A bright, enterprising Indian, who recently turned down an offer to run one of India’s leading industry organizations, summed up the rejection so succinctly as to make sense of the gathering gloom about the country’s economy. This individual, whose access to American leaders short of the president and the vice president has been witnessed firsthand by this columnist, said that the decision to turn down the offer was because industry organizations had lost their relevance in the current lay of governance.
This person of choice who must remain anonymous has several decades of experience of dealing with industry and has had a ringside view of momentous changes affecting India’s economy, including the downs of the 1900s and ups of the early part of the previous decade. When this individual talks of representative organizations of industry and commerce losing relevance it is a story that runs somewhat as follows.
Even when Manmohan Singh, as finance minister in the P.V. Narasimha Rao government, decided to shed the albatrosses that weighed the economy down, the perceived taint about businessmen lingered for long afterwards and politicians would not be seen rubbing shoulders with individual industrialists, at least in public. Under no circumstances would they engage in any open display of bonhomie, such as accepting rides on private planes owned by captains of industry, as they do nowadays; nor did these captains own such manifestations of opulence.
Representative organizations of business continued to be necessary as vehicles of institutional access to the government. Many ministers, of course, had industry connections and vice versa, often more than mere ‘connections’, but these were almost never touted in public.
This columnist has peeped, as a younger journalist, into the daily schedules of prime ministers to find certain slots without names, merely carrying the legend, “reserved”. No one other than the prime minister, his trusted private secretary and the visitor in question knew whom those slots were reserved for, and such meetings were inevitably held at 7, Race Course Road, the prime ministerial residence, and never at the South Block office.
During the National Democratic Alliance government, with the rising importance of men like Pramod Mahajan, things began to change. Even then, such were the reservations about associating oneself with business that before Jaswant Singh joined Atal Bihari Vajpayee’s 13-day government on May 16, 1996, as finance minister, he initiated steps to sell off all his stocks and shares lest there was any appearance of a conflict of interest.
But industrialists gained unfettered access to all levels of government during the United Progressive Alliance rule when fraternizing with the private sector was not only no longer considered unsavoury, but it became a badge of a minister’s progressive and development-oriented thinking. Only few ministers, like A.K. Antony, remained exceptions to this new rule. Such ‘unfashionable’ ministers were mocked by journalists whose media houses had no qualms about deputing half a dozen correspondents to the annual international business jamboree in Davos even as they showed nowhere near such professional interest in villages where the country’s farmers were committing suicide in desperation. Many captains of industry now simply call up ministers on their cell-phones and fix up appointments. The more savvy among the cabinet members meet up with businessmen in the exclusive, members-only reserves of the capital’s five star hotels or similar ones in Mumbai, something that would have been unthinkable at one time.
Naturally, the industry organizations that once represented the collective wisdom — and wealth — of Indian entrepreneurship are ghosts of their former selves. What would have been my role, wondered the individual who turned down the offer to lead such an organization, had I accepted the offer, other than to give out an occasional sound-bite to a television channel, issue a press release, moderate an inconsequential meeting or host a cocktail party for, say, the visiting foreign minister of Tuvalu or Estonia?
But why run down mere industry organizations when Parliament is reduced to the state it is in now — dysfunction during session after session. It is somewhat amusing to see a few economically knowledgeable columnists take up the problem of current account deficit as the critical issue at the root of the current financial problems and everybody else jump on that bandwagon.
Political interests who have been at the receiving end of revelations by the comptroller and auditor general of India have also opportunistically blamed the CAG for blocking or reversing decisions and programmes that could allegedly have prevented the fiscal slide. Indeed!
In the United States of America, periodic surveys are conducted to gauge public opinion about the US Congress, and these opinion polls constantly keep Congressmen on their toes. Arguably, individual members of the House of Representatives could lose their seats in the biennial elections they have to fight if they do not deliver on Capitol Hill in the course of their tenure. Senators are usually immune to such pressures because they serve longer terms of six years, a year more than the tenures of members of the Lok Sabha.
Besides, Congressmen in the US are forced to deliver because biennial elections are, more often than not, a referendum on individual members of the House of Representatives rather than a wholesale contest by one party against another like the Lok Sabha elections. The prolonged paralysis of Parliament added to perceptions abroad of the policy stalemate under UPA-II affected international confidence in the country’s economy. Specifically in the US, visiting policy-makers have repeatedly used Parliament as an excuse, at times not to give in to American demands, be it from the corporate sector or from the Obama administration. At other times, they have pleaded their inability to push policy changes through Parliament, citing coalition compulsions and electoral exigencies. In both cases, it was tantamount to substituting vision, clarity and resoluteness with apologies and excuses — not exactly a recipe for building confidence.
As far as undermining of institutions go, the rot in the political system has spread to the bureaucracy and corroded even institutions which were comparatively immune to the ill-effects of the shifting goalposts: the ministry of external affairs, for instance. There was a time when ‘political clearance’ from the MEA was the bar that politicians in office had to rise above in order to deal with overseas entities. This could be open to the charge that they are devious or have vested interests which may not suit the country.
Over the years, the idea of such clearances has been gradually given the short shrift, reducing South Block’s role just as in the case of representative organizations of industry and commerce. Recently, a newly-appointed Indian envoy went to make the conventional farewell call on the prime minister. When he entered Singh’s chamber, he was shocked out of his wits to find that the head of a company involved in a dispute with the country to which the diplomat has been posted was already waiting for him in the company of the prime minister.
This columnist cannot think of another example of the nexus between politics and big business touching its lowest standard than this incident because the company in question had already led relations between New Delhi and that country to a crisis — and also involved third countries in the process — because of the company’s rapacious business practices there, which had shades of the East India Company’s approach to India.
Such abysmal lowering of all-round standards has enabled individual ministries to progressively run their own independent foreign policies, so to speak, and engage entities abroad, undermining the entire notion of cohesion and coordination in the country’s external affairs. Such a disorganized defragmentation has, in fact, stalled or killed initiatives that had the direct blessings of the prime minister and the US president, initiatives which could have — partially, at least — countered the current blow on the economy.
It will not merely be enough for a post-election government in 2014 to initiate economic policies aimed at reversing the current downturn. It must strive to rebuild institutions and institutional arrangements that have served the country well in the past. Otherwise the history of squandered opportunities under UPA-II is likely to repeat itself.