Opinion » Lead

Updated: March 1, 2013 10:46 IST

Time to call the corporate bluff

Harish Khare
Comment (22)   ·   print   ·   T  T  
The Hindu

The Union budget provides an occasion for the UPA government to end its cosy ties with business houses and recognise the political economy of pain and deprivation

In his memoirs of his years as Finance Minister, Confessions of a Swadeshi Reformer, Yashwant Sinha writes, somewhat regretfully, that “economics in India has always been dominated by politics. My experience as Finance Minister proves this point beyond any doubt.” After detailing many attempts from within and outside the sangh parivar at contesting and suborning his presumably good policies and equally good intentions, Mr. Sinha sums up a Finance Minister’s conundrum: “Elections were important and winning them was also important. But we had to remember our responsibility was not only to the present but also to the future. Good economic policies could not, and should not, be sacrificed at the altar of political gain for the present.”

It remains to be seen whether Finance Minister P. Chidambaram will be able to avoid the “populism of the present.” After all, this will be the last serious budget before the political system drifts inexorably towards partisan battles of the next general election. Hence, the last chance to rectify not just a difficult economic situation but also to rescue it from political opportunism, and to salvage the idea and principles of economic reform from a soggy moral calculus.

In the process, Mr. Chidambaram also gets another shot at restoring the United Progressive Alliance dispensation’s reputation as competent manager of the national economy. On a personal note, he can be expected to want to use the budget to reverse the damage the economy suffered under Pranab Mukherjee these last three years.

Three obligations

However, a budget is not just an exercise in balancing books; it is the finest instrument for showcasing a regime’s political philosophy and notions of public morality behind its economic priorities. The power to impose taxes — and the expectation that citizens should joyfully submit to this demand — carries with it the ultimate democratic responsibility. When on February 28, he stands up to present his budget, Mr. Chidambaram will have to be mindful of at least three specific obligations that any Finance Minister needs to always keep in mind.

First, the budget cannot be an exercise in favouring and rewarding (or punishing) this or that business house. Easier said than done. Mr. Chidambaram is known to have friends in the corporate crowd. Perhaps it would be unfair to suggest that the Finance Minister would allow his friendships to cloud his judgment; nonetheless, it will not hurt if he were to be reminded of The Economist’s sound advice to policymakers: “promote capitalism, not capitalists.” This decade-old mantra remains valid and Finance Ministry mandarins will need to demonstrate that they are capable of making a distinction between the shabby interests of this or that capitalist and the healthy requirements of a complex and lawful economy.

There are good political reasons to heed this sage advice. The Finance Minister knows — as do his colleagues in the Congress party and the government — that much of the UPA’s political difficulties have arisen on account of bad blood among the business houses. The genesis of the 2G controversy can be traced to greed and rivalry among corporate honchos. This un-moderated rancour within the corporate world soon sought — and found — passionate partisans and motivated advocates in ‘civil society.’

A mock anti-corruption “movement” was unleashed to distract attention away from the excesses and illegalities of the corporate world. If Mr. Chidambaram still chooses to play favourites among the corporate houses, there will be a heavier political price to be paid by his party.

Business rivalries have already produced a different kind of disequilibrium. Corporate disputes have allowed the Supreme Court — rather some judges — to impose their own ideas and principles on the political executive. Judicial interventions and pronouncements are then worked upon to crank up anger and partisanship against selected political rivals.

Nonetheless, it must be presumed that the Congress has not totally shut down its political antennae. Its leadership knows that many of these captains of industry have an interventionist political agenda. It is no secret that a sizeable section of the Mumbai club is keen to rearrange the ruling arrangements in New Delhi around, say, a Sharad Pawar or a Narendra Modi after the next Lok Sabha elections. There is no earthly reason why the budget should seek to mollify these very greedy and politically ambitious business houses that have proved so intractable these last few years. Rather, the corporate bluff must be called.

Promoter of social good

Secondly, the budget should reveal a government that is not just wedded to the idea of wholesome public interest but is also cognisant of its obligations to be the ultimate promoter and protector of the social good. This basic democratic obligation has somehow been lost sight of in recent years. The budget provides yet another opportunity to the UPA government to satisfy the citizens that it is not in thrall of crony capitalism. It is not a mere platitude. This is an imperative, all the more because there are at least half a dozen senior Cabinet Ministers who are known for their proximity to this or that industrial house, and who at times find it difficult to resolve the conflict between their oath of office and their unhealthy ties with these super-affluent gentlemen. It is this soft corner for a tainted corporate crowd that has fed the perception of collusion and contributed to the alienation of the middle classes. The middle class quest for lawful governance cannot be satisfied without bringing the so-called economic entrepreneurs within the ambit of the law.

Thirdly, Mr. Chidambaram has an obligation to use the budget to signal that the democratic system has the will and the stamina to roll back the corporate offensive in running this country’s national priorities and its collective affairs. No doubt, recovery of the Indian Growth Story is a national imperative; no doubt, the global economic slowdown has complicated this recovery; and, no doubt, “animal spirits” need to be unleashed. Yet, it should be unacceptable to liberal and sensitive voices that the national narrative has simply been hijacked by the presumed need to appease market sentiment, that too at the expense of democratic values. As a centrist party, the Congress in particular has to be always cognisant of the larger political economy of pain and deprivation. A democratic government cannot act as if it has no option but to behave like a hostage to the manipulators of the market sentiment.

Striking an equilibrium

Above all, the state-market equilibrium needs to be reworked in morally defensible terms. Even within the framework of a liberal economy, it is the obligation of the public authority to ensure that the relationship between the corporate and the citizen is a balanced, fair and two-way affair.

It is the task of democratic governance to see to it that the citizen as a consumer gets a sense of fairness, and is not being helplessly taken for a ride by large corporate organisations every time he or she makes a commercial transaction. Many business leaders in India think they have arrived, and that they neither need nor care for the “political crowd” and its democratic obligations. In particular, the business leaders are prone to believe that they are entitled to chafe at any suggestion of lawful restraint on their greed and profits. On the contrary, there is more than a hint of a threat: if elements of the policy regime are not arranged to the satisfaction of corporate interests, “they” will take their investments out of India to friendlier markets. This attitude has already produced unhappy economic and political aberrations.

The larger democratic arrangement has lost its moral lustre and the political and constitutional system has incurred a debilitating legitimacy deficit partly because there remains a perception of collusion between the public authority and the corporate practitioners of unethical practices. Recovery of the lost moral sufficiency of the economy can no longer be postponed.

(Harish Khare is a veteran commentator and political analyst, and former media adviser to Prime Minister Manmohan Singh)

More In: Lead | Opinion

It is incumbent on the government to create the egalitarian, just society by devising economic reforms such as taxing the super riches, providing tax benfits to lower and middle class people, FDI,rather than colluding in crony capitalism and exploiting the natural resources for the greedy corporate houses. Crony capitalism and banana republics annihilates the prosperity of the nation's common people for the few bussiness houses.

from:  santhosh k
Posted on: Mar 1, 2013 at 17:33 IST

Influence of corporate houses on politics and politicians is a bitter
reality and no political party can afford to deny it. Another truth is
that a country like ours, with huge population of poor and a
relatively unsatisfactory record of governance, can hardly depend
upon good schemes and good intentions of the governments.
Implementation is the key and during the last sixty five years we have
singularly failed to use our resources for achieving maximum welfare
of the poor and under-privileged. We do have laws, which are not
implemented in spirit, as can be seen in the case of the Consumer
Protection Act or the latest Right to Education Act.
Since Mr. Harish Khare has advised Shri Chidambaram to avoid providing
help to this or that corporate house, I wish to end this comment by
giving an example of indiscretion on the part of minority government
led by late Shri Inder Kumar Gujaral. It sanctioned hike in pay and
benefits of the govt. employees without any moral authority to do so.

from:  Narendra M Apte
Posted on: Mar 1, 2013 at 16:16 IST

"A mock anti-corruption “movement” "...really?
After assigning blame on world economy, internet users and all and sundry, now we assign blame on the greedy corporates?
Aren't there supposed to be Government entities to ensure that the corporates did not intervene public policy? Who was in charge of that?

from:  Shankar
Posted on: Mar 1, 2013 at 15:37 IST

The way the Finance Minister allocates funds to certain groups/ activities clearly reflect this an election oriented budget wherein they can pocket thousands of crores that can go in to election spending. Where the really have to go is not seen the allocation. Still the government is looking at green revolution technology in agriculture and allocating the funds for such technology but failed to allocate funds for the change -- organic inputs. That shows still the government is looking at corporate culture. FM allocated 7 lakh crores as agriculture loans but failed to mention how much is collected and if not where that money is going. FM says Nabard will look in to building storage at panchayat level but failed to tell how much he allocated in his budget towards it. He failed to look in to power and irrigation sector which are also primary sectors in agriculture growth.

from:  Dr. S. Jeevananda Reddy
Posted on: Mar 1, 2013 at 05:58 IST

It is certainly again proved that it is not the govt leading this democratic country,It is the private companies seems to be taming us.I doubt wether india is under industralist sector or wether democracy is at them?However it is the middle class who suffer a lot in between this.Democracy is not one's property,It is equal to all and Every one is in this part of questioning of this budget."UPA be prepared of 2014's FUTURE TSUNAMI".

from:  sairam
Posted on: Feb 28, 2013 at 21:59 IST

Considering the fact that congress is nearing to the completion of two
consecutive terms at the centre, it can go for the kill by focusing on
economic development rather than having cosy ties with industrial
houses. This requires courage and commitment from the congress party.
Funding from corporate honchos might help in winning elections
once/twice but it definitely wont help for winning consecutive elections
in the long run, what is required is sound economic principles and
policies. Hope congress realises this!!

from:  ranjithp
Posted on: Feb 28, 2013 at 20:45 IST

Past few years have shown to the public, the nefarious nexus between
the politicians and the corporate houses. In democracy, the only
weapon in the hands of the general public is the vote. But, the
choices before the public is like the choice between the fire and the
frying pan. A dimensional change is really required for our
democracy to function with greater accountability and to instill
confidence in the voters.

from:  Srinivas
Posted on: Feb 28, 2013 at 17:43 IST

Certainly the political profit-loss balance sheet is bound to provide
a frame of reference to budget- making. But remaining in power should
not be the prime aim of policies. Some right, bold measures are needed
to keep the ship sailing in the correct direction.
Second, Indians have remained a pillar of development with one of the
highest rates of savings. The fault lies in spending. Reforms are
narrowly defined as bringing in FDI. Reforms in governance are
anathema to the ruling echelons. If corruption is the monster to be
tackled, do not keep shifting the blame. Historically, the the
spontaneous marshaling of the anger and energies of the youth, the
middle class and above all women augurs well for dreaming of reforms
empowering people. Which party is going to lose or gain is only
secondary to national interests. A change usually breaks the vested
interests for good.

from:  kaliappan Ranga
Posted on: Feb 28, 2013 at 16:42 IST

For a change, Khare brought about a sage advice to Congress party in general and Chidambaram in particular that they should stop favoring one corporate family against another. In fact this has been what Congress has been doing for the last 60 years after independence. But like the tiger grown up on slow feed of its mouth, same corporates have started their game in a sort of blackmailing the politicians for more favors. However Khare could not hide his anti-Modi stance by bringing out his name that same industrialists who have been with Congress are trying to bring up Modi to the national scene, which is some what presumptuous knowing fully well that Corporates are greedy and want flesh like a tiger cannot be a pet animal any where.

from:  MVJRao
Posted on: Feb 28, 2013 at 15:54 IST

I still cannot comprehend what event in the last 10 years led the author
to conclude that such a thing exists - "United Progressive Alliance
dispensation’s reputation as competent manager of the national economy".
The economy is in a recession, the fiscal situation is bad and inflation
is high. And it has been like this for several years now. It would be
foolish to assume that the enormous amount of losses caused by the scams
do not affect the economy.

from:  V G
Posted on: Feb 28, 2013 at 13:52 IST

Yashwant Sinha , in his memoir, has rightly said that budget is
politicalised. His thinking that country's interest should be given
priority-but who hell these political classes care for country's
interest ! They are more interested in thievery, thugy, dacoity,
corruption etc.

from:  K K Singh
Posted on: Feb 28, 2013 at 13:40 IST

It is unfortunate that Harish Khare who is 'political analyst' gets an opportunity to write about economic issues and ends up doing a bad job.These pro Congress journalists are looking for a scapegoat to blame for the economic crisis India is facing.Please , it is not the 'Mumbai club' or the big bad corporate houses who are responsible is indecisiveness of this government driven by Sonia Gandhi and fronted by Dr.Manmohan Singh...oh veteran commentator have the guts to say it.

from:  Peter Chettiar
Posted on: Feb 28, 2013 at 13:34 IST

Mr.Khare ex advisor to MM Singh preaches the corporate demons ill doings
now. What did he do when he was the advisor? He knows that
politicians,corporate big wigs and administators of the country are
looting after the british left india.Why crocodile tears now? No use as
the water is above our heads.

from:  s.raman
Posted on: Feb 28, 2013 at 13:25 IST

Nice write-up.Especially considering writer being an insider,I would
like to hear more about "A mock anti-corruption 'movement'".Looking
forward for more articles from former media advisor to PM.

from:  Prakash
Posted on: Feb 28, 2013 at 13:17 IST

The author and all of us are talking about budget and politics and good policys.And we are all missing the point that the Indian economy under UPA is hurling towards disaster or lets call it a melt-down similiar to the ASEAN crisis of 1997.
All economic indicators if scrutinised without political bias ,points towards a sinking economy .
The current account deficit – the gap between the country’s external earnings and expenses – is heading for an all-time-high record of over 5 percent of GDP this year.
As at the end of September 2012, India’s external debt was 25 percent higher than our total foreign exchange reserves at $365 billion. It is worse now.
Hot money is what India is attracting more of right now &what comes in easily can go out even more easily – to our cost.
The merchandise trade deficit has balooned to 170Bn$ in 10mnths of 2013.
The INR could easily dip to Rs70/usd soon and if the flight of hot-money starts,god save a meltdown like ASEAN 1997.

Posted on: Feb 28, 2013 at 12:55 IST

I fully endorse the views and comments of Mr.Khare.The government needs to be sensitive to the needs of the common man and should abstain from favoring any industrial house.
As the author has rightly pointed out in his balanced article, there are plently of macro-economic and global challenges that need to be addressed. Our honourable Finance Minister has a tough balancing act to do.But in the end, we fervently hope that economic sense takes centre stage and precedence above all else.

from:  Sunil Bharadwaj
Posted on: Feb 28, 2013 at 11:21 IST

Good but tardy article. This should have come earlier when budget making
process would be going on so that inputs or rather suggestions from this
article could have been taken into account. Today, FM will present
budget in the parliament so it is too late to accommodate opinion
expressed in this article. But anyway, the budget can be analysed based
on the rationale presented in this article at later stage.

from:  Amit Kumar
Posted on: Feb 28, 2013 at 11:10 IST

Demonizing corporates will not solve this country's economic problems. The problems lie elsewhere. Even the so called capitalist countries who "socialists" and "communists" hate have better & comprehensive social security systems. Something that even China does not have. (It may have lots on paper) We always hate rise in taxes, fares, tolls expect government to provide us everything by printing notes. The problem also lies with our "socialist" government. Other than governance the Government wanted to do everything in 1960s, 1970s and 1980s. Thats where the demon lies. Hope readers agree with me.

from:  Balram Rathod
Posted on: Feb 28, 2013 at 11:09 IST

It's an open fact that politician changes the policies to benefit the
corporate houses. It is two way transaction, big corporate houses fund
parties' election expenses and in turn politician benefit them by making
policies in favour of them. The budget is always short term in vision
that benefits the ruling party to keep their party in hunt. Thus it
requires courage to bring reforms and this time too I can't see this

from:  Akshay Dhadda
Posted on: Feb 28, 2013 at 10:25 IST

I will not be surprised if the Ambani Group(s) writes the budget and the Finance Minister proof reads it for spelling and punctuations to present it in the Parliament as his own.
After all he is a Harvard Alumini.

from:  mani sandilya
Posted on: Feb 28, 2013 at 08:31 IST

Hope the `animal spirits` in budget-2013 are protected by Government
for market competition only & not to `kill and eat` up the players and
stakeholders other then the owners.Strangely ignoring the familiar
Indian references to Kautilya's Arthashastra, the finance minister, in
his 2012 budget speech, quoted from the Shakespeare's Hamlet."I must
be cruel only to be kind."In subsequent media interviews the FM was
quick to score by saying we are still better than Europe Crisis.
Hamlet the prince of Denmark The Tempest ... Hamlet explains that he
does not like his mother marrying the next King of Denmark so quickly
within a month. It is unfortunate that the helpless FM Pranab
Mukherjee last time was committed like in royal marriage to several
queens to protect the interests of few crony corporate.How the
business hungry government listens to the survival advice of Harish
Khare & correct the trickle down economy crisis in line with 15th.Aug-
speech of President of India needs to seen ?

from:  Rakesh Manchanda
Posted on: Feb 28, 2013 at 07:35 IST

A very incisive analysis. It would have had some impact on the line of thinking of both
politicians as well as the thinking public ; if only this article was not posted only 24 hours prior
to the presentation of the budget. The floods are already above the necks of an average
citizen and nothing is going to lessen the effect of the carnage.

from:  S.Sugunakumar
Posted on: Feb 28, 2013 at 05:13 IST
Show all comments
This article is closed for comments.
Please Email the Editor



Recent Article in Lead

Basharat Peer

When messengers shoot the message

Apart from insensitivity and boisterousness, it was the combination of jingoism and the relentless advertising of India’s aid efforts by television reporters embedded with the Indian forces that led to the intensely hostile reactions from the Nepalese. »