I had a revealing conversation with an industrialist some weeks back. Why, he wondered, were so many books being written on the lives of businessmen these days? When I suggested they could be the new role models for the country's youth, for whom accumulating wealth is not sinful, he was shocked. He is fairly successful but a bit unsophisticated, someone you could call an unpolished diamond, and that's why he finds it hard to mask his feelings. The startled look on his face said a million words: with all that we have been up to, how can anybody in his wildest dreams consider us a role model? He is too much of an insider to know that business and ethics aren't seen as going hand in hand in India - even after almost 25 years of liberalisation.
Whenever you think businessmen have finally given up their dodgy methods and are doing business the proper way, something like the espionage racket happens and shakes your belief to the core. What is it that they have not done? Accessing classified information is just one of their misdemeanours. Jog your memory a little, and you will remember that they have bribed, they have perpetrated fraud, they have misappropriated money that didn't belong to them, they have duped their customers and they have told lies.
Even the common man on the street knows that these are the people who are supposed to produce goods and services, create jobs and generate wealth in the days to come, not the government. But their conduct inspires no confidence. These are the people Prime Minister Narendra Modi hopes will soon transform the country through his "Make in India" campaign. But the business community appears blissfully unaware that with every such incident that gets reported in the media, its image takes a severe beating.
I know businessmen who have let go of a thriving business or not chased an opportunity because they found the whole task of "environment management" quite repulsive, but they seem to be a minority. Others are only too happy to play the game. In the last few days, apart from executives of top-notch companies being taken into custody for allegedly running an unsophisticated racket to access sensitive information from government offices, we have also read about a Kerala businessman allegedly crushing a security guard with his luxury car.
Actually, corruption of this kind can be fixed. There is a direct correlation between regulation and corruption - the higher the regulation, greater the scope for malpractices of all kinds. If you look at the scandals that have got exposed in the recent past, you will realise that these have happened in highly controlled sectors: telecom, energy, defence and real estate. The moment discretionary powers are taken out of the hands of bureaucrats and processes become transparent, corruption just melts away.
The biggest example of this change is telecom. The spectrum scandal of 2007-08 happened because the telecom minister had the power to bend rules. The moment the system of allocations was replaced with auctions, corruption ended. There was nothing left to be fixed. Earlier, telecom, too, was a ministry rife with intrigue and subterfuge. Not any longer. The touts and power brokers have been driven out of business.
When the switch to auctions happened, there were apprehensions that services would become expensive and all telecom companies would plunge into losses. None of that has happened: India continues to have one of the cheapest tariffs in the world, and the efficient companies are making decent money. In fact, most of them have become more efficient in the use of spectrum. Only if a resource is bought at the right price will it be used efficiently. And even if a company chooses to bid outrageously, it should bother only the company's shareholders, certainly not the policy makers, taxpayers and subscribers. Thankfully, the government has decided to walk down the same path for coal blocks.
In other areas, too, transparency has helped. There was a time, not so long ago, when accessing applications made to the Foreign Investment Promotion Board, or FIPB, was a minor industry. It helped businessmen keep tabs on what rivals were doing. (Journalists, in the bargain, got the stuff of quite a few breaking news reports.) Now that all items on the FIPB agenda are uploaded on its website, all those shenanigans have ended. It will help immensely if the Centre moves to transparent processes in sectors like oil and gas, and defence also.
However, the biggest challenge will be to reform real estate, easily the most corrupt sector of the economy. The problem is that it is controlled by the states, and the maze of rules and regulations are not easy to negotiate. So it will be a long process. A developer, in his lifetime, can understand the ins and outs of one or maybe two states. That's why you will find that there is almost no developer with large pan-India presence. The speed money that builders pay is so huge that no state has so far shown any move towards reforming the sector. The day real estate is reformed, Indian business will get cleansed of all its sins.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
