Comments by "M Shastri" (@libshastra) on "Asianometry" channel.

Sadly India's Judiciary is pretty dysfunctional. Cases are piling up and it has shielded itself from reforms. It really needs deep reforms
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Innovation is not a monopoly of the Americans. India innovates to solve it's own problems the way American entrepreneurs do.
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The issue with India is Government and infrastructure. While Infrastructure is getting fixed but Government is still a problem. The reason why India's semiconductor industry is limited to chip design is because humans don't need infrastructure or industrial policy. They have very low setup costs. Up until recently, Industrial policy in India was nonsensical and very hostile to any privately owned industry. Industrial labor policy was skewed towards labor unions and Indian Govt always maintained substantial market share and market monopolies. When it comes to things like electricity, social welfare policies like free electricity for farmers, means the cost of that is borne by industry. The bureaucracy is absolutely horrible. They make you go through absolute pain for simple things like proving your residency. The semiconductor industry is a symptom of the larger structural issues with Industrial, Business and labor policy and the rotting bureaucracy in India.
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@metagde6402 it's because of the bureaucracy. It's corruption made by the Govt. for the Govt. to the benefit of the Govt. It's the regulations and more importantly the interpretation of those regulations that makes the environment really conducive to corruption. Given the backlog in the court system (and quality of judges), you can't even dispute the interpretations of those regulations. So you're left with one choice and that's to pay the bribe. Lemme give you an example: You want to build a warehouse, you find a plot of land, look up it's development use and apply to purchase a land deed from the owner of the plot. In every other country, this is typical a two step process, verify the use is appropriate according to the development plan and the purchase of the plot. The purchase is private transaction between two private entities. In India, in addition to that, you need the local District magistrate to sign off on your purchase and the court clerk to validate the seller was of sound mental health at the time of the transaction. So, the DM will not sign off until the clerk is done with their validation of the seller's mental health and vice versa. Now if either DM or clerk refuses, you're left with disputing the decision in your local sessions court. Sessions court judge will likely adjourn your case ad nauseum until either your business dies or it makes no sense to build that warehouse. So you, as a businessman is essentially blackmailed by regulations and forced to pay a bribe. In such an environment, do you really think anyone would think about running an business without bribing someone? It's foolish especially since business transactions are time sensitive.
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@metagde6402 it's not just politicians. It's the entire system. At several occasions, our politicians themselves need to beg/scream at the bureaucracy to do it's job. A Minister in Delhi gives an approval in writing but a mid level bureaucrat in Karnataka will not accept that and will deem that as fake. Minister has to scream at bureaucrat to get things done, papers moved, wait days for project status etc. They can't even fire them. Just look at Gadkari's speech on the opening of NHAI's HQ and his interviews. That should give you an idea of how rotten the bureaucracy is.
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@julm7744 Philippines business environment is way better. Less regulations and it's part of several trade blocs. India has few bilateral trade agreements and even fewer free trade agreements. So when folks invest in India, they do for the domestic market and not for exports. But the cost of starting up a physical business like factories and the cost of compliance is too unpalatable for anything beyond human capital investments. A tech company I worked with considered setting up a fab plant to support their staff in India but quickly shut that proposal down because of the regulatory environment. Their biggest challenges were land, port Infrastructure, labor laws and import duty. They didn't mind import duty but they were pretty annoyed by labor laws and lack of purchasable land with easy access to port infrastructure.
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@julm7744 so, India right now is undergoing a huge transition accelerated by the pandemic. The regulatory environment has improved a lot in the past decade but it's not enough. There's still a lot of regulatory baggage that needs to be sorted out especially at the State level. So currently, there's a lot of regulatory imbalances between various levels of Govt. whereas previously all levels of Govt was painful. For eg: Environmental clearances and arbitration agreements which is under the purview of the Central govt. has been rationalized and streamlined however land acquisition which falls under the jurisdiction of State and municipal govt. is still painful. There are mechanism to circumvent this like invest in an industrial park but the process is slower than it ought to be. I believe India (hopefully) might be in a better place in a couple of years. There are really good initiatives that Govt is rolling out to bring good structural changes into the economy and regulatory environment. It'll take a couple of years to get there but it'll have a positive impact. Re: RCEP India needed more time to be competitive when RCEP was signed and in hindsight, it was the right decision to back out of it.
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@adithyadanaj9768 the regulatory baggage makes the industry pretty uncompetitive. It also makes Investments in R&D or towards growing your business extremely risky. The regulator treats everyone as rule breakers without realizing how their rules makes it impossible to be in compliance. There's no nurturing only punitive punishment. The regulator in India is like a school teacher in Delhi Public school, only thinks in terms of punishment and forgets their job is to teach and nurture their students. Why would anyone invest if tomorrow the Govt. of the day or courts decides to declare your business as illegal? Why would you invest if tomorrow Govt. decides to retrospectively tax you? Or overnight pushes job quotas? And we have idiotic folks who keep screaming Tata-Birla Ambani-Adani corruption and crony capitalism. Or call then uncompetitive without context or attempt to understand the real issues that businesses face. We really should be admiring the businesses that haven't moved out.
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Though India has improved the business and regulatory environment, India's Judiciary holds it back quite significantly. It's slow, judges don't follow precedent set by higher courts, judges would rather adjournment than decide on any case. Simple cases such as contract enforcement takes too long to decide. Sadly the Judiciary has made itself independent from reforms and oversight. Despite it's rich, nuanced and detail history of jurisprudence, the Judiciary has become an institution that mattress things more miserable since the 2000s. Most multi national companies get around this through arbitration agreements and bilateral treaties (most popular route is to use Singapore's Judiciary to settle disputes).
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@yohaneschristianp this is a very condescending and terrible take. People's attitude have little to do with structural issues within India's government and Judiciary. Often they are held hostage by the Judiciary even if the government has the right intention of improving governance.
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