Even as critics of public policy worry about the influence of individual businessmen and high profile companies on sectoral policy, has the voice of “India Inc” become weaker in the councils of decision-making? Have industry associations like the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Confederation of Indian Industry (CII) become less effective in not just influencing government policy, but in espousing and defending the interests of Indian business as a whole?
When a Group of Ministers (GoM) approved a proposal that people displaced by a mining company should get 26 per cent of that company’s profits, it was the public sector Steel Authority of India Limited (SAIL) that first opposed the idea on the grounds that captive mines are not accounted separately in its books, and hence the calculation of their profits is difficult. It was only after SAIL spoke up that Tata Steel did and business chambers followed suit.
Earlier, in the run up to Parliament’s approval of the diluted Civil Liability for Nuclear Damage Bill, it was public sector Nuclear Power Corporation of India Limited (NPCIL) that first cried foul, before it was asked to shut up by the government, and only then did private sector Larsen & Toubro (L&T) and industry associations wake up. Tata Power and Reliance Industries, with long-term interest in nuclear power, chose to remain silent. It was left to a retired diplomat and a nuclear policy researcher to point out that Indian companies would some day become “suppliers” and so, forget about American companies, any Indian legislation ought not to hurt the interests of Indian firms in the business.
In the case of mining policy, we are yet to see what impact the industry’s protestations will have. In the nuclear liability legislation, they had none at all! If individual firms are unwilling to publicly criticise the government, for their own reasons, even business associations have shied away from going on the offensive.
In recent months, whenever industry has been under attack, as for instance in the case of Vedanta in Orissa; or where business interests have been adversely impacted by political initiatives, as for instance in Hyderabad on the Telangana issue; or where vested political interests have pushed policy hurting business interests, as for instance in the GoM’s decision on ethanol pricing, where sugarcane interests have prevailed over those of the chemical industry; neither the so-called “captains of industry” nor the various chambers and associations have stood up to be publicly counted, protesting against myopic political management of industrial policy.
Part of the reason for this is the general decline in the image of Indian business among ordinary people. Allegations of cronyism apart, the increasing tendency on the part of business billionaires to show off their wealth, best exemplified by Mukesh Ambani’s palatial home (and there are many less celebrated examples around the country), while not generating adequate middle-class employment (as the information technology industry has done, and where icons like Narayanamurthy and Azim Premji enjoy a hallowed status, compared to Mumbai and Delhi business billionaires) has partly contributed to this.
This is precisely why the government felt comfortable enough to come forward with a proposal to impose a 2 per cent “corporate social responsibility” tax and business leaders and associations have so far felt uncomfortable opposing it. By now, one would have expected some spokesperson of the private sector to have claimed that they are better in spending money in socially useful activities than government. No one has dared make that claim so far!
There is, without doubt, a general air of defensiveness that has come to characterise the creation of wealth by Indian business. The arrival of a “left of centre” government in 2004 was the turning point. The first response of Indian business to the calls for “inclusive growth” was to pooh-pooh it. Noting the unwillingness of business to understand the new mood of the country, Prime Minister Manmohan Singh went to an annual meeting of CII and expounded his ten principles of CSR and inclusive growth. He was pooh-poohed too, both by business leaders (CII president Sunil Mittal happily gave interviews to the media minutes after the PM spoke saying business knew its responsibilities, thank you!) and by the media, which editorially ridiculed the prime minister.
From those early days of defiance, not reading the tea leaves and the smoke signals, Indian business seems to have lurched to the other extreme of submissiveness. Not only have business associations devoted their annual general meetings to discussions on inclusive growth, inviting all the politically correct bleeding hearts to re-educate them and give them a social conscience, but they have even ceased to defend the interests of business, where they must, against the growing aggressiveness of self-proclaimed defenders of the “people’s interest” within the increasingly assertive community of non-governmental organisations (NGOs).
Time was when one went to an annual meeting of CII to hear Michael Porter talk about how to make Indian industry competitive. Today you may end up hearing the likes of a Vandana Shiva!
Apart from the decline in the image of business leaders in the more recent past, compared to the post-1991 era of industrial revival, the inability of industry associations to make a difference, defending business interests more aggressively, has also made the difference.
Maybe industry associations would regain their elan and credibility as the spokespersons of Indian business if they refuse to function as travel agents for Union ministers, ferrying and escorting media around the world to ensure domestic coverage for publicity-hungry ministers, and act more as pressure groups, forcing ministers to listen more and talk less!
