Differing with Prime Minister Manmohan Singh, who feels the corporate sector has been harsh in blaming the government, leading players in India Inc say a policy paralysis in the government and its inability to push reforms have indeed led to an economic slowdown and Singh's criticism is not justified.
Federation of Indian Chambers of Commerce & Industry (Ficci) president Harsh Mariwala does not mince words and says, “This is a democracy and I see no problem if the industry airs its views. In my opinion, being vocal can bring about a positive impact. There is no harm if you are vocal about the issues you face. There is a problem of trust between the government and the corporate sector.”
Mariwala says the industry body has been getting feedback from its members, clearly talking of a “policy paralysis”, “reversal” and “stalemate” in the government. He had earlier said the business confidence in corporate India was even lower than in 2008.
Mariwala was responding to the concerns raised by Manmohan Singh at a meeting with industry chieftains (including Mukesh Ambani, Ratan Tata and Rahul Bajaj, among others) last week, where he said he was disappointed with the negative comments emanating from the industry. The industry’s blaming of the government for the economic slowdown emboldened forces with no stake in the economic growth of the country, he said.
A similar view was expressed by Finance Minister Pranab Mukherjee last week at the annual general meeting of the PHD Chambers of Commerce & Industry. He reiterated that corporate India should work with the government instead of merely repeating its grievances. He also said the government was trying to build a consensus on reforms, including those in FDI and pension, among others.
But, India Inc says there is a crisis of confidence between the industry and the government, which has become a stumbling block for growth.
Maruti Suzuki Chairman R C Bhargava says, “Maybe, both sides have gone much beyond what they said. But, there is an attitudinal issue between industry and government and a feeling that nothing is being done. The key problem is the bureaucracy, fearful it will be scrutinised even if it makes the right decisions, is taking no decisions at all."
Sajjan Jindal, Vice-Chairman and Managing Director, JSW Steel, says, “The slowdown is a global phenomenon and has had an impact on India. But, a slow decision-making process has also affected it. In the past six-eight months, the industry has been under a lot of pressure.
The impact of the mining ban has taken a toll. Environmental clearances have also been pending. The Land Acquisition Bill in its current form is not industry-friendly at all.”
Refusing to accept policy makers’ criticism that Indian Inc is only airing grievances and not supporting the reform process, many say it is the other way around: The government is not pushing the reform agenda. Says Thomas Varghese, CEO, Aditya Birla Retail, and chairman, CII National Committee on Retail, “All industry associations supported it when the government cleared FDI in multi-brand retail. The government should have persisted with it."
Varghese says the key problem is the half-hearted way in which the government tried to push retail reform. “The government was trying to implement reforms in a manner that it lacked political support. All the back-room work has to be done before the reform has to be launched and not after,” he adds.
A similar view is echoed by others, who say there is more negative than positive news in corporate India. Says Rana Kapoor, founder, Managing Director & Chief Executive, YES Bank, “Currently, somehow, the bad news is exceeding the good news. We are now eagerly waiting for second-generation reforms from the government, in retail, pension, insurance, aviation, etc.”
Kishore Biyani, Chairman of Future Group, the largest retailer in the country, says, “Though it is good the PM is talking about the importance of speaking positive things, I believe companies are talking both positive and negative about the economy. They have always supported the good initiatives of the government."
But, many in corporate India concede the strong stand taken by the industry, especially many leading honchos like Wipro chairman Azim Premji, against the government might need to be moderated. Venu Srinivasan, Managing Director of TVS, who has made no bones about the present economic situation being more difficult than in 2008, says, “The industry is surely seeing some pain. But, it has to moderate its shrill tone and engage with the government”. The question is whether the engagement will turn the tables for economic reforms.
With additional inputs by K Raghavendra Kamath, Somasroy Chakraborty & Viveat Susan Pinto
