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Remember reforms?

Azim Premji has an institutional belief in government. What he essentially announced this week is that many of those in authority aren't doing their job. Chanakya writes.

india Updated: Nov 05, 2011 22:07 IST
Hindustan Times

There's a funny story about Azim Premji. The Wipro chief had just been declared one of India's richest men by Forbes for the first time. But there he was, kicking up a fuss about the lack of a better link road to connect Wipro's Sarjapur campus in Bangalore. With his kind of net worth, Premji could have easily knocked off a cheque and got the road built along the stretch like any other bigwig corporate boss would have.

But not the chairman of Wipro Ltd. His demand was that the government does its job by providing infrastructure. Even if the easiest way to firm up that road in order to benefit his business was to spend his own money and get the job done, Premji insisted that the government keep its side of the social contract and build the road.

This mindset goes a long way to explain Premji being terribly upset recently when he told reporters, "The biggest concern is over the governance issues. There is complete absence of decision-making among the leaders in the government."

Unlike many other corporate houses, Wipro doesn't (need to) maintain a transactional relationship (read: pay the right price and you'll get the job done) with the government. Instead, Premji has an institutional belief in government. What he essentially announced this week is that many of those in authority aren't doing their job.

This stinging criticism comes a month after a group of prominent business personalities including Premji had written a letter to the PM and other politicians bearing a distinct message: "Widespread discretionary decision-making has been routinely subjected to extraneous influences. Possibly, the biggest issue corroding the fabric of our nation is corruption. This malaise needs to be tackled with a sense of urgency, determination and on a war footing.".

In all his critiques, of course, Premji is telling us to look at the one thing that UPA 2 was supposed to deliver: reforms. With parliamentary proceedings clogged up by matters involving the Lokpal Bill and the 2G scam and other sundry matters pertaining to corruption, the nation's policymaking hangs in limbo. Laws relating to foreign direct investment in insurance and retail, land acquisition and the setting up of the goods and services tax (GST) and direct tax code (DTC) are held up as if in perpetuity. With the laws for smoother functioning of industry and business still in the theoretical state and Parliament too paralysed to make them practical, the 'old-style' transactional way of doing business with government is in the throes of making a comeback.

And how has the UPA 2 government, once seen as the executor of India's reforms dream and now as its bumbling executioner, reacted to Premji's critique? By saying that the Wipro man is exaggerating things. After all, said a government spokesperson, didn't the last two Cabinet meetings that took place in the last few weeks result in the announcement of a new manufacturing policy and the clearance of a programme to encourage micro and small enterprises?

But the government can't quite fob off Premji's charges. It is a fact that the UPA 2 has a neat 14 months or so in which it can launch its next round of much-deferred reforms. After that, the window closes and we'll all be forced to shut up and tolerate 'policy paralysis' in the run-up to the general elections.

So what makes this government, headed by the same man who isn't only the posterboy of India's first wave of reforms in the 1990s but also its prime architect, stall when pushing for reforms should have been much easier in 2011? With Premji having already stuck his neck out to mention the absence of decision-makers, I would proceed to say the lack of leadership.

Much has been made of how Manmohan Singh has steered away from politics and left such matters to Sonia Gandhi. In the meantime, the plan seemed to be for the economist-prime minister to formulate and push for second generation reforms. But as matters are becoming increasingly clear, unlike, say, the Indo-US civil nuclear deal in which Singh played a pivotal role to approve and push, no such momentum can be seen in the reforms front.

He's already used up his 'coalition compulsions' card. But surely, a government needs to walk and chew gum at the same time? By pushing for reforms, much corruption - especially of the 'transactional' kind between business houses and government - will wither away. And if the reforms button needs to be pressed, there's no better time than between now and 2014. Manmohan Singh has done it once before. Can he do it again?

First Published: Nov 05, 2011 22:03 IST