While all this is true enough, the fact is that those in business do not often recognise how the government creates the macro-economic environment that is vital if their businesses are to prosper. What kind of government exists and how it functions are therefore of vital importance to everyone in the system, because India is a long way away from being on auto-pilot. Much of India's economic reforms agenda is still incomplete. If industry argues, as it does, that reforms are needed in the labour market, in the financial sector and in infrastructure, it stands to reason that a weak or unstable government is not going to have the appetite to undertake such reforms. Rapid growth and low inflation do not happen by accident, nor does foreign investment in India double overnight without some facilitating role played by the government. And it should be obvious that when governance standards are far short of where they should be, political instability or uncertainty cannot improve the situation.
Even in the software sector, where it is often said that success came to the country because the government was busy looking elsewhere, the government had a vital role to play in scripting the story. It invested in higher education and in the engineering institutes which have fed the software firms with educated manpower in numbers that few countries can match. The government also facilitated the offshoring boom by setting up international satellite links that killed the problem of distance. And chief ministers like Chandra Babu Naidu went around the world inviting the big international companies to locate their activities in India. When it comes to core sectors, power projects cannot get off the ground if state electricity boards are not solvent or till open access becomes a reality, and investments in steel plants get stuck if governments cannot get around land acquisition issues. In sectors that need effective regulation, you get a free-for-all if there is no proper regulator in place. In short, business has a vital stake in good governance and effective governments, and it is foolhardy to think that if the political situation is in a mess, the rest of the country can carry on regardless.
