The government as godfather
R Srinivasan
The election commission feels that three months are the "absolute minimum" length of time required to organise and conduct nationwide polls in a country the size of India. Then you have counting and formal declaration of results. After which comes the process of forming a stable government.If the scenario which obtained last time around repeats itself, we are looking at something like six months before a new government is properly in place. For the country's proverbial "toiling masses", six months without an elected government does not matter a jot. But for significant sections of Indian business, six months may be too long. Within that time, many of the more vulnerable sections of Indian business may have the stuffing knocked out of them by a well-planned thrust from overseas. By the time the friendly, neighbourhood member of Parliament has been allotted his seat, the friendly, neighbourhood businessman may be replaced by the local representative of some giant conglomeration headquartered in Seoul or
Seattle. Take a look at the consumer durables sector. High brand equity had helped leading domestic brands like Videocon, BPL, Godrej and the like maintain their price levels comfortably higher than the rest. Whether it was fully justified or not is another issue. The fact is that they were price leaders. Then comes the triple whammy - open borders, crashing Asian currencies and a collapsed government. Suddenly, they are price chasers, desperately trying to match price cuts with the Akais and the Samsungs and the Thomsuns. The Indian consumer never had it so good. Deals have become steals. Cut-throat competition is leading to an almost farcical situation where all one needs to do is buy a TV to furnish one's entire home - with a "Made in Korea" or a "Made in Japan" tag to boot. Just the shock Indian industry needed to bring home the realities of reform? Perhaps. But it is important to have an Indian industry left to put this lesson to work. Leadership abroad cannot be achieved without leadership at
home. For this, businesses need the active support of their governments. Why? For the same reason that roads need traffic lights. When you have multiple entities exercising free will in a common environment - whether in the shape of vehicles on the same road or business entities in one economy - you need some form of control to be exercised by a neutral authority in order to prevent unbridled anarchy. Nowadays, when de-regulation is the buzzword, anybody asking for controls is promptly dubbed either an ultra-nationalist or an ultra-leftist. Such accusations spring from a basic confusion over the meaning of regulation. If nobody stopped for anybody on the roads, you are bound to have a heck of a lot of wrecks. Ditto for the economy and its constituents. Business also needs government for another basic function - protection of their interests. Again, anybody making such a statement is bound to be greeted with catcalls. Again, the jeers spring from confusion over protection and protectionism. If every
government which takes steps to safeguard the interests of its country's business is protectionist and anti-competitive, then the USA should be topping that list. The US government - the executive arm, that is - makes no bones over the fact that it uses its muscle to open up markets for US businesses. It also ensures that the same interests are not harmed at home. It has effectively used its powers of access to the US market to leverage gains for US business, ranging from greater access for US products and services to protection of intellectual property rights. US industry has used its influence with the political set-up to create this pro-active role. India's industry needs somebody in its corner too. And it can't afford to wait.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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