A return to the Licence Raj will only stall India’s reopening

Via Financial Times

The doors were still shut when I pulled up to the Wendy’s restaurant in New Delhi last week, nine weeks after India entered a nationwide lockdown on March 24. Home deliveries had failed to take off in the capital after news broke that a pizza boy had tested positive for coronavirus, sending 72 families into quarantine.

The restaurant management decided to temporarily pivot to donation-funded social work. Instead of churning out Bun Tikki burgers made of potato patties, staff inside were cooking a steaming vat of oily rice to distribute to families pushed into poverty by the coronavirus lockdown. I did not expect to see fast-food companies on the front lines of the pandemic response in India. But with years of experience navigating New Delhi’s byzantine regulations, they were well positioned to help.

When India put its 1.4bn people under one of the world’s strictest lockdowns, it centralised control of daily life. Everything seemed to require a permit or stamp, in an echo of the bad old days of the Licence Raj decades ago, when a rat’s nest of rules arbitrated by bureaucrats stifled the country’s economic growth. In 1991, India began to dismantle the socialist-era system of permits and regulations to move to a market-led economy. Red tape persists, but those radical reforms helped unleash growth, helping to lift millions from poverty.

The pandemic has been an unwelcome flashback. For weeks after Prime Minister Narendra Modi announced the lockdown, essential services struggled to operate because they could not get permits for their vehicles to move through cities or across state lines. It seemed nothing was immune from the permit mania, even the residents’ association in my neighbourhood decreed that any worker coming in must be issued a pass or they would be barred entry in a bid to keep the area “safe and secure” from coronavirus.

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I found the new rules alien, but this was familiar territory for Mukesh Kumar, the 31-year-old chief financial officer of Wendy’s India. He said that part of his job is to secure more than 25 licences for each restaurant spanning multiple government departments.

To put vehicles on the road to help with food donations, and to organise buses to take thousands of migrant workers home from New Delhi, Mr Kumar spent hours on the phone with officials beginning with the chief minister’s office and ending with local police departments. Two weeks later, he finally got the green light to run the buses. “There were tons of bureaucrats involved,” said Mr Kumar, offering the Zen-like advice: “Success is correlated with patience.”

On a 47-degree day last week, the hottest May Day in years, Neelami was one of hundreds of people waiting to board a bus home to the central state of Chhattisgarh. The slight 18-year-old was holding her baby, standing in the dusty field of a sports centre by the New Delhi airport that had been converted into a temporary depot. She was waiting to introduce her two-month-old daughter to her husband, who had been trapped in his village since the lockdown. “It’s been very difficult,” said the 18-year-old, “I’ll be happy when I’m home”.

Established non-governmental organisations and grassroots volunteers are working to ease the pressure on Indians whose livelihoods have been disrupted by the lockdown. A group of lawyers chartered a plane to help labourers stranded in Mumbai and unable to work to make a 2,000km trip home. But more needs to be done. Aid workers estimate that there are hundreds of thousands who need help. And, as lockdown eases, the complex set of rules is still changing, delaying a return to normalcy.

On Monday, Indian authorities unexpectedly announced that the borders of New Delhi would be sealed for another week, causing traffic to snarl and aid workers to scramble. “It’s chaos, the government is confused,” said one volunteer helping organise buses for migrant workers.

Meanwhile, India’s Covid-19 caseload is still rising and showing no sign of peaking as it approaches 200,000 infections. It remains to be seen if the excessive bureaucracy will dissipate as the country opens up. More than ever, India needs to kick-start growth. Returning to the Licence Raj will only make that harder.