The last few months have seen a good deal of comment, not least by businessmen, about a paralysed government that is unable to move on its reform agenda, and is caught in webs of scandal. While that is as it may be, little or no attention has been paid to the role of business in creating this denouement. The telecom scandal, the Commonwealth Games deals and crooked government contracts in general have all had a stellar role reserved for businessmen — some of whom are in jail, and others still free. More may emerge on this as the spotlight gets focused on the stacks of money stashed away abroad. On a different but related note, a recent research report had the ring of truth when it said: “It is our contention that notwithstanding the many positives of a growing Indian economy, corporate governance, accounting standards and disclosure practices adopted by some of India’s prominent companies are questionable.”
Compare this with the image projected by Indian business in the mid- to late-1990s, when the rewards of economic reform began first to show up. The names projected then were essentially ethical personalities — Premji of Wipro, Narayana Murthy and Nilekani at Infosys; businessmen with clean profiles who were also winning internationally (Baba Kalyani of Bharat Forge, Suresh Krishna of Sundaram Clayton); and first-generation entrepreneurs making their mark in tech or sunrise sectors, like Anji Reddy and Kiran Mazumdar Shaw. It was as if India had turned its back on the businessmen who had prospered in the days of the licence-permit raj, and that Indian entrepreneurship was flowering afresh in a new, competitive, open environment and confidently taking on the world.
Substantial elements of that picture still hold true, but new images now figure prominently in the mosaic — Ramalinga Raju of Satyam, the Bellary brothers, the owners of DB Realty, Vedanta and others that stand accused of violating environmental norms, Hasan Ali, and companies and realtors that are in conflict with poor villagers over forcibly acquired land. The rising tycoons of today tend to be in the resource sectors, and winners of public-private partnership arrangements. While everyone should not be tarred with the same brush, the political crisis over corruption is precisely because deals have been done. Call it the unacceptable face of Indian capitalism.
In a country that will have very large numbers of poor people for many years to come, the manifest increase in inequality over the past decade and more carries with it an inherent risk. Economists have shown that rising inequality is inevitable at a certain stage of economic development. What gives this a broad measure of public sanction is the fairness of the process — the winners have won in an open market, they have used clean methods, and they have shared their wealth or put it back in the business for productive ends, not frittered it away on conspicuous consumption. Most importantly, there is something in it for everyone — jobs, the hope of a better future, upward mobility from one generation to the next. Take away some of those elements, and it undercuts the legitimacy of enterprise itself.
Yet, the chambers of commerce that were once busy projecting the clean faces of Indian business are now silent. The defence mechanisms – sector regulators, courts and the media – are not effective enough. Shareholders occasionally hammer down a company’s stock price when the CEO buys a plane on company account for Rs 270 crore, but you know that something is going off the rails when a car company readies to launch a new model in India for Rs 16 crore. What are we waiting for — street riots of the kind just seen in England?
