Manmohan Singh is a blessing for India: HDFC Chairman

HDFC Chairman Deepak Parekh hit out against the Opposition and the coalition parties and said their style of politics is hurting India's growth. Speaking to Karan Thapar on Devil's Advocate, Parekh praised Prime Minister Manmohan Singh for his efforts and called him the cleanest Prime Minister.

Karan Thapar: Hello and welcome to Devil's Advocate. As 2012 gets underway, how do India's top businessmen view the government and its handling of the economy? That's the key issue I shall discuss today with the Chairman of the Housing Development Finance Cooperation Deepak Parekh.

Mr Parekh, let's start with the year that just ended. Many people say that 2011 was one of the worst years faced by any government for a long time. Others say that the country has ended up depressed, some even say disillusioned. Would you agree with both of those?

Deepak Parekh: I would agree with those. 2011 is a year to forget about. Not only for the India but for the whole world - you see what happened in Europe, in US everywhere. So 2011 has been a bad year and so also for India. We should now in the new year think positively and look at options and opportunities.

Karan Thapar: Now in the open letter that you wrote on the January 17, you spoke of the collapse in the self confidence and self belief of Indians in themselves and in the State. Twelve months later, has that collapse of self-confidence got worse?

Deepak Parekh: It is at a low end. You know the more you criticise the government, the more negative you are about the government, the confidence around you, the confidence among the people of the country also takes a dip.

Karan Thapar: So it becomes a self-fulfilling, vicious spiral?

Deepak Parekh: It becomes, absolutely. And I think we have to look at it differently today and we have to be more positive. It's a new year. Let the past be behind us and let's look at what we can do. How we can get back to 8 per cent GDP growth.

Karan Thapar: Okay. I will come to that in a moment's time. But for the government, after a succession of scandals and scams, after the CVC imbroglio, after the crisis with Anna Hazare and Baba Ramdev, and then right at the end of the year the debacle over FDI in retail and the debacle over the Lokpal. Would you accepct that the government's authority and credibility have also been damaged?

Deepak Parekh: It has been damaged. It has been damaged but part of it. You know, the way the politics works in our country. First of all we have a coalition government and partners with minor seats. Less numbers of seats can dictate policies rather than the party with the largest number of seats.

Karan Thapar: It's a bit like the tail wagging the dog?

Deepak Parekh: It is the tail wagging the dog. Then the Opposition has also not played a positive role. Now the role of an Opposition party anywhere in the world is to oppose, but in a democracy, dissent is acceptable. Disagreement is part of democracy but not distortion, not breaking up Parliament every day. You know, disruption in politics is not good and what we saw in Parliament this session and the earlier sessions this year needs a lot to be desired. It gives you a little negative feeling on democracy. What are we doing? Is it a victory of democracy or democracy is becoming a big curse for us? No decisions can be taken if every item, if every policy issue which the ruling party puts up and the Opposition opposes and opposes by disrupting Parliament, by dislodging Parliament. So I think we need to have a better system. Everyone has a day in the (sun). The Opposition will get their day in the sun but I think the Opposition party also must behave more responsibly. The coalition partners in a coalition government must also behave more rationally.

Karan Thapar: If I understand you correctly, you are suggesting not just the behaviour of the government but the response of the Opposition has thrown into question the functioning and efficiency of India's democracy?

Deepak Parekh: Yes. Unable to take decisions. This is because of the political system, the democracy the way it is working, with so many parties and so many coalition partners, it becomes very difficult.

Karan Thapar: So this has raised serious, if not damaging, questions about the very system of governance in India?

Deepak Parekh: Absolutely. I think the people of India will realise that in general elections you must have one party running the country and not ten different parties joining hands. It doesn't work. It doesn't help. It doesn't do good for progress.

Karan Thapar: So its not just a government crisis, its not just a political crisis, it's a system crisis.

Deepak Parekh: It's a system crisis.

Karan Thapar: Which means it's much worse.

Deepak Parekh: It is bad because you know. You can't take decisions then how can the country progress?

Karan Thapar: Now one key issue, which was there in both the open letters you wrote last year, was what you called the widespread governance deficit. One of your colleagues, Azim Premji said, "The biggest concerns now are government issues and the complete absence of decision making in the government". Explain to me, what does this mean for industrialists, for investment and the economy?

Deepak Parekh: See, when we talk of governance deficit, we are talking at two levels. One is the petty corruption, which you and I and every one in India faces. And one is the corruption at the senior level - large amounts like the Commonwealth Games or the telecom scandals or Aadarsh building in Bombay. These are bigger issues. Now if you look at the small man. The common man in the country is fed up because he can't get anything done without paying a bribe. For instance you want a driving licence, you want a death certificate. I had to pay for a death certificate. You don't get death certificates.

Karan Thapar: You yourself?

Deepak Parekh: I had to pay. Birth certificates, passports, driving licence. Now the main reason for this corruption at low level and this is 100-500-1000 bucks. Small amounts. The salary levels of people are abysmally low. How do you expect a policeman on the street to keep law and order to protect the citizens when he lives in slums or slum-like conditions? He doesn't have enough money to feed his children.

Karan Thapar: People in authority, even if they are only policemen, have to be paid enough to guarantee that they don't have to resort to corruption?

Deepak Parekh: Yes, absolutely.

Karan Thapar: Once again we have to think through very carefully right down to the very bottom how we pay and how we run the system. It's a root and branch.

Deepak Parekh: Absolutely. So what we said is that we need some redressal mechanism for the common man and particularly we need police reform, judicial reform and the electoral reform.

Karan Thapar: But you also wrote about what you called policy paralysis, the fact that the government talks about critical reforms but is unable to deliver them. In that context, how damaging was the debacle over FDI in retail where the Prime Minister endorsed the policy but Sonia Gandhi was silent, the allies opposed and the government couldn't go ahead?

Deepak Parekh: It was a very.. It was a bad day for Indian democracy and I think it was a bad day, it was a sad day for Indian business. I think FDI in retail will help the farming community. We need to invest in farming. We need much more R&D and technology and we need to upgrade our farmers. And whether you like it or not, FDI in retail will do that to some extent.

Karan Thapar: Given that FDI in retail is so critical to India's future in so many ways, when the government proposes it and then within ten days has to back down. How much of a hit did the government's image and credibility take?

Deepak Parekh: Government's image has been tarnished, has been hit, but I must say that the Prime Minister and the Finance Minister have confidently said 'we will bring back FDI in retail on the radar and it will be through by June 2012'. They have both emphatically said that and I believe in that and I am sure they will try and do that.