Political Enterprise
Any business has to regularly interact with various agencies of the state. The roadside paan vendor cannot wish away his weekly transactions with the beat cop; a factory owner must have regular exchanges with various inspectors; and a large infrastructure provider has to frequently interact with government offices, ministers and senior officials. Through myriad laws, rules and procedures, the state creates for itself powers to permit or refuse; accommodate or hold back; fashion beneficial conditions or obstacles; and, by doing so, gains the currency to collect rents and favours in one form or another. A few countries—such as New Zealand, Singapore, the UAE and the Scandinavian nations—execute such powers in a transparent, rule-driven and enterprise-friendly way. Most do not, because complex opacity is the high-octane fuel for rent-seeking.
The essays in this book attempt to explore precisely this area—of how business and politics interact in an economically liberalised India. For large businesses such as those explored in the book, this interaction is a two-way street: of what the state and its players ask for to facilitate business and, conversely, what powers businesses wield in shaping actions of the state and politics.
The story is clear enough. In a milieu where much of India’s growth depends on private investments, no government wishes to be seen as anything other than a catalyst of corporate progress. Almost every state has annual government-sponsored mega business summits to attract investments. Prominent businesspersons form a part of the prime minister’s entourage in any major foreign visit. Chambers of commerce and industry associations go out of their way to highlight the so-called ‘win-win’ partnerships between government and business. States compete with each other to show how much better they are in helping business. And there are hosannas all around when India’s ease of doing business rank improves from 100 to 77. There is little doubt that both central and state governments are more pro-business than they were under the regimes of Indira Gandhi or Rajiv Gandhi. And it matters little which political party is in power.
However, there are murky sides to this relationship. Here, it is important to distinguish between the officials of the central, state and local governments on the one hand and between types of industries on other. Today, the Centre’s role is limited, except to grant fiscal concessions and approvals for some industries such as defence, mining, coal linkages for power projects, spectrum allocation and air traffic. There are big rent-seeking opportunities in these, but they tend to be one-offs, subject to requisite approvals.
The roles of state governments and local administrations are much more pervasive, and relate to various approvals from land acquisition or its right of use, construction permits to getting electricity, registering property, inspections under various laws and so on. There is also a distinction between ‘redistributive’ and ‘growth-oriented’ rent. Smaller government officials are interested in the former: ‘my fee for this approval which you must have’. State-level political leaders, often chief ministers, veer to the latter: ‘I’ll help you grow and my share of that is…’. Also, how much a business needs to interact with governments for its survival and growth depends upon what it does. An enterprise selling soap and haircare is less dependent on government than a highway builder or a company investing in power plants and ports.
Though a few essays make for heavy reading, many are stimulating in how the tales are spun. My favourites were ‘Cabal City’ that looks at municipalities to highlight the interplay of democratic powers and rank bad governance; and ‘Media in Contemporary India’, which shows how journalism has been transformed into a commodity. A good read, for those so interested.
In a milieu where India’s growth depends on private investments, every government wishes to be seen as a catalyst of corporate progress