Elections battle may broadly continue to be fought on the age-old paradigms of caste and religion but across the political spectrum, there is now a consensus that corporate investment, even from the hitherto reviled private sector, is a Good Thing (the quaint exceptions are the Left and Mamata Banerjee's Trinamool Congress).
Paradoxically, this near-universal acceptance has been instrumental in fostering the growth of crony capitalism, a symptom of politicians' clumsy attempts to find a short cut to attracting private investment. That is probably why the business community adopts a curiously amoral position on the issue. No industry lobby talks about it, although the issue dominates the discourse on doing business in India. Yet one of the anomalies of this closer, overt relationship between private corporations and politicians in India is that it ultimately constricts the ambit of the private sector.
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This may sound strange if you consider the power some corporate groups appear to wield in shaping policy and the greater visibility of businessmen in national life. But a quick look at the list of India's 20 largest companies by sales over 18 years, from 1995, the year the reforms began to kick in so to speak, to 2013 will show that the private sector cannot claim to have gained the commanding heights (this even though the government refrained from merging public sector companies to create behemoths to qualify for the Fortune lists, the way China did).
Between 1995 and 2000, according to data from Capitaline, 12 public sector companies figured among India's top 20 companies (this included Maruti Suzuki, a joint venture with Suzuki at number 15). This number dropped to 11 in 2005, but only because the government exited Maruti in 2002. But the public sector has continued to dominate the top five rankings, with Indian Oil Corporation consistently leading and the government-owned oil companies bunched within the top 10.
True, these rankings are partly the result of a skewed domestic pricing policy that has deterred private competition in the oil business. But the fact that Reliance Industries has powered itself from number 11 in 1995 to number two by 2005 - the result of its impressively implemented but export-oriented refinery at Jamnagar - demonstrates the private sector's ability to compete.
In the main, the private sector companies that entered the top 10 lists by the mid-2000s are ones that had acquired their critical mass in pre-liberalisation days and are rooted in infrastructure - oil (Reliance) and heavy automobiles (Tata Motors' bread and butter). Big-ticket, government-controlled infrastructure also accounts for the entry of post-liberalisation groups like Adani, Essar and Bharti Airtel in the list. With the exception of Bharti Airtel, B2B businesses not only sustain the list but those that do so depend on central or state governments in one way or another. B2C companies like Hindustan Unilever and Maruti Suzuki, neither of which has government-oriented business, had dropped out of the list by 2013.
All this does not necessarily point to crony capitalism. But it is also true that far too many central or state government projects that are awarded or bid out or businesses that operate with government dispensation carry with them the suspicion, however unjustified, of collusion. Who would think, for instance, that telecom, one of India's feted success stories, would end up in a welter of cronyism-related controversy a decade later. Or that some privately built and operated airports would almost immediately run into accusations of questionable deal structures. The scandal over coal block allocations is a good example of collusion both at the Centre and in states.
Within states too, there is no shortage of companies that enjoy investment-attracting favours from one state administration only to be isolated when an opposition government is voted to power. Uttar Pradesh and Tamil Nadu are perennial examples. This means of doing business creates a climate of inherent instability and it matters since the private sector has become the major engine of future job creation. Corporations tend to be defined by the political group or politician who favours them, making them untouchable for others. The big groups, of course, can hedge their bets by contributing to a wide spectrum of political interests. But India is not Russia, where the oligarchs' political alignments are binary. Here, political power is being increasingly fractured along regional lines, so corporate groups that revel in the favours of a few powerful state satraps may find themselves shunned by others. As a growth strategy, this is a limiting route for companies to follow, a fact that is amply demonstrated by India's business landscape.