For five years United Progressive Alliance (UPA-2) has followed a policy of aggressively hounding legitimate businesses through what senior counsel, Arvind P Datar, calls an "unpredictable, unfair and arbitrary tax system." This too is contributing to slow economic growth

At a time when India needs it the most, foreign direct investment (FDI) has almost dried up and portfolio investors, who have contributed the biggest chunk of our foreign exchange reserves, are staying put only because a pullout would mean booking crippling losses. But, this is a self-created situation.

For instance, for nearly five years, the United Progressive Alliance (UPA-2) has followed a policy of aggressively hounding legitimate businesses through what senior counsel, Arvind P Datar, calls an “unpredictable, unfair and arbitrary tax system. And, since public discussion about the government’s actions is easily controlled and dictated by official leaks, it ensures that business houses are demonised as cheaters and tax-evaders. This is a time-honoured strategy of the Congress since independence, when it took a socialistic and an anti-business stance, bringing with it licences, shortages and mounting corruption.

Today, each of the biggest corporate houses, including icons of good governance of the information technology (IT) sector, is fighting hundreds of slow, expensive and, often, unfair disputes raised by income-tax, excise, octroi, sales tax and customs in various jurisdictions across the country. Neither the government, nor courts/tribunals or lawyers is interested in bunching these cases to offer clarity and end harassment. It is far worse when it comes to environment and pollution related issues. Officials, backed by powerful politicians, brazenly tell the industry that a bribe is non-negotiable—whether you want to install adequate anti-pollution equipment or save money is your choice. This is a double whammy for those who want to play by the rules. Strangely, although we have powerful and well-funded NGOs in this sector, the corruption issue never makes media headlines. As Mr Datar writes, in The Economic Times, “would he (finance minister), as a CEO, invest in a country where the tax liabilities are as uncertain as they are excessive? Would he invest in a country where virtually every favourable decision of an independent judiciary is promptly overturned with retrospective effect? Would he invest in a country where the tax administration repeatedly attacks large multinationals and the organised industry but turns a Nelson’s eye to large-scale tax evasion by those who are either politically influential or who can ‘settle’ their cases?”

While large industry survives this harassment, small business are realising that there is no sense of achievement left in entrepreneurship. Doing business is India is dirty, taxing and self-defeating—and that is the worst that can happen to a country’s economy.