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The Govt Has Killed The “India Growth Story”: Narayana Murthy

Shri. Narayana Murthy

The Govt Has Killed The “India Growth Story”: Narayana Murthy

Editorial Staff

Narayana Murthy, the billionaire founder of Infosys, has expressed deep disappointment that India has faltered in its growth pace owing to the abject indifference of the Govt and the flawed policies of the Income-tax dept. There is so much pessimism about India amongst Global Cos that India does not even figure as an investment alternative anymore, he says, and offers solutions on what can be done to reverse the trend

Narayana Murthy, the billionaire founder of Infosys and doyen of the Indian I. T. Industry has expressed deep disappointment that India has faltered in its growth pace owing to the abject indifference of the Government and the flawed policies of the Income-tax department.

In an interview, Narayana Murthy took off from where entrepreneurial whiz kid Jaitirth Rao had left it (Dear Income-tax Department, ‘Thank You’ For Ruining Indian Economy) and agonized that while the entire World had great expectations from India, we had “fallen very, very short”.

the Income-tax department has adopted a hostile stance and does not trust even top-notch companies, which have contributed billions of dollars to the Indian economy. They do not recognise a statement of work, and insist on a company negotiating a new master agreement for every project. Such a thing is not done anywhere in the world. While the Industry has been arguing with the top officials of the Income-tax department, it has met with deaf ears

Narayana Murthy pointed out that, earlier, in the rarified field of Global CEOs in which he traveled, India always figured as an alternative to China. However, now the international Global giants were consciously shunning India and it was not even in consideration as an investment destination, he lamented.

For the sorry plight of the Nation, Narayana Murthy put the blame squarely on the studied indifference of the Government. All decision-making had come to a standstill and there was a total paralysis of action, he said. The Income-tax department came in for special criticism from Murthy. He pointed out that the Income-tax department adopted a hostile stance and did not trust even top-notch companies, which had contributed billions of dollars to the Indian economy. “They do not recognise a statement of work, and insist on a company negotiating a new master agreement for every project” he pointed out. “Such a thing is not done anywhere in the world” he said and added that while the Industry has been arguing with the top officials of the Income-tax department, it has met with deaf ears.

What is surprising is that it is not only the top notch bureaucrats who have adopted an indifferent attitude and turned a deaf ear to the plight of the Industry, but even the Ministers at the highest level don’t seem to care at all. Narayana Murthy pointed out that he had submitted detailed presentations to the Prime Minister and the then Finance Minister Pranab Mukherjee setting out the problems of the Industry and what could be done to resolve that but though, fourteen long months had passed, the Government had not even acknowledged his letter, let alone done something about it.

The only way in which the Country would be able to salvage its growth prospects would be if the Vodafone retrospective amendments are reversed. To restore investor confidence, the Government has to make a political declaration that no further retrospective amendments would ever be carried out. A clear message has to go out to the investing public that judicial decisions would be respected and not set at naught by retrospective amendments

Narayana Murthy was particularly upset about the Government’s “I don’t care” attitude because the problems that he had pointed out were not in the realm of legislation or matters of ideology or politics but were simple administrative issues. All that was required was for one senior bureaucrat to say “let’s adopt global standards” and most problems would be solved in a few hours time, he said. Murthy lamented that the Government was so paralyzed that it wasn’t able to take even simple decisions.

Narayana Murthy also made his contempt for the retrospective changes to tax laws clear. He emphasized that it was “very surprising” to him that the Government did not play fair in the Vodafone matter and should have chosen to change the law after the Supreme Court has ruled on the case.

He blamed the retrospective amendments for ruining the investment climate of the Country. “The impact has been sad and confidence of global investors has been shaken very, very badly“, he said and added that “an aspiring economy should never indulge in such unethical practices”.

Narayana Murthy was clear in his mind that the only way in which the Country would be able to salvage its growth prospects would be if the Vodafone retrospective amendments were reversed. He added that to restore investor confidence, the Government had to make a political declaration that no further retrospective amendments would ever be carried out. A clear message had to go out to the investing public that judicial decisions would be respected and not set at naught by retrospective amendments, he emphasized.

Murthy was, however, optimistic that the change in guard in the Finance Ministry with the appointment of P. Chidambaram as the Finance Minister would auger well for the Country. The Government had to start off on a clean slate and the Ministers and bureaucrats had to be encouraged to be proactive and take quick decisions. That simple measure would bring the economy back on track, he emphasized.

4 comments on “The Govt Has Killed The “India Growth Story”: Narayana Murthy
  1. While the benefits of growth has not reached the benefits down the line, the Government has killed the growth story with the biggest beneficiary of the serious irregularities, corrupt practices and corruption being the Businessmen of India who became fat and fatter since 1991 when liberalization – public loot with no rules, no effective regulations – commenced by the crook named Dr Manmohan Singh.

  2. CA Uma Kothari says:

    Sri Murthy had rightly said that “the Income-tax department has adopted a hostile stance and does not trust even top-notch companies,…”
    This is because generally the revenue officers have prejudice in mind that businessman is chor. The approach adopted is based on deliberately ignoring business realities and presumption that the business is always lucrative and there is no scope of loss. If tax payer has paid good amount of tax, the presumption in mind of revenue officers is that the taxpayer has evaded tax many times more than what he has paid.
    This is not as per policy of government but is a result of prejudices of officers. Government has made policy to rely on major portions of tax returns, but once case is selected for scrutiny, the tax officer has predetermined mind set to make a high pitched assessment. This is evident from empirical studies when we find that most of additions and dis-allowances made by tax officers are deleted in appeals.
    Statutory presumptive provisions to treat capital receipts like gifts received as income is great insult of the public at large. How a legislative presumption can be made to presume that a gift received from a non relative is in fact income of person who received gift? Such presumptions put a big question mark on integrity of public. If the government of India does not trust its public, how others can trust our citizens and how we can trust each other is a big question mark on integrity of our public hence our nation.

  3. vswami says:

    It is one thing to say that any such forthright and seemingly sincere criritique, coming from a widely acknowledged successful business magnate of his staure,- perticularly belonging to the IT sector which is in the lead over other sectors in more than one respect from the point of view of the national economy, – should be given its ‘due’ ; that is, a careful but due consideration and weigted from all angles. That , however, is not to be taken as binding or prudent to follow as gospel; for instance, the message of ““let’s adopt global standards” as sought to be canveyed, but seemingly over emphasised. For, going by past experience in the Indian climate, one feels strongly that , for adopting anyone or more of the socalled global standards , the utmost thing that calls for an incisive and intensive scrutiny is its adaptability to domestic environments or psyche.

    Experts in the field of economy, especially those who are specially equipped among them but who are truly interested in the natioin’s economy, but with no less interest in the societal welfare as well, in a profound sernse, alone should take pride in volunteering and puttig forth their well considered views in such matters; so as to be of ideal guidance to the policy makers.

    My foregoing personal sporadic thoughts , I should frankly admit, are mostly inflienced by what late Palkhivala, the renowned humnanist has often stressed in many of his memorable public speeches and writings- full of/ rich in sagely wisdom (a compliation of which is contained in the two popular Books – WE , THE PEOPLE and We, the Nation THE LOST DECADES.

  4. CA Dev Kumar Kothari says:

    Well said by respected Shri Murthy. Similar feelings I have been expressing from time to time. In fact the attitude adopted by government officers are ‘who care’, ‘who care for judgment’ because law can be amended any time with any period of retrospective effect.

    When law can be amended to overcome judicial pronouncements( even of SC) and that too just to make good mistakes and lapses of government officers in procedural matters, what can we expect on other issues? ,
    When definition of ‘entertainment’ can be amended with retrospective effect to include tea, coffee, snacks etc, to overcome judicial pronouncements (finally by the Supreme Court) holding that such provisions are essentials and not entertainment, it is big dream to expect that law will be amended to withdraw amendment made to overcome ruling in case of Vodafone.
    It seems that amendment of laws and particularly tax laws have been due to whims of bureaucrats to show power- we can amend law any time for any past period.This is unfortunate that our elected members hardly care about such issues and they are interested only on issues which provide them political mileage.

    In business we honor our verbal commitments also even if loss is suffered- this is to maintain and improve goodwill. However it seems that GOI is considering tax collection of Rs.40000 crore as more valuable than the reputation of country, its laws system and also judiciary – when all these cannot be relied, how our public can be trusted by overseas businesses?
    This situation is very unfortunate and need immediate corrections.

    The taxpayer should be aware of what is his tax liability before commencement of previous year, any amendment made after 1st April X should be applicable only to previous year to begin on or after 1st April X+1. Recently we are also facing uncertainty at Supreme Court level also. Even the judgment of the Supreme Court may not be final. The trend shows increasing number of cases in which benches of the Supreme Court is expressing doubts about correctness of earlier judgments of the Supreme Court and referring matter to larger bench of SC. And larger benches are reversing judgment of division bench. This is another area of concern. Though there are powers, but such powers should be exercised in rarest of rare cases and not as a routine. Even if there are two views possible, the best and preferable course is to let legislators take corrective measure prospectively, instead of the supreme Court creating uncertainty by doubting its own judgments and unsettling settled things.
    The law should be made simple, clear and unambiguous. When we make wholesome amendment at least once in any year, there should not be any retrospective amendments.

    Making retrospective amendments can be regarded as indication of lack of foresight, and complete carelessness and casual approach in drafting laws. and also not keeping with changes and complete lack of desire to amend law on basis of real time amendments.

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