By Sanjay Jha
( AN OPEN LETTER TO INDIAN CEO’s WHO CONSTANTLY CRIB, COMPLAIN AND CRITICIZE )
OF late there is a power chorus that indulges in consistent, oceanic castigation of the Prime Minister led by India’s high-profile, mostly billionaire CEOs. Tragically, they reveal shocking ignorance of economic history , comparing the current predicament to the precipitous crisis of 1991. For their immediate consumption, India’s foreign exchange reserves are USD 289 billion ; other macroeconomic fundamentals and India’s “ attractiveness” is an altogether different script. 1991 and 2012 are as different as Angela Merkel and Angelina Jolie. But then, I guess, some are watching a 3D film with reading glasses.
It is an incontrovertible truth that all economies are seriously hurting, this is a global crisis, not an Indian self-suicidal downhill ride in luminous isolation. We need energy-boosters for sure , but the economy isn’t pathologically anemic. Since the CEO’s haven’t figured out the disease itself, they are obviously clueless in giving prescriptions. It is infinitely easier to grumble. Like India seems to be doing with impeccable precision; just complaining. Isn’t Euro a reality and its global repercussions inevitable? There is speculation that a double-dip recession is on the cards. It is a snowball yet, fortunately, not an avalanche. Smile!
In the post-Lehman Brothers period of 2007 , several American companies have reinvented themselves, and remember, some of the most innovative companies worldwide are still US dominated. General Motors has made a stellar comeback. It is terribly churlish of Indian businesses to threaten overseas investment ( thanks to liberal RBI permissions), but only myopic business czars will ignore the world’s largest consumer-labor market. Why don’t you reinvent yourself to adjust temporarily to a relative slowdown? There is no policy paralysis, just a hamstring pull. But who listens? Or understands? Or cares to? Globalization comes at a cost, right ? India will get FII/FDI investments but will also experience capital outflows when sentiments turn negative; basic theory of business cycles, I thought. Elementary economics.
The fact is India Inc practices double standards as efficiently as Novak Djokovic his brutal two-handed backhand. They are beneficiaries of free/subsidized land, large low-cost talent pool leading to huge competitive advantage, tax holidays, access to policy-makers through Radia-type lobbyists, and image managers. The indirect benefits include the government funding of skills development on a massive scale. Given our budget/fiscal deficit there is a compelling case to raise corporate taxes, but redistribution is being conveniently sidestepped as wasteful welfare economics by India’s Big Business. What is your view on Buffett tax, Sirs? Expect pin-drop tranquility, like when Satyam happened. Several of India’s biggest firms, some publicly known, adopt dubious accounting systems to fudge their balance –sheets. Then they give sanctimonious lectures from high-rise podiums on corporate governance! A rare shining lodestar was Anu Aga of Thermax , now Rajya Sabha MP who the CII cleverly shafted to placate a seething Narendra Modi when she asked some acutely uncomfortable questions. So much for ethical and moral standards!!!
While everyone correctly condemns A Raja’s misdemeanors, crony capitalism is rampant , as most industry associations are an incestuous lot and will give non-committal responses on the telecom firms who circumvented, manipulated norms in collusion with the disgraced minister. The government is always at fault, but India Inc is sacrosanct. Rajat Gupta of McKinsey faces humiliation for a few frivolous transactions compared to the Titanic-sized insider trading sport played by several merchant bankers, large brokers and promoter firms with the small unsuspecting investor. It is considered shareholder value creation.
While the state has a humongous responsibility to halt the gravy train, the debate on corruption has been peculiarly lopsided focusing only on the demand-side. The supply-side of corruption is India Inc that over a sustained period has become the new Fifth Estate, the stationary bandit ( unlike politicians who lose in elections and bureaucrats who retire or get transferred) who surreptitiously acquire spectrum, land, mineral, water, mines etc belonging to the aam aadmi. Rent-seekers have flourished with abundant ease of late. Is India Inc ready to come under the RTI and Lok Pal, at least companies using large public resources, those in public-private partnerships, and others above a defined size? Raghuram Rajan has correctly stated that large business houses have assiduously exploited India’s natural resources for private profiteering.
By the way, what’s India Inc’s genuine CSR outlay ? Is it really an authentic single-sided philanthropic act, or links back to the business model through backward integration benefits ? Isn’t it a shame that a country with the fastest-rising super-rich and several hundred millionaires and top notch billionaires needed a Warren Buffet and Bill Gates to lecture us on corporate social responsibility?
The PMs first priority is poverty alleviation and reducing glaring inequalities; millions starve, farmer suicides destroy the India story. So cut the sanctimonious lectures , and frankly, if you want to invest abroad, just go! Capital must find a haven that justifies ROI after all . Do our CEO’s have a dazzling epiphany, a single-shot panacea for India’s diverse challenges? Are we waiting for urban Maoists to take boardrooms hostage? India is experiencing bumpy roads like all, but its pure bunkum to make it appear like we are on the road to perdition. It is a convenient distortion. Like the CEOs genuflecting in a cheesy Bollywood style before Narendra Modi heralding him as the next PM candidate! But then these blandishments get you cheap land at the cost of the common man.
I would love to see how our Canali suited-booted tribe would handle one of UPA’s coalition partners with its quicksilver mood swings if he/she was on their Board. And better still if the Board meeting was being conducted LIVE with 100 cameras witnessing the charade. Recognizing the reality of political compulsions is expected; haven’t we been used to it since the 1990s? Running down Manmohan Singh is inexpedient, opportunistic, impolitic , the government has been stultified by repeated obstruction for illogical reasons. It’s the reality of our democracy. We have limited elbow room. The fact that we have a long way to go is axiomatic, and there is no denying that things can be better, faster. That is a perennial state in democratic governance, anyway. Or even for the corporate world.
Even as most have bitched about India, we have quietly become the third largest economy in the world in PPP terms, experienced steady to spectacular GDP growth despite global recession, made substantial social welfare allocations ( RTE, MNREGA, NRHM) besides creating a transparent RTI mechanism and Aadhaar identity cards. Extraordinary policy changes await approval post a political consensus ( Land Acquisition, Lok Pal bill, Food Security, GAAT, GST, Direct Tax Code, FDI in multi-brand retail etc). The bottom-line is that despite the most negative onslaughts it has received, UPA has actually been one of the most quietly performing governments in our parliamentary history.
India Inc needs to grow up and be less selfish. As Joseph Stiglitz , Nobel prize winner in economics wrote “ Of the 1%, by the 1%, for the 1%” mind-set is prevalent amongst powerful business owners. It needs to change. Maybe they can learn from Howard Schultz.
Schultz, the Starbucks CEO trimmed 900 under-performing stores and posted his most outstanding quarter ever in a recession-slow economy , and has now underwritten a campaign called Create Jobs for USA and talks with relentless passion of American pride , and reinvention and redefinition.
Stop preaching, Mr CEO ! Go practice! And smell the Starbucks coffee!