Let’s leave it to the wiser chroniclers of Indian economic history to argue over where the opening up of FDI in retail ranks among the more significant reforms implemented in the last two decades. But there is no denying it is among the most significant, and probably the boldest, single reform action after the flurry of changes in the summer of 1991. So, why is corporate India not celebrating? Why are the captains of India Inc not registering on the media radar screens, hailing this step for what it is, an incredibly brave and wise move that they themselves have been pleading for, for years? Even the select group of the most respectable corporate citizens, who have been writing joint letters exhorting the prime minister to break out of the current stasis to resume the reform process, to start taking decisions, are quiet. No thank-you or well-done notes, not even, oh, aren?t we happy, you are finally listening to us? All we have seen is a bunch of tweets: notably from Anand Mahindra and Ratan Tata. Welcome, but still guarded. There is, somehow, a hesitation to show any joy. This may or may not be among the five most significant reforms carried out in 20 years, but certainly, it is the one to evoke the least corporate exuberance.
So, what is going on? Has corporate India lost interest in economic reform? Or do they (at least partly) agree with the opposition that this step will ruin India? Have they suddenly discovered a new love for the kiranas? Mind you, it is the same corporate sector that hailed the opening up in every sector, and throwing open every area of our economy, manufacturing, even agriculture, to global competition and investment.
It is the same corporate sector that sees Narendra Modi as a governance idol and praises him for his decisive as well as clean administration. His is, after all, one of the very few states where government may allocate land to a businessman without charging a tribute. Why is the same corporate sector now not willing to back the UPA government more wholeheartedly, and vocally, for making such an audacious move?
The short answer is, corporate India is not stupid. Call it looking at the big picture, or reading the political winds, but the fact is, Indian businessmen are more disillusioned with UPA 2 than they have been with any government since V.P. Singh?s 11-month disaster. Never in the past two decades have they been made to feel so unwanted. Never have they been given so little attention. On the other hand, ever since UPA 2 was sworn in, the government has worked on distancing itself from corporate India as if politically mandated to do so. The three top-most leaders of this arrangement, Sonia and Rahul Gandhi and Prime Minister Manmohan Singh, have reduced their contact with India Inc as if by a conscious strategic design. Sonia and Rahul have not been seen at a corporate gathering: either an event of one of the chambers or the World Economic Forum for years. Even the prime minister’s contact with the most direct beneficiaries, and the most vocal supporters, of his reform has diminished to almost nothing. He no longer goes and speaks at the chambers: in fact, the last time he did so, at a big CII event in 2007, he lectured the corporates on high salaries, a point Salman Khurshid, as corporate affairs minister, rubbed it in again in October 2009, months after the swearing in of UPA 2. It is as if the UPA discovered the anger that drove the Occupy Wall-Streeters two years ahead and embraced it fully.
The fact, therefore, is that corporate India, over the past two years, has felt left out, if not orphaned. This at a time when half the ministers are back to old ?we are the mai-baap sarkar so we will decide? ways, the bureaucracy is more powerful and indecisive than ever, regulators are non-existent or weak if not compromised, the civil society leads a strong ?corporates-as-evil? upsurge and some of the courts play along. And it is not just about the senior owners and executives jailed in the 2G case. While sections of the Central government, from infrastructure ministries to finance and environment, have returned to powerful ?glory? days of the pre-1991 era, the corporates have discovered the mistake they made in breaking old lobbying networks and political relationships. This is where the Radia phenomenon had emerged. You needed someone to ?deal? with Raja when the rules were ambiguous, and the government (and the prime minister) by and large too powerless to be the higher court of appeal.
You ask some of the cleanest and most respected leaders of corporate India and they will tell you the picture looks even worse from their point of view. As they see it, not only has this government fully ignored them, it has been hostile to them, treating them almost like outcasts, as if it was embarrassing to be even seen in public with them. The way individual business houses have been targeted, Lavasa, Vedanta and even Posco for example, was reminiscent of the way V.P. Singh went after hand-picked corporate enemies, like Lalit Thapar and S.L. Kirloskar. When you specifically target one corporate because you dislike it, it is an even more vicious form of crony-capitalism than merely favouring someone. Because you are then damaging one and in the process helping his rival who you like for whatever reason. If any of this is news for anybody in this government, they are either delusional or plain dishonest.
You can examine some of these instances in greater detail. Take Vedanta for example, obviously the top company on UPA 2?s hitlist. And we are not even talking of the environmental ban on their mining timed perfectly with Rahul Gandhi?s visit there. The way this government has handled the Vedanta purchase of Cairn is a perfect example of the return to the old we-are-the-government-and-we-make-and-break-rules-on-the-fly. Sure, ONGC had signed an agreement with Cairn on expenses and royalty sharing which had become unfavourable to it once oil was found in Rajasthan. But did it mean the government could now arm-twist Cairn into paying this back to ONGC or the deal would never be allowed to go through? The Scotsmen running Cairn have been smart enough to pay up, cut their losses, and run. But to the rest of corporate India this is as clear an example as any that the UPA is back to its older rishte-mein-to-hum-aapke-baap-hotey-hain ways.
That is why Indian business is so silent, even sullen, even when the prime minister has dared to carry out a reform they all wanted at grave risk to his government and himself. It is obviously a reform fully backed by the Gandhi family. But none of them has been talking to modern, wealth-generating, entrepreneurial India. Sonia and the prime minister are cold-shouldering the chambers and Rahul is not seen addressing students at IITs, IIMs, even BPOs that generate so many jobs. There is this touching belief that talking to modern, growing, aspirational India would somehow alienate those that got left behind and are much more numerous. Whether it is politically smart or not is not the issue. The issue is that India Inc has read the winds right, and will continue looking the other way. Unless, indeed, the UPA carries out a course-correction and reconnects with entrepreneurial India.
sg@expressindia.com