We're Digging It!

Most people assume that the government is excellent at corruption, very good at digging up roads and terrible at everything else – but this is only part of the picture. We may curse the government each time we pass by a road that has been dug up for the last 6 months, but the reality is that a dug up road is like a new year’s resolution gone wrong. It’s like the gym that you’ve stopped going to a month into the new year, the cakes that you’ve started eating after a fortnight of conscientious abstinence and the pair of jogging shoes that you used precisely twice and that’s now making you avoid the shoe rack in fear of being consumed by an overwhelming sense of guilt.

You know how it is. Each New Year begins with a significant proportion of the population making a resolution to make their neighborhood gyms richer. Well, alright…the resolution is to lose weight and get fit in the New Year, but the reality is it’s the gyms that get richer. To their credit, though, the people at least tried. It’s the same with the government – a dug up road is like the government ebulliently committing to a new infrastructure project, beginning work with fresh-faced enthusiasm and promptly losing interest midway through. Which is why the road remains dug up until the next time an election is round the corner.

So while most people were cheering the government’s announcement that it’ll allocate several thousands of crores for infrastructure investment in Bangalore at the Global Investors’ Meet last week, I wasn’t quite so enthusiastic. It just meant that there would be many more roads dug up all over the city before promptly being forgotten in the eager rush to do some fresh digging up.

For those of you wondering, the Global Investors’ Meet is one of those annual shindigs that are increasingly popular in India these days. It’s the sort of event that gets the newspapers frothing in excitement because it includes high ranking politicians as well as corporate leaders who are so senior that they cannot afford to be seen doing any actual work and hence spend all their time networking. It’s one of those events that most governments can fall back on to bail them out of a crisis situation and buy them a few weeks of goodwill. “Rising racial intolerance? Collapsing infrastructure? Power crisis looming? Let’s have a Global Investors’ Meet before this gets out of hand!”

A big sign of the success of any of these Global Investors’ Meets is the value of the MoU’s signed at the meet. And you know it’s always a spectacular success because every year it’s a new record number that ushers in a sense of unmitigated optimism for the state in question. The newspapers eagerly lap this up with reports stating that “Investors signed MoU’s worth Rs 60,000 crores with the Karnataka Government which could lead to the creation of up to 6 lakh jobs in the state. To address industry concerns about excessive paperwork that scuppers most investments, the state government has promised that it would hire origami enthusiasts to make all that paperwork a lot more interesting. Ratan Tata has also praised Karnataka claiming that it’s one of the few states that he actually enjoys investing in, while Kiran Mazumdar Shaw, who had twice threatened to leave Karnataka, has once again changed her mind and decided to stick around and invest some more.”

Each year, everyone goes back thinking that the state is well and truly on the way to being an oasis of development and prosperity, only to come back for the next Global Investors’ Meet with everything still being the same. Any reasonable person would be well within his rights to wonder why this is so. The chief culprit for this is the MoU. In essence, an MoU is like a non-committal, no-strings-attached version of the IoU. While it officially stands for Memorandum of Understanding, it's meaning is closer to “Might Owe You”. According to its definition, MoUs are “not legally binding but they carry a degree of seriousness and mutual respect, stronger than a gentlemen's agreement”. I’m no Sherlock, but that does sound very suspicious, doesn’t it? Even if an MoU carries the highest degree of seriousness and respect, it still means that a company may invest a certain amount in a state, but it just as well might not do so if it doesn’t feel like it. So you’ll have legal teams as well as government and corporate big shots spend months and months agonising over the fine print and meticulously poring over the details of a document that finally looks something like this:

In short, major investment decisions that could impact the future of a state are made on documents that hold less legal water than your average rental agreement. Which means that you’re more likely to get your rental deposit back than the Global Investors’ meet resulting in any actual investment – now that’s a headline worth reading!