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India Inc. – The Voice Returns

India has always had a tradition of flattery and sycophancy, but it was generally seen to happen due to sheer professional and business compulsions. No one wished to displease the big boss and generally wanted to be seen as a flunkey of the boss. Thus, even if the Reserve Bank governor announces a mediocre, dull or second rate credit policy or monetary policy, which was not good for the economy/banking, no bank chief criticises it. They only seek to outdo each other to praise it and give compliments, such that every CMD will be loud in his applause even if he disagreed with the RBI policy. So is the case with policy announcements by the SEBI chairman and stock exchanges, capital market functionaries and mutual funds and so is the case with any budget or other announcement by the Finance Minister and the ruling MPs, industry associations, babus and all beneficiaries of crony capitalism. They all join in a chorus to applaud the FM, seeking better and better adjectives in her praise, often without even bothering to understand the policy announcements and their implications. Even later, when the policies are experienced as flawed and failed, even then these sycophants will not be critical, as in the classic case of the failed demonetisation.

Such chamchagiri of the government can be vocal or also silent. Thus you may be critical of the government policy and you will yet not speak out, but give a silent nod of approval. With a powerful government in power, one is seeing a rise in sycophancy, surprisingly in media too. But that is not what a vibrant democracy like India is all about, where you have a right and responsibility to express a reasoned dissent and difference of opinion and be critical of the government, where its policies are wrong, so that a correction takes place. Nobody in power even dissented against the draconian demonetisation and the business fatalities it caused, nobody has been critical of the government’s failure to resolve the NPA crisis, nobody has told the government that grand announcements are of no use, without suitable execution and nobody tells the government that there is a huge mismatch between its claims of improvement in ease of doing business and the ground reality.

But now the economic slowdown is biting the corporates and the common man alike, one without sales, profits and funds and the other without jobs and livelihood. Corporate profits have been muted, sales have been stagnant or dipping and consumer spending is eroded, as we see in the dipping sales in the auto sector for the 10th consecutive month. Investor and consumer confidence remains at an all time low. With their back against the wall, and June quarter corporate results unnerving them, even those corporate leaders who applauded the pathetic budget of the FM, (except Adi Godrej who had expressed his disappointment with the budget, saying that it is not growth oriented and has failed to usher in any concrete measures to boost growth and create jobs) are now coming out in the open to voice their concern and discontent on the state of the economy and the government’s lack of response to correct it.

Rahul Bajaj the thespian industrialist while addressing his company’s annual general meeting, pointed out to the slowdown in the economy and blamed the government for inaction. He said that with no investment and no demand, will growth fall from the heavens. He remarked that like any government, they would like to show a happy face, but reality is reality. Yet another senior industrialist, the L&T chairman A M Naik said that the private sector is going through challenging times, that GDP growth will be at the 6.5% this year and that it will take another 18 months before the situation shows improvement. He vocally doubted the government and RBI data/statistics about the state of the economy and pointed out that India has not been able to capitalise on the opportunities arising from the ongoing US China trade war, while Thailand and Vietnam have already benefitted. He asked the government to live upto its election promises and said that a lot of openness and reforms are needed. Adi Godrej pointed out that a lot of issues must be fixed, and without doing that the country cannot achieve its true growth potential. He pointed out that unemployment at 6.1% needs to be tackled at the earliest. Even the self confessed Modi bhakt, TV Mohandas Pai, the former Infosys CFO, severely criticised the government’s failure to curb tax terrorism and said that businessmen are treated as crooks.

As the L&T chairman points out, it will take another18 months before the situation improves and a further deterioration of the economy and corporate environment is imminent. Business failures will be on the rise and corporate India will speak up in large numbers. But the corporate stressed leaders will be regretting the fact that they did not speak up earlier and pressurise the government to act fast and in their zeal to be sycophants, let the situation continue to worsen, as we are seeing.

 

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