May 22, 2020
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Nani Palkhivala

Nani Palkhivala
"Casteist and religious forces are going to be the bane of this country.... There is great danger of the country disintegrating... In fact, I feel we have already lost the soul of India...." Continuing our series of interviews with the doyens of Indian industry on the eve of elections, Nani Palkhivala, eminent jurist and chairman of ACC, speaks on the divisive forces at work within the country and what he calls the 'lopsided' liberalisation process that is drifting away from the strong cultural heritage of India. Excerpts from an interview with Shekhar Ghosh:

Which areas have gained the maximum momentum in the liberalisation process?

The maximum impact of liberalisation has been in the areas of investment. India has now become a part of the global economy. For the past 40 years, this country has been suffocated and strangulated by rules, restrictions, licensing and bureaucratese. Today, for the first time, it can atleast breathe freely.

Having said that, however, I must add that the fruits of liberalisation have not percolated down to everyone. The ordinary man hasn't reaped all the benefits of liberalisation. There are people who have taken advantage of the liberalisation process for their own aggrandisement and enrichment. To the extent that individuals have prospered at the cost of the country. One must, however, admit that in every country this is bound to happen. Once you liberalise some individuals are bound to go for their personal gains, human nature being what it is.

Who has gained the most from economic reforms?

Lawyers have definitely gained a lot from reforms. Every foreign company that shows an interest in this country will first deal with lawyers. There is an entire new breed of lawyers today specialising in patents, mergers and acquisitions, foreign investment clearances and so on. The building community is just minting money. Real estate prices in a metropolis like Bombay have boomed on account of liberalisation. Finally, those who deal and speculate in the stock markets have also struck jackpot. A single individual may win or lose, but, on the whole, these communities of professionals have benefited the most.

Do you feel Indian industry has a level playing field today or has it been shortchanged?

We have not yet introduced the level playing field. If an Indian has to borrow in the domestic market, he has to pay an 18 per cent rate of interest, almost three times what a western economy borrower would pay. I am not going into the reasons for this high rate of interest which is dependent on many macro-issues like fiscal deficit, money supply, rupee-dollar parity, budgetary deficit, et al. But the ultimate result is that Indian industry does not have a level playing field with its western counterpart. It does take its toll on profit margins. I think exports would have been higher but for this extraordinary higher burden of interest. We're definitely not able to exploit the full benefits of the export potential that India has.

Despite the initial hype that liberalisation would bring in unlimited foreign investment, several other developing nations like China and Indonesia have surpassed us in wooing foreign investment. Why?

For a number of reasons. Foreigners do not have the kind of confidence in our country that would justify their investment. They feel that the political situation in this country is unstable. Why, even the social situation is unpredictable. Economists will give you all kinds of valid reasons about the monetary and economic policies of the Government, but my gut feeling is that several inherent social attributes of our country are responsible for the negative perception as far as foreign investment is concerned.

Could you elaborate?

I think casteist and religious forces are going to be the bane of this country. Casteism is to India what tribalism is to Africa. The casteism prevalent in this country makes it very difficult to predict whether democracy will survive here. That is mainly because of the kind of people who get elected in this country on the basis of caste. And if it is not casteism, then it is regionalism. Almost three-fourths of the population in India have regional loyalties, none whatsover for the country as a whole. There is a great danger of the country disintegrating in future.

Do you think the next government should give priority to social issues?

Our first and greatest failure has been that we have not bothered to educate the people. The country has totally ignored and neglected education. The great civilisation that flourished in this country gave birth to India's priceless heritage. It has been ignominously ignored. The Government couldn't care less. And it has done nothing to make the people take pride in their heritage. To my mind the cultural heritage of the country is far more important than material prosperity.

But don't you think concern for our heritage can come only after basic needs are satisfied?

I do find that people today are better dressed than they were 10 years ago. And there is more food today. The way eating places are overcrowded in Bombay also means that they have more money to spend. I agree that the basic needs of the people have to be satisfied first. It is also true that most people would be interested in money than in culture. But I cannot help feeling that we have lost the soul of India. I think it's in the Bible somewhere, "What doth it profit a man if he gained the whole world and suffered the loss of his soul."

I think the identity of a nation or of a region is likely to suffer as a result of the globalisation process. This is so because people cease to belong to one country and have a certain identity of their own. They tend to fall into a groove where the greatness of a country is measured in material progress.

Let's come to the basic tenet of our Constitution. Several experts have been voicing their opinion that the federal structure of the country needs to be reviewed...

I think India will disintegrate. India was never ever one single country. It is only when the British established their sovereignty after the Battle of Plassey in 1757 that India was unified. The fact that such a thing can happen out here is proved by the fate of the USSR. Before its disintegration, the USSR was the second most powerful state in the world. If you had asked me 10 years ago, I would have never thought that such a division could be possible. There is no doubt in my mind that India would be the gainer if the integrity and identity of the country were preserved. But human nature being foolish, I would not be surprised if India disintegrates for the simple reason that there is no national leadership with an all-India outlook. How many of the present leaders have a national outlook?

What remains unfinished on the reforms agenda?

The reforms have to weld the people together and make them rise above considerations of caste and creed. I don't find that happening. The reforms have also failed to mobilise the available talent of the country. This is one of the most talented nations on earth, but you find talent here at a discount. There is also enough room to improve and simplify the tax structure of the country. In a country of 900 million plus, not more than 10 million are paying taxes. The Government can earn much more by just simplifying the tax structure.

But I would put it as a top priority for future governments to make sure that litigation in this country is fast. When I was in the US, I once asked the then US Supreme Court chief justice, Warren Burger, as to which was the longest case that he had ever tried. He said the case in which the privilege of the President was challenged. "It lasted for a full day and an hour," he exclaimed. Nowhere in the world do you have a backlog of cases as far back as here. I have argued cases which have gone on for five months and more.

What's the solution to this litigation maze?

One practical way out is the introduction of written briefs, which is how most cases are solved abroad. Lawyers present the case in written briefs which is pursued by the judge who then asks questions, if need be, to both the parties and delivers the judgement. When Justice Chandrachud was appointed Chief Justice of the Supreme Court, he called the bar members to his room to discuss the introduction of written briefs. No sooner had he raised the topic than the entire bar walked out on him. Lawyers get paid by the day. They had the most to lose by such efficient deliverance of justice. 

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