India--Whither Globalisation?

Policy Failures!

Published on August 28, 2004 By Themissociijuris In Consumer Issues

If we are really serious about making India a sustainable Global Market, then these few words of caution may be of immense help:-

1. The foreign manufacturers selling their ware in India under a Consumer-loan Scheme—funded by foreign Financial Institutions, are on a very slippery wicket here, in that:-

a) These FIs are relying heavily upon extra-legal methods to recover their loans—but this haven wouldn’t work for long. Their modus operandi is that they bribe the pliable police personnel to make threatening calls to the defaulting loanees. For example, recently a person posing as an Inspector in a Police Station, telephoned a Deputy Secretary who is working in the Ministry of Law (Union of India), and gruffly asked him as to why he had delayed the payment of the billed amount to his Credit-card provider—an MNC? The said Dy. Secy. has friends in other Ministries, e.g. the Department of Public Grievances and the Ministry of Home Affairs; such calls can, therefore, spell trouble for the concerned MNC.

There is no guarantee that the loanee’s future income—on the basis of which the said loan was sanctioned, will materialize. It is so because the middle-income/lower-middle-income families who are taking these consumer-loans, are fast losing out the employment-opportunities for their wards (kith & kin) and even their own private-sector jobs are not secure. Here, these days the Industrial Units in the ‘traditional industry’ are closing down fast due to:-

i) The plethora of archaic Labour & Industrial Laws-- coupled with the multi-Inspector regime under each of these numerous Laws. If the Law Minister was to be asked to spontaneously reply to a question regarding the total number of Laws which govern the Indian Industry today, he is most likely to fail to answer correctly—and is likely to err even if he is given time to consult his Secretaries.

ii) Global competition, coupled with the above-mentioned consumer-loans, is attracting the consumers away from the indigenously manufactured products—moreso, the quality-control over the indigenous products, services & human resource is almost NIL.

iii) Since the gestation-period for setting up an industry is long, the local population will eventually be starved due to the combined effect of the shut-down of the local manufacturing Units and unwillingness of the MNCs to keep sanctioning ‘unrecoverable loans’. This will certainly lead to a public uprising against Globalisation of the Indian Market.

iv) If the aforesaid loans come from the savings of the other Indian population, then the Public Interest Litigation will hound the MNCs, and public outcry for reforming the Consumer Protection Act and related Laws will have its echo in the Parliament. At present, there is no legal requirement to the effect that only such MNCs will be allowed to trade its foreign-made merchandise in India, as would not only deposit a sizeable amount of its moneys in a Nationalised Bank situated in India but also post in India one of their senior Executive Directors (of foreign origin) so that in the case of breach by the company or its agents of any of the numerous Indian Laws, the said Director (as the Principal) could be taken into custody and punished under the Indian Laws, and the said moneys, too, be impounded with a view to disburse the same to the aggrieved customers.

2. The smell of corruption which pervades almost all the corridors of power here, will continue to give rise to ‘scandals’, and the consequent counter-blasts under the Criminal Law to extradite from abroad some big guns. The source of one such very obvious scandal-in-the-offing is:

The Public Sector Undertakings (PSUs) are generally granted loans by the Financial Institutions (who hold the Indian public’s savings in a fiduciary capacity) without requiring the PSUs to hypothecate their real assets to the FIs-- because the Government guarantees the repayment of these loans. However, while selling the profit-making PSUs to private individuals or corporations, the Ministry of Disinvestment unwittingly placed no condition upon the said private/corporate buyers to hypothecate their assets to the FIs against the loans still owed by the PSUs at the time of the transfer of the PSU into private hands. In the result, certain transactions/deals which were clinched by the buyer(s) with as little as 0.75% of their own funds having been being invested therein (e.g. the sale/disinvestment of Centaur Hotel in Mumbai for Rupees 150 crore), may be tempted to siphon off the said PSU’s assets to the other companies/concerns owned by them, and then declare the said erstwhile PSU as bankrupt—thereby virtually making the FI’s to write off the said loans as ‘bad-debts’.

It is time that an advisory be issued to FIs which are owned by the Multi-National Conglomerates, to protect their public-funds (owned by the public in the country in which the MNC is registered) from such scandals so that the echoes of such scams are not heard in their own Legislatures.

Comments

Themissociijuris

on Aug 28, 2004

7. And why good cases are lost and bad ones won under the 'justice delivery system' prevalent in India?

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