Needlessly maligning business

Lately, business seems to be receiving negative vibes based on allegations ranging from conspiracy to abetting greed and graft. No responsible businessman supports these traits. Aberrations exist in all walks of life but a presumption of pervasive greed, corruption or collusion in any class amounts to flawed logic. Such an atmosphere creates serious reputational risks for enterprises and the country.

The biggest injustice that can be inflicted on the nation is to keep people in jobless poverty or under-employed (that is, employed below fair-earning capacity). India requires deep reforms that encourage people and businesses to invest, scale up and hire. With the government restricting itself to social goals, infrastructure and agricultural advances, private enterprises must step in.

It is a paradox that India wants massive increases in investment to create jobs and income, and yet the government and the opposition parties seem anxious to convey a “non-pro-corporate image”. This is all the more odd, since the leadership rightly maintains that there is no contradiction between being concurrently pro-business and pro-poor. There is a national agenda where all sectors must play a role.

Till about 1991, the Indian state largely viewed private enterprise with suspicion; ironically it was the trust of society in enterprise that supported it.

Our ethos still encourages one with capital to act in trust for himself, his family and society and do good for the nation with his ability, wisdom and experience. However, capital has an inherent need to earn returns matching business risk, and therefore flows to jurisdictions that best allow this. Ease of doing business has much to do with building and administering trust; simplifying rules and processes comes later. They become relevant only when one decides to do business.

An atmosphere of trust is critical for taking business risks, entering into a contract, or for that matter for the bureaucracy to take decisions. But when push comes to shove why does our national instinct switch so as to demote trust and fall back on populism?

A factor in recent years was allegations and perceptions of crony capitalism; some instances were enough to threaten a mature systemic balance. Ambiguous laws with clouded transparency and scope for discretion can promote a mindset that larger success is driven by relationships. However, business actually seeks legislative clarity, contractual certainty and fair treatment. Instances of greed must be dealt with care, tact and expediency. Public breast-beating achieves nothing.

Every government in the world leverages the natural resources and tax policies at its command to generate economic activity, provide jobs, and enable profits in rational reward-risk ratios. The resultant benefits to society, the exchequer, and expanding business activity and competitiveness are the real holistic paybacks.

Recently, it has been articulated that India can deliver the highest returns in the world. But working here calls for such returns to compensate for risk and uncertainty.

Our leadership exhorts the bureaucracy to take honest decisions without fear or favour. Exhortations cannot override existing law which can at some future point deem proper decisions to be “corrupt” (even without nexus or gratification). It is no one’s case that improper conduct or violation of the law whether by business or otherwise goes unpunished.

Swift judgment in the case of aberrant behaviour builds systemic trust but requires a larger supportive judicial infrastructure and processes, not more laws. Allegations devoid of irrefutable evidence, marked by political expediency, or an extension of outmoded economic thought, threaten the mutual trust of society, business and the government. Like in a family, trust is fragile and needs conviction and perseverance for it to be nurtured.

The writer is immediate past president of Ficci

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