in LETTERS but the SPIRIT takes the colour of the parties involved. After 17 years and look at the plight of a giant like ITC, where do ordinary mortals stand?
This morning in the TIMES of India there was a piece of unsolicited advice given by the pompous and ineffectual Mikhail Gorbachev to PUTIN: QUIT LIKE ME! That is SOCIALISM from the motherland of SOCIALISM which became the flavour of India and contaminated the seventies. The reasoning given by Mikhail Gorbachev is that Putin should feel happy that he had served 2 terms as president and once as the Prime Minister. What reasoning is that? Putin did not, like Gorbachev, PRESIDE OVER THE FALL AND DISINTEGRATION OF A GREAT COUNTRY LIKE USSR with his PERESTROIKA and GLASNOST! So, Gorbachev says, YOU HAVE HAD ENOUGH rather MORE THAN ME! SO STOP.
I hope Putin, the JUDO MASTER doesn’t quit sheepishly like Gorbachev and hope Putin carries his fight to the hustings, in a true democratic fashion.
SOCIALISM is striving for PROCRUSTEAN EQUALITY, which kills competition and the free enterprising spirit of man. The state should strive to collect taxes and use them properly for the upliftment of the poor and not stymie the spirit of the enterprising and positively oriented individuals.
Psalm 15:4 says, He that sweareth to his own hurt, and changeth not.
It means that a person should not resile from a contract merely because the contract has turned out to be disadvantageous. That OUGHT TO BE the principle. In India we have become champions of the poor and have succeeded in keeping a majority of the population that way, so that we could REMAIN CHAMPIONS. The POOR are our CAUSE, and we shall in no way let them become RICH and lose our CAUSE!!
LET US KEEP OUR WORD and when the Judiciary settles a dispute favouring the rich let us not change the rules in the name of supporting the poor or the state. In effect, the epicentre of we as a people not keeping our contracts or not enforcing our contracts is the malady of SOCIALISM which has become the bedrock of our consciousness.
Hope India would improve its position in the next review by the WORLD BANK.