In his Madison Square Garden speech, Prime Minister Narendra Modi claimed that the 21st century can belong to India as it has three assets that no other country does: democracy, demographic dividend and demand. Undisputedly, these are invaluable assets. But Modi must realise that these are eclipsed by a unique combination of three crippling liabilities that only India has: excessive rules and regulations, egregious levels of corruption, and an embarrassingly hostile and irrational tax system.These three liabilities far exceed the value of the three assets and make India a country with a negative net worth. Year after year, India fares miserably in the 'ease-of-doing-business' surveys, but precious little is done to move India up this ladder. Modi's visit to Japan and the US is expected to attract more than $75 billion in investments. India can attract four times this amount if we simply allow industry and the service sector to operate in peace rather than constantly harass them with rules and taxes.India has just too many laws and too little governance. The average mid-size company has to comply with numerous labour, pollution and other regulatory enactments. While abolishing archaic laws is welcome, how does abolishing the Oriental Gas Company Act, 1857, or old nationalisation laws improve investment climate or ease of doing business? It would be far more productive to spend time in eliminating unnecessary rules, forms and returns than repeal moribund 100-year-old laws.Excessive rules and regulations substantially increase the cost of compliance and divert scarce resources that can be used for productive purposes. Medical science requires injecting a dye in our bloodstream to detect blockages. In a similar manner, it is vitally necessary to systematically study the entire process of starting an enterprise: from incorporating a company till the stage of commercial output. Instead of eliminating old laws, can we eliminate 100 unnecessary rules, forms and returns required to be filed in triplicate?Most rules and regulations are like highway check-posts. Most can be done away with but are deliberately continued as they yield a steady source of 'income' for the bureaucratic and political establishment. Information technology is a potent tool to eliminate corruption. But Indian ingenuity has successfully sabotaged software to ensure that roadblocks continue and nothing can move until a bribe is paid. The new government must implement an action plan to improve India’s Transparency International rating by 20 places each year.The first step in any business is the incorporation of a company. In Singapore and Britain, this process takes a few hours. Common sense tells us that this should be the norm in India as well, but the approval of a company's name takes several days. If Google can approve an email address in seconds, there is no reason why it cannot be done for approving the name of a company.After incorporation comes the actual setting up of a factory: getting plans approved, obtaining permits and licences and getting a power connection. At each stage, the prospective entrepreneur cannot proceed without lubricating the system.The ultimate killer is our tax system. Apart from the utterly thoughtless and suicidal retrospective taxes, there is an inexplicable viciousness and arbitrariness in the way taxes are administered. SEZs were promised a tax-free environment for 10 years, but within three years, the Budget imposes minimum alternate tax of 18 per cent, a levy that completely wrecked the financial plans of companies that invested in SEZs. Several exemptions and concessions are sought to be denied on the flimsiest grounds. Assessments are reopened after five years and receipts that are not 'income' by any standard are sought to be taxed.The situation is equally fatal at the state-level. Concessions granted for 5-10 years are routinely revoked with scant regard for the fiscal devastation this may cause. Tamil Nadu is especially remarkable. Nokia exported phones worth Rs 25,000 crore in three years and foreign exchange was received in India. The sales-tax department simply treats these exports as 'interstate sales' — with no explanation of how phones that have reached Germany and Brazil could be treated as Indian sales!Modi's 'Make-in-India' plan will ultimately depend on how effectively he can cut down the three liabilities.(The writer is a senior advocate, Madras High Court)