Something must be truly rotten in the state of India if the business community is driven to criticising the government in the full glare of publicity and in strong terms.
This year alone has seen a unique summer of openly voiced discontent. First, it was Azim Premji, Wipro’s highly respected promoter, who questioned the government’s inability to accelerate economic growth. “India is functioning without a leader,” he told an analysts’ conference in June — ironically, on the same day Standard & Poor’s downgraded the outlook on India.
Around the same time, N R Narayana Murthy, Infosys’ chairman emeritus and eminence grise of India’s glitzy new economy, voiced some concern about the ennui the UPA government demonstrated over anti-corruption legislation. Then earlier this month, he told a TV news channel the government needed to be more “pro-active” in creating more jobs, attracting foreign direct investment and so on and so forth.
In July came a bluntly worded observation from Larsen & Toubro (L&T) in a press release announcing its results. In the curious banker/corporate-speak that analysts tend to adopt, the release somberly warned that policy delays and high interest rates have “moderated” growth prospects in the domestic economy. It is worth wondering whether L&T’s forthright Chairman A M Naik would have been even more pithy had he been asked a direct question.
Now, earlier this week, you have HDFC Chairman Deepak Parekh providing robust critiques of everything from banking, stock market and insurance industry regulation at an investors’ meet. He followed this up by suggesting, in an interview to a TV channel yesterday, that India would be downgraded to junk status if the policy paralysis continues.
Individually, these are reputed representatives of the corporate community, with credentials impeccable enough for their observations to carry weight. Several of them sit, or have sat, on a variety of panels and committees advising the government on policy, so they also speak from positions as “outsider-insiders”, so to speak.
Taken collectively, however, this behaviour is so aberrant that the government might do well to take note of it. By and large, executives operating in India – whether rich and powerful, middle-level, Indian or foreign – have made it a habit to be uber-ultra-cautious about how they criticise the government on the record.
That is, if they dare to do so at all. The retired scion of a corporate house appointed to a quasi-government job once reacted thus when asked how he liked working with government. “No comment,” he smirked — and then quickly added, “but that’s off the record.” Then followed an anxious phone call to confirm that this quite harmless comment would stay off the record in the published interview.
Business Standard’s post-Budget juries comprising leading businessmen rarely give low ratings even to the most horrendous of Budgets (including Pranab Mukherjee’s last one), despite knowing that they could impact business adversely. This is often widely at variance with what they say off the record, as any journalist will testify.
Of course, this year’s criticisms hardly amount to a tidal wave of change — they’re more like the preliminary line of breakers on the shoreline. Still, this should be considered a healthy development for two related reasons. One, it’s a sign that the corporate community is developing a stronger sense of self-confidence as a constituency representing the best of India’s global reputation. As the major job creator of the past decade, the private sector is certainly in a position to demand reform more vociferously, especially change that will maximise opportunities for growth. This is a great leap forward from the business community’s initial stance as complainant (incredibly, against global competition) and perpetual mendicant for this or that tax break or policy change (the profit-rich IT industry’s enthusiasm for perpetual tax holidays being a case in point.)
Two, businessmen have been loath to criticise the government publicly in the past because they feared the fell retaliatory hands of its enforcement and investigative agencies. This remains a threat to be sure, especially as simplified laws reduce the rent-extracting opportunities for government servants. But the overall political outlook has changed. Older businessmen and entrepreneurs will recall the raid raj of the seventies and eighties and V P Singh’s infamous blacklist of prominent corporate tax dodgers. Today even the most thin-skinned of governments are unlikely to acquire such tendencies. So maybe more businessmen should be as intrepid as the Premjis, Narayana Murthys and Parekhs to speak out — and as reputable too.