Wednesday, October 30, 2013

India's industrial lobbies are crumbling

The return of these institutions to the fold of big business houses and the consequent weakening of executive control in these chambers have damaged their credibility and are detrimental to their sustenance

On hindsight, it is safe to say that India Inc no longer runs through legitimate lobbies. Recent years have witnessed a sharp fall in the quality of leadership at India’s premier business chambers — the Federation of Indian Chambers of Commerce and Industry, the Confederation of Indian Industry, the Associated Chambers of Commerce and Industry of India and the National Association of Software and Services Companies. This has led to sagging morale in business circles, with furious voices emerging from the inside.

The return of these institutions to the fold of big business houses and the consequent weakening of executive control in these chambers are detrimental to their credibility and sustenance. These institutions are more the victims of inner strife than the economic slowdown that has plagued Indian industry in recent months.

It is worthwhile to recall that ‘lobbyism’ is itself a hyper-materialistic term which is often used to refer to the clout of the old boys’ network that uses the backdoor approach to get things done. Lobbying is an established phenomenon in the US, but clearly what may be fine in an alien land is not acceptable in India. Still, some people like a former CII chief (whose untainted reputation lost much of its sheen after the

Radia tapes came into the public domain) have sought to push the culture of lobbyism. UPA2, with its propensity to plunder public resources, has ensured that such systemic ills happily flourish. It is unlikely that the Government’s insensible use of the carrot-and-stick policy which pampered business tycoons, will lead to any improvements. It will only encourage sleaze in business and accelerate the downward spiral in trade.

The crucial issue here is that the Government rarely does anything that is notionally wrong, but routinely falters at the implementation level. The converging of politicians’ business interests with those of the industrialists can only fudge the lines between politics and business.

A recent case in point is the FIR lodged by the CCenttral Bureau of Investigation against Kumar Mangalam Birla. The Government sought to spin the news in its favour but the Supreme Court and a former Coal Secretary did not allow it to hide the Prime Minister’s Office’s explicit mishandling of coal block allocations. Moreover, the UPA’s own Ministers, including Mr Anand Sharma, spoke their mind and expressed displeasure over the Government’s risky adventure against Mr Birla.

The Ministers fear slowing growth in such circumstances — already, India’s corporate entities are turning incompetent. There is also a disconnect between intention and action, making it highly unlikely that the Indian economy will return to its lost growth trajectory soon. There is not much for trade bodies to look into at this point, as the current mess has happened at a high level, leaving no space for third parties to intervene.

The fight is on to save the face of the Government. And, except for the Supreme Court and the Election Commission, no other institution has effective authority to challenge the regime. Through indecisiveness and preferential treatment, the Government is doing its best to damage the entrepreneurial spirit in the country. Unfortunately, no voice can be heard against such moves from the industrial community, instead, it only whines on specific issues wherein its immediate interests come into play. The trade representatives are now pantomime actors.

Besides, these institutions had ceased to be the knowledge institutions long time ago, when motley groups of tainted management consultants begun supplying second-hand wisdom from within the various chambers’ crumbling blocks. Clearly, it is tough to be either on the side of the Government or the industry.

China has controlled its economy and implemented progressive reforms for over three decades, yet, it hasn’t been able to join the league of high-income nations. It is impossible to see India walking a smooth path in the coming years. If the country’s economic performance has to improve, steps must be taken renew faith in institutional frameworks.

Industry is a vital component of the nation’s growth and ‘profit’ is really not a dirty term, if it has some redistributive bearing. Economic growth and redistribution of wealth can happen simultaneously, if the Government and trade and industry learn to work together.Finally, industry chambers too need to wake up and get their act together, if they wish to remain relevant. Or else, they will soon have no role to play at all.
-Atul K Thakur
(Published in The Pioneer on October28,2013)

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