One can’t but help sympathise with Prime Minister Manmohan Singh. He has become the victim of circumstance, and unreasonable expectations. The markets surge because he decides to keep the Finance portfolio with himself.

Nobody stops to ask whether this was dictated more by choice, or an absence of choices. After all, if he had wanted to be the Finance Minister, he could have anointed himself at the time of forming the government, or even at the time he was forced to shift his then Finance Minister into a job which no one else in his Cabinet wanted at the time.

Instead, hosannas are sung to the tune of ‘happy days are back again.’ Then the markets crash, because he hasn’t ‘done anything’ barely days into the job — and quite unmindful of the fact that he has another, and more important day job to do already!

His legacy is no help either. Burnished by the passage of time, his first stint in the Finance Ministry is now looked back on through the roseate glow of positive recollections.

The many mis-steps and false starts have been edited out, as indeed the vital political leadership provided by the unremembered and unsung hero of Indian reforms — the late P V Narasimha Rao.

Bumbling BJP

The Opposition Bharatiya Janata Party has gleefully seized on the recent Time magazine cover dubbing him an ‘underachiever’ to pillory him for non-performance.

That is actually a more telling comment on the BJP’s inability to turn to political profit, the plentiful political capital it has been supplied with, rather than anything else.

No Opposition party in the world could have hoped to get more, even if it had gone on its bended knees and prayed for it, than what the BJP was gifted with by the accidents of circumstance and a bumbling government combined.

From the fiasco of the scandal-ridden Commonwealth Games, to the ongoing saga of the spectrum scam, to an unending rise in prices, to the unedifying spectacle of two ministers in jail on corruption charges, to the shabby sight of a ruling party being forced to eat crow by its own alliance partner, the BJP was gifted by a benevolent providence with issue after issue to take to the masses and rally it into political victory.

But the BJP is caught in its own welter of confusion and contradictions, unable to capitalise on these issues, and stuck with the prospect of its only potential winnable candidate being stained with something which mere efficiency in administration or the ability to attract investments won’t wash away.

So, to hold the Prime Minister solely responsible for any and every ill affecting the nation is a bit unfair.

But that, one could argue, is the political class for you. They are creatures of the moment, bereft of ideological conviction or genuine insight, driven hither and yon by momentary developments and prospects of short-term gain.

Why tilt at a faceless enemy, when a solitary, identifiable individual is conveniently to hand? So what of India Inc then? They are the new heroes of the new India as far as the same middle-class is concerned. They are the ones who, once the stifling shackles of the licence-permit Raj were removed, showed the world the true potential of India.

The new heroes

They are the world-conquering heroes who fought for, and won India a place at the top table of the world’s great economies. They proved the concept of free market competition and free enterprise. They proved the trickle-down theory by not only getting rich themselves, but creating a vibrant, affluent and above all, consumption-oriented middle class. They are demonstration of Republican theory, that less government is more for everyone else.

What have they been doing in these tough times? The short answer appears to be — behaving exactly like the government they are busy criticising. Where are the disruptive strategies or the counter-cyclical policies to tackle, what admittedly is the most serious set of challenges to be faced by India Inc in recent times?

Apart from whining about ‘policy paralysis’ and bleating for interest rate cuts — preferably with some tax cuts thrown in — corporates have done little to show that they are reacting to the recession in any meaningful way.

Most, if not all the market heavyweights have, instead, chosen to flee to the safety of conservative risk avoidance. Most of the index heavyweights, from a Reliance Industries in the core sector to an Infosys in the IT end of the spectrum, are sitting on mountains of cash, without any credible plan to utilise the same.

Taking risks

Not that saving cash in tough times is a bad thing. It is good, conservative, risk avoiding practice — but avoiding risk is not going to get you out of a recession. As Intel’s co-founder Gordon Moore once famously said, “You can’t save your way out of a recession.”

Intel itself has lived by that motto. In 2001, when the dotcom bubble collapsed, Intel ramped up R&D spending to levels where it made the bottomline barely profitable — but reaped the benefits in sales and profit growth in later years.

A counter-cyclical approach to business, and counter-intuitive spending during tough times, has paid off in the past for companies willing to take the risk. Take the Tata Group. Despite being the largest business conglomerate in the country, Ratan Tata behaved like a risk-taking entrepreneur.

From pursuing the dream of manufacturing an Indian car to buying a steel company several times the size of Tata Steel, to buying out an iconic British tea brand much larger than his own beverages brands to acquiring a luxury automobile marquee in a year when the world’s largest and greatest auto makers were staring at bankruptcy, he took risks at a time when the market was fleeing from it — and prospered. But where is the M&A market in India? Where are the bold acquisitions, the aggressive takeovers? At a time when opportunities are abundant, Indian companies, expected only a few years ago to be major movers and shakers in the mergers and acquisitions market, have gone silent.

A chance to change

The best companies use a recession as an opportunity to try new things, radically change their business model and strategy and explore new markets and opportunities where the risks may be high, but the potential rewards higher. It is also a time to replenish their armoury with the ultimate weapon.

During boom times, corporates cry hoarse about the shortage of talent. During downturns, they are so busy trimming ‘excess’ that they often shave off the very talent which had helped drive their businesses.

This is a great chance for companies — especially the emerging Indian multinationals — to be multinational in more than the locational sense, to put together a top team from the global talent pool. But when was the last time you heard of an Indian company making a daring hire at the top?

The trouble is that India Inc appears to have got too comfortable, too soon. Just a few short years of high growth appeared to have boxed them into a mindset which fears the slightest disturbance to the status quo — and expects somebody else to bail them out.

It is time it stepped up to the crease — and started batting itself out of trouble, instead of waiting for the umpire.


India Inc appears to have got too comfortable, too soon. Other than whine about ‘policy paralysis’, corporates have not reacted to the recession in any meaningful way.


(This article was published in the Business Line print edition dated July 12, 2012)
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