External capital

THE report of the External Capital Committee, appointed by the Government of India to consider the question of the flow of capital into India from external sources, will be received with mingled feelings in this country. On the main issue, the report of the majority is undoubtedly disappointing and in serious conflict with the opinion of the majority of those educated and patriotic Indians who have given any thought to the subject. That issue, as stated by Pandit Malaviya in his admirable note appended to the majority report, is “what measures, if any, should be adopted to ensure that in every public company which may be incorporated in India in the future, a certain proportion of capital should be Indian.” This was the question definitely raised by India’s spokesman in the debate on the Steel Protection Bill, which led to the appointment of the present committee. The actual words of the Commerce Member in that debate were: “I am aware that there is a section in this House which would like to incorporate in the Bill a specific provision regarding the proportion of the foreign capital. I am prepared to take up separately the examination of questions of that kind and in that examination I am prepared to associate with the Government a committee of the Legislature appointed ad hoc for the purpose.” It was in fulfilment of this pledge that the committee was appointed. And yet what is the conclusion of the committee on this crucial point? “General measures discriminating against foreign capital or penalising it by taxation or control would, far from assisting the development of India’s resources or fostering the interests of the Indian investor, be injurious to both.”