Reforms have devastated small and medium industries

Price of reforms: Industries losing out, one after the other

By Jay Dubashi Dhan.com September 21, 2000 (Source: Free Press Journal)

The real reason for the slowdown in the economy is the slow destruction of our industry. Reforms have devastated small and medium industries and killed them off. Small industries have been killed off by imports and medium industries by foreign investors. Our entire soft drink industry has been destroyed. Our entire auto industry has been reduced to a shell. Foreigners are taking over our cement industry and also our drugs industry. One by one, major industries are being taken over and killed. Recently, Raymonds sold its steel plant to a German company, though Germans have never produced steel in India. Our businessmen are interested only in money and are selling off their companies to foreigners. Even the Indian government is busy selling its companies to foreigners. It could not get a buyer for its Modern Foods and sold it to Hindustan Lever, a multinational, though this company has never baked bread in India.

In a modern economy manufacturing holds the key to economic development, which is why all developing countries like South Korea, Malaysia etc have been focussing on manufacturing sector. And it is precisely this sector that is slowing down. Remember that the turnover of the entire Tata group, the biggest in the country, is around Rs 35,000 crore a year. The turnover of the next biggest business group, Reliance, is slightly smaller. This means that the reforms are destroying industries worth four Tata groups every year. It took Tatas a century and half to build up their group. The reforms are destroying in three months what Tatas took 150 years to build.

It is not only small and medium industries that have been destroyed. Large industries have also been hurt badly. Companies like Tata Steel and Telco are not what they used to be. They made losses last year, something they never did in the past. A large number of big companies are sacking people right and left though they call it voluntary retirement. Experienced people are being sent home, which means not only no work for them but also loss in output eventually. Some of the well-known names in business are disappearing. Almost all Indian firms making TV and electronics have vanished. And their staff is unemployed.

As I said, the reforms are costing this country four Tata groups a year. Five years from now, it could be ten Tata groups a year. Remember that only multinational companies and software firms like Infosys are flourishing. But remember also that companies like Infosys are essentially contractors and do no great work except doing what they are told by their clients. I do not know how long they are going to last. But in the meantime, India's industrial haemorrage continues at the rate of Rs 142,000 crore a year, a heavy price to pay for a poor country like India.