Is India’s Government an Obstacle to Economic Progress?

The Wall Street Journal ran another opinion piece on March 8 on the continuing biotech eggplant controversy.  This time, Mr. Gurcharan Das, author and former CEO of Procter & Gamble India, writes “despite 18 years of economic reform. If anything holds India back from realizing its true potential, it is weak institutions of governance.”

Nowhere is this heartbreaking truth clearer than in the tale of Maharashtra Hybrid Seeds Company. The development of biotech eggplant was the latest in a string of innovations.

Mahyco’s scientists toiled for years, conducted 25 environmental biosafety studies supervised by independent and government agencies and did rigorous field trials in collaboration with two Indian agricultural universities. In October 2009, after nine years of trials, their invention was approved by the government’s Genetic Engineering Approval Committee. Top Indian and international scientists hailed the innovation, hoping that it would open the door for further research and trials on the more popular foods like rice and wheat.

Yet on Feb. 9, Environment and Forests Minister Jairam Ramesh stopped the seed’s introduction. He ignored the government’s own regulatory process, the committee of distinguished scientists who had approved Bt Brinjal, and he undermined the trust between the citizen and the state.

Last month, Agricultural Minister Sharad Pawar wrote to the prime minister that biotech innovations that withstood regulatory scrutiny “should be vigorously encouraged.” Any hesitation could hamper research in on biotech varieties of potato, rice, mustard, tomato, groundnut, chickpea and pigeon pea currently underway. He added: “Absence of clarity on some of these issues could jeopardize R&D not only by the private seed companies but also by public institutions.”

In other words, India cannot attract investment if entrepreneurs cannot predict how the government will react. No wonder investors continue to believe that authoritarian China is more investor friendly than democratic India.

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