A K Bhattacharya: Silence of chambers

NEW DELHI DIARY

When was the last time you read or heard about a chamber of commerce criticising a government initiative? The question is relevant because this is one input that any government needs most by way of feedback from industry and trade to all that it does by way of governance. And yet if you scan the print and electronic media for the last several months, you will rarely come across an industry association making a negative comment on a government move.

Prime Minister Manmohan Singh announced interest waiver for farmers in Vidarbha. Yes, the government must come to the rescue of farmers hit by successive poor crops and the mounting loan repayment burden. But should this be at the cost of only the state-owned banks? And if no measures are announced to bring about structural changes to prevent a recurrence of events that can engulf these farmers all over again in such financial crises, shouldn't the government inaction on this front be criticised by industry?

Similarly, the government believes in affirmative action by industry to reserve jobs for the socially backward and underprivileged sections of society. It plans to bring in legislation to make such reservations of jobs in the private sector compulsory. Industry is naturally unhappy as they fear that a compulsory enforcement of job reservations will undermine efficiency. But the response from industry associations and chambers of commerce is muted. Some noises are made initially, but even these fade away after a few days of the announcement.

Why have industry associations failed to raise their voice of protest against anything that goes wrong with the government's policies? Chambers of commerce and industry associations were not so mealy mouthed even until the mid-1990s. Industry associations would periodically criticise the government's failure to hasten the pace of liberalising trade and industrial policies. The government's annual budgetary allocations and fiscal proposals would come in for regular attacks from industry associations. But things have changed in the last few years with no public airing of criticism of government policies. Thus, committee reports that become too critical of the government are retracted or withdrawn and peace overtures are made to placate chief ministers who are upset after being criticised by industry associations.

There are three possible explanations. One, chambers of commerce and industry associations have in the last decade grown their businesses in such a way that they are now wary of joining issue with the government in public. Many of them have adopted a business model in which event management (holding seminars and conferences) has become an important source of income for them. The success or failure of these seminars and conferences largely depends on the support and attendance of ministers and senior government functionaries. In such a scenario, it takes that extra bit of courage and independence to be open about criticising a government policy.

Over the years, the government has also become much more sensitive to industry associations' reactions. Today, the relations between industry associations and the government are marked by this recognition of mutual need to avoid criticising each other in public. So, ministers have stopped levelling charges against industry in these meetings and chambers of commerce have refrained from issuing adverse comments on government moves.

Two, most industry associations have reduced their level of interaction with the government and have begun to do a lot more work within industry. Thus, the country's apex industry associations are engaged in identifying missions that are aimed at achieving inclusive growth, enhancing the skills level within industry and ensuring sustainability of development. These are issues that have less to do with the government. So, there is less interaction with government as industry associations are more preoccupied with their member companies.

The third explanation is that today industry associations have worked out a better equation with the government that does not require the two to make public their differences. It is true that industry leaders today have much easier access to the government. Meeting a minister or a senior government official is not a difficult proposition for any industry leader, whatever may be his scale of business. In such a scenario, industry associations do not find it necessary to make public their areas of concern with regard to the government's policies. The government also prefers to have bilateral meetings with industry associations to resolve the differences or problems.

Whatever be the explanation for the industry associations' silence over public policy issues, the relations between them and the government have undergone a significant change. As independent agents, these associations were playing a useful role by voicing industry's concerns or viewpoints on public policies or developments. Thanks to the change in the relations, tracking how industry is reacting to the government's moves has become more difficult. It is equally difficult to ascertain if industry associations are able to resolve industry issues to the satisfaction of all stakeholders in society or a bilaterally beneficial deal is being concluded. To that extent, the new trend of industry associations not speaking out their mind in public is not a healthy development.

akb@business-standard.com