It was Rahul Gandhi’s famous ‘suit-boot-ki-sarkaar’ jibe that, most agree, made a supposedly pro-industry prime minister Narendra Modi shy away from helping industry even when it was obvious existing government policy needed to be changed. Indeed, during demonetisation, the government tended to demonize both businesses as well as businessmen; much of the policy that followed seemed to emanate from a similar belief. So, for instance, the government decided to go after seedtech firm Monsanto – it even tried to cap royalty rates at one point – and it put all manner of price caps on pharmaceuticals and stents, it sold off the seized shares of UK energy major Cairn Energy even as the retrospective-tax case was pending before a global arbitration panel; indeed, the anti-profiteering authority within the GST was part of the same can’t-trust-industry view.
Given this background, it is ironic that Rahul Gandhi’s remarks – last week, in the context of the Rafale deal – should spur the prime minister into defending Indian industry’s record and say that he was proud to be standing besides businessmen in public. Should we insult them, he asked at a function in Uttar Pradesh where several industrialists were present, should we call them thieves and burglars? Don’t humiliate corporates, he said, since they contributed a lot to nation-building. While this got Anand Mahindra, Executive Chairman of the Mahindra Group, to tweet his thanks – “a much-needed vote of confidence at a time when only one unfortunate face of industry was being perceived” – the fact that Modi chose to justify his stance by saying even Mahatma Gandhi had no problem being seen in close proximity with GD Birla makes it clear just how far the pendulum had swung against industry when it came to perception; who would have thought that, after the 1991 reforms, that industrialists would be treated with such scorn?
To that extent, the prime minister’s public appreciation is welcome, but what needs to be seen is whether the government’s attitude towards business will change in a meaningful manner. In the case of telecom, as this newspaper has repeatedly pointed out, government policy of high levies has crippled the sector – so will the new telecom policy meaningfully lower levies? While the prime minister wants higher oil self-sufficiency, apart from high levies, government policy has mostly been unfair; in both oil and telecom, the government has arm-twisted firms to get them to agree to its terms or to pay disputed dues. If the sugar industry is reeling under bank loans and dues to farmers, it is unacceptably high government-mandated sugarcane prices that are responsible; there are many such instances of government policy that have hit industry. Investment levels in the country have, it is true, collapsed primarily due to stressed corporate and bank balance sheets, but there is little hope of them recovering in a meaningful manner unless government policy is a lot more supportive.