When Prime Minister Manmohan Singh expressed his disappointment with industry last week, his words were a little disheartening. In my 20 years of tracking business, 2011 is the first year that I saw business leaders come out and express their frustration with the government - in public. From
Deepak Parekh and his letters to politicians, to business heads and lobby groups, all have been squeezed into a tight corner from where there is no option but to come out and comment critically on the way the government has been mismanaging the economy.
"I must confess that it is a little disappointing to sometimes hear negative comments emanating from our business leadership or be told that government's policies are causing slowdown and pessimism in the industrial sector," he told India's top business leaders in a December 22 meeting. "…in a democratic polity like ours and in the era of coalition politics, it often becomes necessary for the government to build a broad consensus on major public policy issues."
If coalition politics is to blame, it falls directly on coalition mismanagement by the United Progressive Alliance (UPA) in misreading its partners, notably Mamata Banerjee, who has threatened to walk out on various reforms the government initiated. As a result, the principal opposition party, the BJP that has been stalling every move of the government in Parliament and making the UPA look like a group of blundering, arrogant and incompetent leaders, has drawn more blood than any other party, ever.
The BJP is not allowing any opportunity to humiliate the government go waste. On its part, the government is lavishing these opportunities on it. BJP opposed the terribly-timed foreign direct investment (FDI) in retail, ostensibly to protect kirana shops. It is opposing the goods and services tax that will end much of the black economy in the system. It is opposing the government's bill on Lokpal. It has even opposed the Pension Fund Regulatory and Development Authority Bill, a legislation that BJP first conceived in 2003.
The energy sector, Singh said, needs urgent resolution and attention. The question is: what is he doing about it? The way his government has reneged on a contractual agreement in the Cairn-Vedanta deal is shameful.
The way it has cornered the company such that it has virtually signed on a we-give-up-our-legal-rights to fight injustice is not something democracies do. With investments running into billions of dollars, investors would be hesitant to invest in the next round of exploration.
"Corruption and better governance also require firm handling," Singh said. "I wish to assure you that our government is serious about tackling these issues." There was a time when we took such words seriously. No longer. A businessman told me companies have been receiving similar notices from the income tax department, asking for the same amount - and summoning entrepreneurs to come in person to meet the official. Since every rupee is accounted for electronically, there is no scope for leakage. But from every person who visits that office, Rs. 5,000 is the price to exit.
This when the Lokpal bill is being debated in Parliament. If industry leaders say they are frustrated, I think it is a good sign - they still have a stake in a rotting system of which they are an active part. Perhaps the greed of corrupt officials has increased beyond the confines of civilised society. If the government doesn't listen to them even now, they will stop complaining because once they move out of India, there will be nothing left to complain about.
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