India Inc should be firm in insisting on good governance in governmental administration with the least interference in business and industry instead of running to Delhi to get interest and tax cuts and subsidies
The ruling neta-babu nexus is not the only ones who are responsible for the present sorry state of economic affairs. Corporate India, going by the term India Inc, has a major role for its lack of valuable contribution leading to the Indian economy going awry.
Immediately, after Independence, essentially the Post-World War II era conditions necessitated rigid controls and regulations. In the absence of large capital formation there was an urgent need for massive investments in the core areas that saw the rise of the command public sector going into remote areas across the country.
The 1980s witnessed Indian entrepreneurial skills coming into its own with more and more entering the capital markets and the existing companies going for increased public holdings. The stock market boom was on. Little was said of the need for protection—the existing licensing laws pre-empted any worthwhile competition from within or abroad. Industrialists were smug that they could merrily carry on unhampered.
The throwing open of the economy in 1991 under trying circumstances brought about a howl of protests calling for what they termed the need for level playing fields from the captains of industry—the Bombay Club. They were used to jealously to protect their private turfs by taking care of the netas-babus so as to ensure that no one dare enter their protected terrain or activity. Those once opposing licences and permits were now openly seeking it! The liberalisation process not only brought in competition from overseas MNCs but also from the lower-cost budding domestic small and medium entrepreneurs. This was not to the liking of the interests that were so far firmly entrenched and manipulating prices and controlling supplies of cars, scooters and consumer durables. Unfortunately they are still here to stay and they are all past masters at rule bending.
The 2G (second generation) spectrum scam brought out in the open the arrival of a new tribe of fixers called Corporate Lobbyists whose services were availed by some of the biggest and well known names in Indian industry. Their fabulous pay-off charges went to take care of biggest guns all the way right up to the top of the echelons of power at New Delhi. Their retainers made unsuccessful legal bids to stop further exposure by crying invasion of privacy. They didn’t hesitate to resort to backdoor corruption that is punishable under the Prevention of Corruption Act. Today they also oppose vehemently the application of the provisions of the Right to Information Act, even when the public equity holding in their entities and their borrowings from public sector institutions exceeds more than 50% of their own stakes. Their clout is such that they have succeeded so far. They need to be reined in, too. Sooner the better.
The insulated Indian economy has been able to withstand the vicissitudes of the South-East Asian and Latin American financial crisis and the 2008 Western Meltdown, thanks to one astute governor of the Reserve Bank of India (RBI)—Dr YV Reddy—who refused to succumb to political pressures to further open up the rupee.
The post-1990s Indian economy has witnessed a dramatic shift in the economic milieu. It has seen the rise of world conquering heroes who have won for India a place on the top of the world’s great economies; be it G20, BRICS or ASEAN. They have not only disproved the trickledown theory of getting rich themselves but also creating a vibrant, affluent consumption-oriented enlightened IT-savvy risk taking middle class by going on a massive world wide M&A spree hitherto not witnessed—acquiring major international automobile, steel, liquor, chocolate, foods, teas, drugs and pharmaceuticals, IT hardware and software, engineering goods and consumer durables companies. Their appetite for acquisitions remains insatiable. All this at a time when major Western economies were reeling under financial downturns and job losses. The vast Indian middle class with a bludgeoning domestic market has been eagerly lifting all that is produced from here but from abroad too, fascinated as they are by the foreign/imported stuff. It is no small wonder that every large international manufacturer— be it BMW, Mercedes or Volkswagen or white goods or food or retail giants— wants to set up shop here.
It is the same India Inc market heavyweights who are whining about policy paralysis and trust deficit and bleating for interest cuts preferably with some tax cuts thrown in. All of them are sitting on mountains of cash without any worthwhile plans to put them to productive use. They’ve chosen to flee to the safety of conservative risk avoidance—detesting risk taking decisions following the ostrich approach when they could have listened to what Intel co-founder Gordon Moore said “You can’t save your way out of recession”. Intel proved it in 2001 when the dotcom bubble burst. It ramped up R&D spend to levels where it made its bottomline barely profitable but stood to reap benefits in higher turnover numbers and profit growth in later years. Proving thereby a counter-cyclical approach to business and counter-institutive spending during rough times has paid off handsomely.
The best of companies have succeeded in using recessionary conditions as an opportunity to try out something new, by radically changing business model and strategy, explore newer opportunities, products and markets where there may be risks but ultimately reward with a potential towards higher returns in the long run.
The same companies, who cry hoarse of shortage of talents, do not hesitate to issue pink slips during downturns to trim excess forgetting that they often shave off the very home-grown talent that helped drive their business in boom times. They could possibly help develop newer products or improve the existing.
It is rather unfortunate that India Inc still has a mindset of complacency—coming as it did from highly protected conditions moving into a few short years of high growth trajectory and wanting to be hand held at every step.
Instead India Inc should be firm in insisting on good governance in governmental administration with the least interference in business and industry. Mind its own business of keeping manufacture, marketing and services going instead of running to Delhi to get interest and tax cuts and subsidies. Make full use of free market competition and free enterprise. Goad the authorities in getting funds locked up in tax havens for productive use back home.
(Nagesh Kini is a Mumbai based chartered accountant turned activist.)
Thane District Consumer Forum ruled that builder has to fulfil conditions laid by the civic authority while granting OC, even if such conditions are not mentioned in the sale agreement
Thane: The Thane District Consumer Forum has ruled that builder must abide by the conditions laid down by civic authority while granting the occupation certificate (OC), even if such conditions are not a part of the sale agreement with flat buyers, reports PTI.
President of the Forum RB Somani and Member Jyoti Iyer passed the ruling last week on a complaint filed by Sarvottam Co-operative Housing Society against city-based Radhakrishna Developers.
Accordingly, the construction of the 7-story building was completed in mid-2005, but it developed leakages in the first monsoon itself.
The builder did not do anything to fix the problem, nor did he get the society registered, the complaint said. Also, no rainwater harvesting facility and solar water heater unit were installed, despite the conditions laid down by the civic corporation while giving occupation certificate.
The society also said that builder had not returned one of the flats, which he had been using for his office.
The builder argued, among other things, that rainwater harvesting system and solar system were not promised in the sale agreement.
However, the Forum said that the builder was supposed to meet the conditions laid down by the corporation in the OC.
The Forum ruled that the builder must pay damages of Rs9.4 lakh to the society on various counts.
EAS Sarma, former secretary to the Government of India, in his letter to the prime minister said political clout of an individual (Jindal) cannot and should not be allowed to cover up criminality of this kind
EAS Sarma, former secretary to the Government of India, has called for an independent investigation in to the alleged manipulation of laws by Jindal Steel and Power (Jindal) in Orissa.
Citing a newspaper report, Mr Sarma, in a letter written to prime minister Dr Manmohan Singh, said it shows how the ministry of environment & forests (MoEF) twisted environment laws to accommodate a blatant irregularity committed by Jindal, a company that is perhaps promoted by the family of the Congress MP, Navin Jindal.
“...the action taken by MoEF, then headed by Jairam Ramesh, was clearly a coloured one, aimed at ‘regularising’ an offence committed by Jindal in Orissa in violation of the forest laws as well as the Environment (Protection) Act, 1986. Not only MoEF had committed an impropriety of a serious nature but the ministry had also set a bad and unethical precedent that was against the public interest,” the former secretary said.
He added, “Apparently, Mr Ramesh was not alone in this impropriety. His ministry must have been pressurised by the Prime Minister’s Office (PMO) which seems to be omnipresent these days in the scandals that permeate the government, whether it is POSCO, Vedanta, Coalgate, 2G Spectrum, S-Band spectrum, and so on.”
Incidentally, this is not the first time that the MoEF had manipulated the laws and notifications to accommodate the interests of the private companies. “When the ministry found that the draft Wetland Rules notified at its website came in the way of clearing two private power projects in Srikakulam district in Andhra Pradesh, the MoEF surreptitiously withdrew the draft temporarily to overcome the legal hurdles. I registered my complaint before the ministry at that time but the private companies’ hold over the ministry was far too strong for me to succeed,” Mr Sarma alleged in the letter.
Mr Sarma, who also was secretary in the power and finance ministries, asked the prime minister to carry out an independent investigation into the incident of manipulation of the laws to suit the Jindal company. “Incidentally, the same group is involved in other projects elsewhere in the country in which serious human rights violations have taken place. The political clout of an individual cannot and should not be allowed to cover up criminality of this kind,” he said in his letter.