PMs bold advice to the Corporate - why will the genie listen to the master?

Our Prime Minister is often (mistakenly according to his colleague Mani Shankar Iyer) given the credit for what is popularly called the LPG (liberalization, globalization and privatization). Letting the free market situation to emerge in India through the consistent economic policy change (called economic reforms by some) whereby the top of the deck corporates reap all the benefits and the bottom of the pyramid is just about sustained through dole outs. Now the fundamental of the current market paradigm according to economists is that each one to their own, the free market believes that the more selfish the person is the better she would compete and the more healthy it is for the overall health of the market. Period.

Individuals and companies play in the market to maximise their returns of investment, whether it be financial investments, it be career advancement or expansion and acquisition, the fundamental rule is aggrandizements. The methods and tools of the market paradigm are designed towards this purpose, it cannot behave differently. Having let the genie of the market paradigm out through his personal initiatives and initiatives for which he is credited, it was surprise to find the PM make the following statement. Perhaps, the realization that, 'there is enough for every man's need and not everyone's greed' has suddenly hit the PM or there are signs of imminent break out sooner than later that lead to this rather introspective muse. The place where he chose to do it, just like my earlier posting of Iyer's talk was amidst the industrial captains! He must have looked really stranger there.

It is a first in many ways, I don't know when was the last time in the post cold war era an Indian leader openly said that we cannot afford the wasteful western lifestyle. Is this a statement on the much celebrated and proclaimed 'American way of life' that the Super power would want us all to adopt? I think this is perhaps the most striking part of the speech for me, then asking the corporate captains to take a pay cut requires a lot of courage, I do hope he follows it up with a similar request to his own brethren Members of Parliament whose income and perks put together is a major drain on the exchequer though negligible compared to the corporate standards. He also talks of decency and greed being the boundaries of corporate profit maximization, tough luck, neither of these are regulated by the government or anyone else. We have celebrated and venerated Dhirubhai Ambani as a corporate legend, we have even made movies on his life, increasingly our corporates tell their employees and share holders that 'greed accha hai'! The consumer is wooed forever with the promise of any number of choice of products in all categories, and the advertisers go over board to emphasize that it is fine to over consume and all this is the outcome of the LPG.

Anyway, the following are the excerpts from his speech, use the link to read the larger transcript (though rediff repeats itself in reporting)

Source: http://www.rediff.com/money/2007/may/24pm.htm
The Indian industry's success in wealth creation is worth celebrating, but showing off the riches through ostentatious parties is as good as insulting the less privileged and stoking social unrest, Prime Minister Manmohan Singh said on Thursday. Apparently turned off by extravagant weddings and other parties thrown by the "rich and the famous," he cautioned that "rising income and wealth inequalities, if not matched by a corresponding rise of incomes across the nation, can lead to social unrest."

Inviting the industry to be the government's partner in creating a humane and just society at CII's annual general meeting here, the prime minister wanted corporate India to first resist excessive remuneration to promoters and senior executives and reduce conspicuous consumption -- as it was "socially undesirable" and "environmentally unsustainable."

"We cannot afford the wasteful lifestyles of the Western world," he said, reminding the industry that India, with over one billion people, ... faces the problem of scarce natural resources on per capita basis.

...He also said that corporate social responsibility must ... be based on the idea that the wealthy have an obligation to society and to nature.... "The time has come for the better off sections of our society to understand the need to make our growth process more inclusive."

Singh said unless workers feel they are cared for at work "we can never evolve a national consensus in favour of more flexible labour laws aimed at ensuring that our firms remain globally competitive."

The prime minister also made it clear that operation of cartels by groups of companies to keep prices high must end."It is unacceptable to obstruct the forces of competition from having fair play. It is even more distressing in a country where the poor are severely affected by rising commodity prices," Singh said.Terming cauterisations as a "crime" that goes against the grain of an open economy, the prime minister said: "Even profit maximisation should be within the bounds of decency and greed."

May be the PM might have felt like a stranger to them, soon there may be news paper columns questioning his sanity, I won't be surprised if someone suggests his name for the next President, a way of saying let us shoe him up, there might be mild reminders that the market cannot accept this by twenty minute political pundits in popular news channels.

The genie would refuse the master is sure by the response from the corporate houses, not one leader actually used the opportunity to make any dramatics and say that he would personally adhere the PM and lead by taking a 5% cut even. Shows the kind of stuff our corporate leaders are made up of.

In Tamil there is a proverb that once you have lost your eyesight it really doesn't matter if you learn suryanamaskaram (a traditional set of yoga postures normally practiced facing the sun at dawn) or not. Mr. Manmohan Singh seems to be doing just that.

A Sincere Ministerial Admission: Read Mani Shankar Iyer

I always remember Mani Shankar Iyer for being the man who wrote all those one liners for Rajiv Gandhi. If my memory is correct, Iyer came to prominence (or notoriety depends how you see it) by being part of the new young brigade around Rajiv Gandhi. Many of that group are no longer active in the Indian politics, Arun Nehru, one doesn't know where he is, long since I saw his columns in insignificant news papers, Arun Singh was last heard of during Kargil when he was brought out of self confinement to advise the defense ministry, Iyer is currently relegated to an insignificant post in the ministry away from the lime light reducing the opportunity available to exhibit his one line acumen. I realized that he is not very popular with the current powers and perhaps is retained due to courtesy. (By the way, I think he is one of the best MPs today in Tamilnadu, I have spoken to many sections of people in his constituency and almost everyone has something good to say of him there).

Then I got to see this speech by him, rather sincere and circumspect. Under all the celebration that goes on about the 'growth' and 'development' this is a reality check that is worth reading -

Source: http://www.indianexpress.com/story/29112._.html

‘I was always Leftist. Economic reforms made me completely Marxist’

Mani Shankar Aiyar

A few weeks ago the newspapers reported that the number of Indian billionaires had exceeded the number of billionaires in Japan, and there was a considerable amount of self-congratulation on this. I understand from P. Sainath that we rank eighth in the world in the number of our millionaires. And we stand 126th on the Human Development Index. I am glad to report that last year we were 127th.

At this very fast rate of growth that we are now showing, we moved up from 127th to 126th position. This is the paradigm of our development process. In a democracy, every five years the masses determine who will rule this country. And they showed dramatically in the last elections that they knew how to keep their counsel and show who they wanted. We, my party and I, were the beneficiaries and we formed the government. Every five years, it is the masses who determine who will form the government. And in between those five years the classes determine what that government will do.

In determining what that government will do, the CII has played an extremely important role. I am not surprised, as that is its job. It represents industry, and therefore it argues for the interests of the industry. Industry has been enormously benefited by the processes of economic reform that we have seen in this country over the last 15 years or so. But the benefits of these reforms have gone so disproportionately to those who are the most passionate advocates of reforms that every five years we are given a slap in the face for having done what the CII regards as self-evidently the right thing for this country.

It is a sustainable economic proposition, because our numbers are so vast, that there are perhaps 10 million Indians who are just as rich as the richest equivalent segment anywhere in the world or in any group of countries. There are about fifty million Indians who really are extraordinarily well off. That’s the population of the UK.

But if you look at the 700 million Indians who are either not in the market or barely in the market, then the impact of the economic reforms process, which is so lauded by the CII, makes virtually no difference to their lives. That is why there is a complete disjunct between what the democratic processes are trying for in the short run and what those who have made an enormous success of our achievements in the last fifteen years deem to be, at least in the short run, their own requirements.

So when you talk of a nine point two per cent growth rate, it becomes a statistical abstraction: 0.2 per cent of our people are growing at 9.92 per cent per annum. But there is a very large number, I don’t know how many, whose growth rate is perhaps down to 0.2 per cent. But certainly, the number of those who are at the lower end of the growth sector is very much larger than those who are at the higher end.

Yet what happens when you have the budget? As an absolute ritual every finance minister (my colleague Chidambaram is no exception) will devote the first four or five pages of his budget speech to the bulk of India and there will then be several pages, including whole of part B, which deals perhaps with one or two per cent of our population. Almost the entire discussion that takes place at CII or CII-like forums, will be about Part B rather than Part A.

There are comfort levels that you get from statistics — for instance, suddenly Arun Shourie, announcing in the NDA government that our poverty rates have fallen from 35 per cent to 22 per cent. He did it by changing the basis on which you estimate poverty. You cannot compare apples and oranges. The next national sample survey has shown that our poverty levels have actually increased. Are we going to be mesmerised by these statistics or understand that 700 million of our people are poor?

So we have an Indira Awaas Yojana which will ensure that there will be a ‘jhuggi’ for every Indian round about the year 2200. We have the PM Gram Sadak Yojana which was supposed to complete all the gram sadak in seven years — we are in the eighth year. And where we are told that the education of 1000 may be covered, who knows only the education of 500 will be covered. And if you happen to be a tribal in Arunachal, you are told that because of your social custom you are to live in one hut atop a hill, we can’t provide you a road.

I was always something of a leftist. But I became a complete Marxist only after the economic reforms. Because I see the extent to which the most important conception of Marx — that the relationship of any given class with the means of production determines the superstructure — holds.

This ugly choice is placed before the government. An unequal choice, because you have organised yourself to say what you want to say but the others are only able to organise themselves and that too without speaking to each other in the fifth year when the elections take place. That is why this expression anti-incumbency, although the Oxford Dictionary says that it is a word belonging to the English language, is a peculiarly Indian phenomenon. Because everything that goes in the name of good governance like the economic reforms either does not touch the life of people or affect them at all.

We have seen what happened at Nandigram, we have seen what was happening at Singur and we have these propositions that say that SEZs are going to come and lakhs of hectares are going to be utilised for the good of the country. For what’s the syndrome in all this, it’s still ‘do bigha zameen’. The chap says that I want my one bigha of zameen to be reinstated, but you offer double the compensation and “baad mein dekha jayega”. You go to Hirakud, which is where Jawaharlal Nehru actually used the expression modern temples of India, and you ask what happened to the tribals who were driven out of there. Absolutely nobody knows.

Coming to the cabinet, you see what happens. The minute suggestions are made as to what would perhaps benefit the people and what would benefit the classes, the tendency is to say that our great achievement is 9.2 per cent growth. Our great achievement is that Indian industrialists are buying Arcelor and Corus. That Time magazine thinks we are a great power.

In these circumstances, when a proposal came before the government to spend Rs 648 crore on the Gram Nyaya department, we were solemnly informed by one of the most influential ministers in the government to remember that we are a poor country. I was delighted when the next day he was with me in a group of ministers and I reminded him of his remark and said in that case can we stop spending the Rs 7000 crore on the Commonwealth Games and he said, “No, no, that is an international commitment and a matter of national pride.” This national pride will of course blow up if you spend Rs 7000 crore on the Commonwealth Games. We will be on the cover of Time and Newsweek.

I have always wondered why this rate of growth and economic reforms process is dated to Manmohan Singh. Because actually it should be dated to L.K. Jha’s book Economic Strategy for the 80s. It is the decade in which we quickly recovered from agricultural depression and registered a double digit growth. At the beginning of the decade our biggest import was crude oil and after that it was edible oil. By the end of the decade we were exporters of several kinds of edible oil.

Why is it that Nehru became successful with his Hindu rate of growth? The reason is that the Hindu rate of growth was five times what our pre-Hindu rate of growth was. From 1914 to 1947, the figures of which are available, the rate of growth of the Indian economy was 0.72 per cent. And we got the Hindu rate of growth which was five times that and it made a difference to the people. The minute you had solid land reforms, the people had their ‘zameen’. That is what Mother India was all about. People felt that they were involved in the process. All the political talk was: gareeb ke liye ham kya kar sakte hain. Indira Gandhi matched it beautifully when the entire political spectrum joined hands against her by saying, “Woh kehte hain Indira hatao, hum kehte hain Garibi hatao.”

There is nobody so marginal in a government as the minister of Panchayati Raj. I count for nothing. Nothing! When I was the minister of petroleum, I used to walk surrounded by this media. I kept on telling them that petrol prices can do only three things — go up, go down or remain where they are. And it was all over the place. But try and get them to write two words about the 700 million Indians — absolutely impossible. And now with terrestrial television it is even worse. You have to be quarreling with your mother-in-law or hitting your daughter-in-law to be able to hit the headlines. It is impossible to get particularly the pink papers to focus on issues that affect the bulk of the people. And it is so easy to get them to focus on issues that are of high relevance to only one or two per cent of the people.

I believe the CII, if it is serious about the issue, should not be restricting itself to 25 minutes discussion before lunch but hold discussions for ten days and maybe something will come out of it.

Edited extracts from a speech at the CII Northern Region annual meeting 2006-07, New Delhi, April 4

33% Indians bribed legal system:

33% Indians bribed legal system: "The CMS study said a majority of the bribes went to lawyers (61 per cent) followed by court officials (29 per cent) and middlemen (five per cent)."
Hind Swaraj being proven right again!