Delhi and Mumbai are two very different cities, and the relationship between them is fraught more often than not. They carry different weights, nurture different self-images: Mumbai is the home of capital, of efficiency, the outward-looking city on the sea; Delhi is the home of power, of rules, the self-obsessed capital on the plain. These are cliches. But like all cliches, when repeated often enough by those that believe them, they become true.
For the men who matter in Mumbai, the trip to Delhi to ask the government for what your company needs is the humiliating price of doing business in India. It gets better and worse depending on which government is in power and what it feels about business in general and yours in particular, but it never goes away, and it is never easy. Worse, you don't seem to have any control over Delhi's attitude.
For the men who matter in Delhi, Mumbai has a power of its own, the power of money and profits and bottom-lines. Mumbai can make or break a Budget, an economy or a government. Thus, every administration must do a little dance to appease "sentiment". Even Manmohan Singh spent a few years trying feebly to prod Mumbai's "animal spirits" into life before giving up sometime in 2013.
You cannot, thus, expect the two power centres to tell the truth about each other. For Mumbai, every Budget from Delhi is super-duper-awesomeness. For Delhi, every whim of Mumbai's is given respectful public consideration, as emerging from the country's true wealth creators. Beneath this veneer of flattery and unctuousness, India's two capitals are usually rolling their eyes at the other's idiocy.
One of the remarkable things about the euphoria surrounding Narendra Modi's assumption of power was that, for a while, this relationship looked to be permanently changed. If anything, for the first time in history, the new prime minister was far more a man of Mumbai - not the Mumbai of politics but the Mumbai of commerce, of fund managers and conferences and dhanda and, yes, of Gujaratis. He was a proud outsider to Delhi, and articulated that status brilliantly in speeches laden with contempt, expressing exactly what those "air-dashers" to Delhi had been muttering under their breath for years.
It seemed that, under this new detente, things could actually get done. The abysmal lack of trust that had led to stalling private investment and thus, to the slowdown would finally end. Mumbai and Delhi would revive growth together, for once.
Today, 10 months on, that newly-woven relationship is fraying. It has deteriorated faster than anyone thought possible.
After the Budget, in the things that Delhi's policy czars and bureaucrats said in private public, a familiar disdain and a new and unfamiliar anger with Mumbai's demands was visible. And, last week, I had the privilege of being in a few rooms with some of Mumbai's smartest money-men, and the level of their frustration with Delhi's dilatoriness and arrogance startled and worried me.
Here is what has happened, as Mumbai sees it:
First, the doors of Delhi have been slammed shut. Those ministers who thought that they could make policy in open consultation with the business leaders affected by that policy, were firmly told to think again. This is not to say that cronyism has died; it hasn't, as the stock price of Adani Enterprises will tell you. But the idea that Mumbai's capital would no longer be seen as a cartoon villain in Delhi did not last once air-dasher after air-dasher discovered they were even more persona non grata in 2015 Delhi than they had been in 2013 Delhi. The silence in Delhi as K M Birla was indicted will not have helped.
Second, the government has gone after "leakers". True, too much confidential information finds its way to those who are willing to pay. But few in Mumbai see this as evidence of a new and more honest order. They see another attempt to paint big companies as villainous, as thieves of information, when everyone in Mumbai knows you need to know what Delhi is thinking just in order to survive.
Third, the taxman is back. Beloved of Pranab Mukherjee, dear to P Chidambaram, and now the apple of Arun Jaitley's eye. It was thought that the new government would at least signal that business and not the tax inspector was its favoured child, but that has not happened. Most stunning will have been the demands that Cairn India pay in excess of Rs 20,000 crore as tax for a 2006 transaction. If the taxman gets his way even on matters related to retrospective tax, after the finance minister solemnly declared that phase of Indian public finance closed in Parliament, then how can Mumbai sleep safely?
And fourth, the government continues to ask for patience, still promising action in 2016 when speedy changes in 2014. were expected. Meanwhile, corporate earnings, supposed to pick up this quarter, won't improve until the end of the year; but Delhi doesn't care. If the PM is scared of being seen as pro-business, one fund manager asked me, then why should business see this government as its own?
Oddly, Delhi is equally snappy about Mumbai, and as suddenly. There are fewer specific complaints. But there is one big one: the belief that Indian business is asking too much, and sitting on its hands when it should be investing. At the big post-Budget meeting of the five Delhi think tanks, some suggested that companies were just waiting until the government handed out concessions of some kind before it began investing. Bureaucrats openly complain that business is unwilling to make real forward moves, even though the government has worked hard at improving the investment climate. Many say just one big investment by a big company will turn the tide - but that big break isn't materialising.
This communication breakdown is born of artificial expectations, and needs to be repaired. Indian growth will not revive without private investment. And that needs trust. Both Mumbai and Delhi have to work to rebuild the trust that, 10 short months ago, they seemed to have found in each other.
mihir.sharma@bsmail.in; Twitter: @mihirssharma
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
