The reforms agenda in public discourse is often focused on monetary policy (inflation control), labour policy (flexible labour markets), fiscal policy (how much to borrow), land acquisition (how to make it easy) and so on. This is what economists, academics, leaders of big corporations and chambers of commerce discuss amongst themselves and with the government. However, if one were to meet the average businessman or a corporate leader and ask him what troubles him, you will probably hear something along the following lines:
'“The local village neta and his gang are forcing closure of my factory on the pretext of pollution. Their real purpose is to extract protection money. The police is unwilling to intervene. I can go to the courts but the process takes too long, is expensive and the outcome is uncertain.”“The local community around my factory has a transport union and demands that only their trucks be used to transport goods at exorbitant prices.”
“Our royalty dispute with the government is pending before the High Court for the last 10 years and I have no idea how much longer it will take. I also don’t know what the courts will decide. In the meanwhile, the amount payable is getting compounded at 18% interest in addition to a penalty that is also accruing interest. I run the risk of going bankrupt.”This is, of course, just a sample of what is plaguing the common businessman. Forget about ease of doing business, we have to deal with the pain of doing business coupled with fear of doing business!
Businessmen often wonder why they are treated like this. After all, they and the people employed by them generate tax revenues that pay for our defence, law and order, roads, education, health and sundry subsidies. When a poor household receives a free LPG cylinder under Ujjwala scheme or gets a housing subsidy under Pradhan Mantri Awas Yojana—someone has paid for it. You know who.
Businesses create employment. Today, only 390 million Indians—roughly 40% of the working age population—are employed. Our demographic dividend will come to naught if we don’t create opportunities for new entrants in the labour force. We also have to create additional jobs to pull people out of agriculture. Only growing businesses can do this.
Businesses bring new products and technologies. They are responsible for giving us mobile phone services, drones and internet-connected devices, the new Covid-19 vaccine and medicines to treat tuberculosis, to name a few. The advances in artificial intelligence, robotics and genetics will most likely be led by private businesses. Innovations brought by businesses take society and the nation forward. The United States is the superpower of the world because of super-achieving American businesses.
Despite such contributions, there seems to be a deep-rooted culture in the executive and judiciary of seeking rent, taking bribes and keeping businesses servile. Why do we have a culture that is unable or unwilling to distinguish between good businesses and bad ones? For alleged misdeeds of some businesses, why are all of them painted with the same brush: sab chor hai (all are thieves)?
In my view, there is a realisation in sections of the government that this needs to change. Last year the prime minister said—the first time for any Indian PM—that wealth creators need to be respected. This year’s Budget boldly planned for privatisation of public enterprises. I also get the same impression watching the recent interviews of Sanjeev Sanyal (principal economic advisor), S Jaishankar (external affairs minister) and Nitin Gadkari (minister for road transport and highways). It seems that the government is thinking through a strategy. My fear though is different. If the mindset of the wider political leadership, bureaucracy, judiciary and people at large doesn’t change, any strategy will only have partial success. Peter Drucker famously said “culture eats strategy for breakfast”.
What we need is a change of attitude towards businesses. Unless legally, morally and ethically run businesses grow, India cannot progress. It is a job of every citizen, leader and institution to promote businesses.Many decades ago, in an extraordinarily difficult time, our late Prime Minister Lal Bahadur Shastri gave a clarion call “Jai Jawan, Jai Kisan”. Those old enough to remember this era will recall how this slogan moved the entire country in unison to ensure national defence and food security. Today the slogan can perhaps be modified to “Jai Jawan, Jai Kisan, Jai Vyapar”.
Whatever your opinion of Prime Minister Modi, you must admit that as a leader he commands power and charisma to achieve this cultural change. What we need is the kind of campaigning the prime minister did for Swachh Bharat. We need that kind of zeal and rigour in landing this message through our legislatures, executive and judiciary—that good moral and ethical businesses are critical for the nation’s success. That we must go out of our way to enable them. It is important to make the people of India a stakeholder in economic reforms.
Pramod Kabra
Partner in private equity fund True North LLP
(pramodkabra20@gmail.com)