Not only is there an economic slowdown but governance deficit and policy paralysis on the part of the government and with some high-profile companies getting tainted in one of the biggest scams in the countrys modern history the 2G scam ensured that the government-corporate relationship touched its lowest during the year. Even the effort of the government towards the end of the year to open up the multi-brand retail sector to foreign investment got foiled and thus failed to lift spirits.
The Winter session of Parliament, like the ones preceding it, was once again marked by rabble-rousing sloganeering and adjournments rather than quality debate or any important piece of legislation. Why should we think that such things will change with the passage of the year and things will be better in 2012, is a common question to come to mind.
The answer to such pessimism or cynicism to be precise best lies in not just reviewing the year gone by but aggregate the changes which have happened over the years, put them in proper perspective and then draw a long-term view of the future over the next few years. Seen in this context, the picture changes.
Noisy debates, cases of corruption and charges of lethargy on policy-making side have accompanied us in our journey of growth in which a lot of milestones have been achieved, especially if the last 20 years are taken into account. The results in most sectors are impressive, though not enough to make us sit back and relax.
In a way, noisy debates, discussions and chaos are healthy for democracy for they remove doubts forever. Change through laws once enacted never looks back, but only moves forward and that too at great speed. We went through lots of noise and chaos when sectors like insurance were opened, or foreign direct investment limits were raised in sectors like telecom. But today, none of those measures have been rolled back, the sectors are doing fine and with time, the limits of FDI will only get raised. Thus, it is important to note that maybe today, there are noises on FDI in retail, but it will happen because its time has come.
At the speed with which corporate India is expanding overseas with revenues from overseas operations contributing more than 50% of the total revenues for many of them, change is inevitable in their ways of functioning and doing business. This will also force the government to change its ways of working.
Sample this: Almost 65.6% of the total revenues of Bharat Forge, an auto ancillary major, comes from outside India. After the acquisition of Jaguar Land Rover, 59.2% of revenues of Tata Motors has started coming from overseas. Same is the case with another Tata group company, Tata Steel. Post acquisition of Anglo-Dutch steel maker, Corus, Thailands Millennium Steel and Singapores NatSteel, the groups 73.5% revenues have started coming from outside the country. With the acquisition of Canadian aluminium firm Novellis in 2007, AV Birla groups Hindalco Industries now earns 70.1% of its revenues from abroad. With the acquisition of the African operations of Zain Telecom last year, Bharti Airtels share of overseas revenues has gone up to 26%.
The development can be viewed from both the sides one, that this is because theres policy paralysis and regulatory uncertainties within, and two, assets abroad are currently available at cheap price and Indian companies are in the way of truly becoming Indian MNCs. So, while negativities such as the 2G scam, the mining scam et al would carry on, so would be growth and optimism.