India Transformed

by Rakesh Mohan

  The Glory Years

  The changes in the relationship during Rajiv Gandhi’s prime ministership (1985–89) were carried forward and institutionalized during the 1991–96 period when P.V. Narasimha Rao was prime minister, Manmohan Singh was finance minister and A.N. Verma was principal secretary to the prime minister. Rakesh Mohan (economic adviser, Ministry of Industry), Jayanta Roy (economic adviser, Ministry of Commerce), Montek Ahluwalia (finance secretary), N.K. Singh (revenue secretary) and Naresh Chandra (then Cabinet secretary) also played a key role, making a significant difference.

  The business sector and the government worked as one team on domestic- and foreign-policy issues with day-to-day leadership being provided by Verma. There was dialogue, engagement, consultation, sharing of views, travelling with the prime minister abroad—Davos, Vietnam, Singapore, etc. Much of this new teamwork was quietly done, below the radar and outside media attention. It was a new phenomenon and not a one-off effort. On the business side, some of the key players were Ratan Tata, Rahul Bajaj, Dhruv Sawhney, Jamshed Irani, Jamshyd Godrej and Subodh Bhargava.

  This period represented a new phenomenon in government–business relations, and much credit has to go to the officials who were comfortable interacting with business without, in any way, being compromised. A clear reason for this sense of security among these officials was that the long-term tenures they had served in the government had proved their capability and integrity. Business, too, worked seamlessly with them irrespective of whether they were principal secretaries, secretaries or joint secretaries.

  The ‘colour’ of the relationship between the government and the business sector was transformed from the earlier situation of distance to closeness, from ‘black’ to a cheerful ‘blue’, from mistrust to trust. In 1993 and 1994, the teamwork between the government and industry was at its best. The following were the highlights during the two years:

  The eighteen-member CEO’s mission to Singapore by CII, which spent four and a half hours with Singaporean Prime Minister Goh Chok Tong;

  The detailed feedback to the Indian Prime Minister’s Office (PMO);

  The visit of the Indian prime minister to Singapore in 1994, accompanied by a CII team;

  The lecture by the Indian prime minister in Singapore on India’s Look East policy; and

  The opening of CII’s Singapore office during the Indian prime minister’s visit. The entire exercise was quietly coordinated by the PMO, the Ministry of External Affairs and the CII working in close harmony. India came out looking very good.

  The relationship change corresponded with major policy changes by the government, such as abolishing industrial and import licensing, the Monopolies Act and the Monopolies Commission. Liberalization and deregulation was the order of the day, driven by Manmohan Singh, A.N. Verma and his team, with the prime minister lending political cover. GDP growth rapidly jumped to 7 per cent for the last three years of the 1991–96 period. There was premature euphoria in the air.

  In the post-1991 period, there were amazing stories of public–private partnerships, i.e., the government and industry working together, heralding a new phase of government–business relationship. One particular example continues to this day.

  Davos: Bridge to the World

  The CII has had a strong collaboration with the World Economic Forum (WEF), Geneva, since 1984, which led to a business–government joint effort to use the annual Davos Symposium in Switzerland, organized by WEF, to project India. Davos is the ski resort in Switzerland where WEF brings together the world’s leaders—from business, politics, media, the arts—and the agenda is structured with a bias for discussion of topics key to the global economy and international relations (to put it briefly), created and built under the leadership of professor Klaus Schwab, founder president, WEF, an outstanding world leader himself. CII-promoted Indian corporates joined the forum as members; CII organized an India reception each year, which increased in international popularity year after year. Indian CEOs hosted a separate reception. Indian speakers were included on panels. Indian artists, such as Amjad Ali Khan, performed. Indian prime ministers delivered keynote speeches. Indian ministers and officials participated and presented the Indian perspective. This extended to the states. The first state to become a member of WEF was Andhra Pradesh, and Chief Minister Chandrababu Naidu prioritized the use of Davos to reach out for investment in the state.

  Davos was used as a bridge to the world, with the Indian government, state governments and the business sector, working in concert. This partnership still continues and the investment of time, energy and finance to use Davos for India’s national interest has been well served, year after year. It is an ideal example of government and business working in harness.

  In addition, the relationship with WEF led to Indian participation in their events and meetings around the world, giving Indian government and business a platform for outreach, be it in China, Africa, Latin America or Asia. At the same time, the CII gave WEF a special platform in India with the central and state governments.

  Ministry of External Affairs

  Davos was a classic example of partnership involving the Ministry of Finance, the Ministry of Commerce and Industry, the PMO and the CII. However, there were also outstanding examples of partnership between the Ministry of External Affairs (MEA) and the CII.

  In late 1980, nine years after the creation of Bangladesh, India was given a green signal to organize a major Indian event in Dhaka to be executed by March 1981—a very tight deadline. AIEI (CII’s predecessor body) was tasked to deliver a trade fair, conferences, cultural programmes, etc. at very short notice, just three months. It had to be done and it was done, with trucks crossing rivers, carrying exhibits. The exhibition and related events were so popular that the event was extended, since people from all over Bangladesh were coming to visit. The Indian High Commission in Dhaka led by ambassadors Muchkund Dubey and Kuldip Sahdev were indispensable to the project’s success; Mrs Padma Sahdev fed the AIEI staff, day after day. India–Bangladesh relations took a turn for the better.

  Another case was Mauritius. Shyam Saran was high commissioner and CII organized a ‘Made in India’ show—exhibition, fashion show (Indian fabrics), cultural programmes, etc. The prime minister of Mauritius and the people of the country were wooed by India successfully. Such was the response that the show was repeated during Shyam Saran’s tenure. The MEA and the CII worked hand-in-hand to implement these high-profile events. A third case was in Singapore, where the MEA, the Indian High Commission and the CII came together to stage a similar set of programmes to project India effectively.

  There are many other examples of successful cooperation between the MEA and the CII and the Indian mission. All of these were enormously appreciated and made a difference to bilateral relations.

  The United Front Days

  Post-elections, in 1996–98, with the United Front coalition government, the relationship continued, but with little to show in terms of new policy initiatives except Finance Minister P. Chidambaram’s ‘Dream Budget’ reducing the tax rates. This period also saw the South East Asian financial crisis, lower growth and new pains in the economy and the industries. Businesses sought a slower pace for liberalization and increased protection, a scenario very different from the 1991–96 period. Government–business relations took a somewhat different turn. Dialogue continued but differences arose on the reforms.

  The Vajpayee Years

  When NDA-I came to power in Delhi in the late 1990s, with Prime Minister Atal Bihari Vajpayee and Deputy Prime Minister L.K. Advani at the helm, there was a fresh look at Indian business and business organizations, their role, their political affinities (if any), their capability and competence.

  A number of questions seemed to challenge the government:

  Was partnership and collaboration possible in the true and real sense?

  Was business, which had worked closely with previous governments of other political parties, politicized and politically aligned?<
br />
  Were business organizations trustworthy and dependable?

  Was business only self-seeking or was it able to look at national interest and work for it?

  These were natural, important questions and the process of building confidence and trust was based on actions, not words. The government was favourably disposed to the private sector, but it took a steady process of work to build a climate and environment of working together. What helped enormously was that the PMO had a very senior position of secretary (economic), occupied by N.K. Singh, fully focused on the economy, economic policies, economic growth and interaction with business. This was an ideal structure to forge a renewed government–business partnership, especially since N.K. Singh himself was deeply knowledgeable about economic affairs and was committed to working with business. It was a perfect system at the apex of the government.

  The prime minister’s visits to New York and elsewhere were specific occasions when the responsibility for organization and leadership was entrusted to business entities. So also, when the finance minister of India made overseas visits, conferences and outreach events were organized to showcase India. These were important occasions for outreach to investors in different countries, and the planning and execution were jointly done by the government and business working in close concert. Every visit was used to put together events to promote investment in India. The 1998 nuclear tests by India had led to an adverse reaction and sanctions by the West. The environment had altered. The joint outreach, in this backdrop, became very important, and it worked for India.

  The World Trade Organization annual conference in Cancun was another example of Commerce Minister Arun Jaitley leading a delegation of government and business. Consultations with business representatives to frame India’s negotiating strategy on a day-to-day basis in Cancun was very special; the teamwork under Jaitley’s leadership exceeded past precedents—business engaged with international counterparts on behalf of India; business addressed the media putting forward the Indian perspective, etc. This was a great example of mutual trust and partnership. The commerce minister even included business in his daily morning strategy meetings with senior officials. This was ‘India Inc.’ at work.

  Business did not interact only with the PMO, finance, external affairs, commerce and industry ministries. Science and technology, education, health, steel, chemicals, food and agriculture were some of the other ministries that worked closely with business, focusing on consultations related to development, troubleshooting and growth. Business also interacted with the Planning Commission, which worked on the Five-Year Plans.

  Being Non-partisan

  Business also learnt how important it was to be non-partisan although the Congress had governed at the Centre in New Delhi during 1947–77, 1980–89 and 1991–96. Business learnt about the sensitivities of political parties and how to engage without becoming politically aligned. This was essential learning and practice to maintain continuity of cooperation with successive governments and their leaders.

  A specific example of this was the 1991 suggestion by Manmohan Singh to CII to engage members of Parliament (MP) of different political parties and brief them on economic issues. This became a regular activity with MPs of different states. In August 1991, at the first-ever structured dialogue with West Bengal MPs, essentially from the communist parties, the CII was told by them that it was selling out the country by promoting and supporting liberalization. Countering this with data was critical, and it was done.

  Nonetheless, the process of dialogue with MPs continued quietly and, over the years, there was positive cross-party support to economic reforms. It was hard work. It was sustained with meetings being held during Parliament sessions, the usual venue being the State Bhavan (Guest House), which was convenient for the MPs. Several meetings were held using the state language, since many MPs were not familiar with English.

  It was a huge challenge that Manmohan Singh, then finance minister, had posed. The enormity of it dawned on business leaders with the passage of time, but this initiative was continuously deepened. It still carries on, twenty-five years after it began.

  Ironically, the West Bengal chief minister of the Communist Party (Marxist), some years after 1991, nominated the chief executive of a business organization—CII—to head a major joint-sector company, Haldia Petrochemicals, reflecting the trust and confidence of the communists!

  2004–14: Ups and Downs

  The period of Manmohan Singh’s prime ministership from 2004 to 2014 witnessed many formal meetings but perhaps not the same quality and depth of government–business informal consultations and teamwork as during Prime Minister Vajpayee’s tenure. These formal meetings were not agenda-based and comprised a round of views expressed by the business leaders present. There were too many speeches and too many complaints, but not enough new ideas and little or no follow-up action. Mutual expectations were not fulfilled, leading to increasing public articulation of the business sector’s disappointment with the government, especially post-2009. The prime minister’s Advisory Council on Trade and Industry continued to meet but people appeared to be talking at each other, rather than with each other. No question, the earlier teamwork of 1991–96 and 1998–2004 had broken down, though formal contact and meetings were held.

  One significant occasion was when Prime Minister Manmohan Singh, on 24 May 2007, outlined a ten-point charter of ‘Business Responsibility’ at the CII Annual Conference; he covered labor relations, corporate social responsibility, affirmative action, remuneration for top management, skills development, anti-competition behaviour, the environment, innovation, corruption and socially responsible advertising.

  This was a huge initiative by the prime minister to reach out to business to integrate itself with national development goals and this ten-point charter still holds good. The media, sadly, reacted adversely instead of welcoming his ideas. Business, too, responded less than enthusiastically, thus losing a great opportunity to align with national interest and take new leadership in the country’s growth process. This adverse to lukewarm reaction led the government to step back from deepening its dialogue with business. The prime minister certainly withdrew.

  Track II Dialogue

  Again, the only significant ‘success stories’ were outside media attention, in the successful efforts to forge defence and nuclear cooperation between India and the US and the new beginnings with Japan. The Track II bilateral strategic dialogues played a quiet part, the focus and ambit of these dialogues being on foreign policy areas, not domestic policy. Prime Minister Manmohan Singh supported this process and, in fact, asked that a dialogue with Japan be initiated.

  This process of international engagement to deepen India’s significant bilateral relationships was very much a government–business informal partnership. The US, Japan, China, Singapore, Turkey, Bhutan, etc. were covered in a sustained effort. More such are under consideration, as past results have been positive.

  The States and Business

  In looking at government–business relationships, the state governments must not be ignored. Over a period of time, states have become increasingly conscious of the need to strengthen the state economy and, in that, the key partnership agendas are: the role of business to fuel investment, to give access to corporates outside India and the state, to project the state, etc.

  One constant aspect was cooperation to organize state-level investment promotion conferences. Another was to organize trade fairs or exhibitions that focus on state resources and help in projecting these.

  A classic example of state–business partnership was set in motion in the late 1990s between the Andhra Pradesh government with Chief Minister Chandrababu Naidu and the CII. The two came together to set up a joint task force with the chief minister as chairman and the CII president as co-chair. The task force had the industry minister of the state, chief secretary, industry secretary and other senior officials in addition to select CEOs from CII’s membership.

  This task force w
orked like a board of directors, discussing every aspect of the state’s economic development and strategy. Among other achievements, Andhra Pradesh was the first state to become a member of the WEF, Geneva, and the chief minister participated in the Davos Symposium each year, meeting CEOs of the world individually, inviting them to invest in the state and, literally, working from 7 a.m. to midnight every single day. In all of this, the CII provided constant support.

  This first-ever joint task force was succeeded by a number of other states following similar models. It was a unique partnership strategy and structure. The model was later also extended to specific country-focused initiatives with the US, Japan and Singapore as joint endeavours.

  There are varying models of such partnership. At one extreme is a model where control is exercised by the government with execution by business. Alternatively, there may be joint consultation and implementation by business, which is given more trust and space. A welcome way is when the chief minister and his/her senior officials actually brainstorm on strategy and plans with business and, then, by and large entrust the work going forward to the business organization. Regular review meetings are, of course, a must.

  States have come a long way in projecting themselves as investment centres and, across India, there is interstate competition. All to the good.

  Now, the Present

  The 2014–16 period under Prime Minister Narendra Modi has seen a somewhat different type of relationship emerging between the government and business. Clearly, there appears to be far greater centralization of decision-making with the tendency to seek the prime minister’s view and directions much more than before. This is a new phenomenon.

  CEOs of MNCs seem to have been able to meet the prime minister but not so Indian CEOs. This strategy was unclear to Indian business, which had hoped for a close ‘connect’ and dialogue with the prime minister. Institutions of industry met the prime minister in 2015, according to media reports. These seem to have been one-off meetings. Not a regular dialogue process. Business clearly seeks to have a regular dialogue since the prime minister, personally, is very focused on economy.