OF THE STATE
past. Retrograde policies, buried in the 1990s are killing India Inc.
At 10.30 a. m. on the morning of May 2, two of India’s top telecom entrepreneurs, Sunil Bharti Mittal of Airtel and Kumar Mangalam Birla of Idea, and two CEOS of global telecom giants, Vittorio Collao of Vodafone and Jon Fredrik Baksaas of Telenor, walked into the office of Union Home Minister P. Chidambaram in Delhi’s North Block. They expressed grave concern about the recommendations of the Telecom Regulatory Authority of India ( TRAI), announced just two days earlier on April 30, which they said would kill the Indian telecom industry. The four businessmen spent the rest of the day, until after 7 p. m., meeting ministers and bureaucrats who could conceivably help an industry that has been repeatedly battered in the past three years. They called on Pranab Mukherjee, Sharad Pawar, M. Veerappa Moily and Montek Singh Ahluwalia, who are members of the Empowered Group of Ministers on spectrum pricing. They met Cabinet Secretary Ajit Seth, the then commerce secretary Rahul Khullar and Joint Secretary, Prime Minister’s Office, BVR Subrahmanyam. The sight of top businessmen shuttling frantically between Government offices was a revival of the worst excesses of the pre- 1991 licence raj. The UPA Government and its top functionaries have resurrected the ghosts of India’s Socialist past 20 years on. Said the usually cautious but now agitated Mittal as he traversed New Delhi’s corridors of power, “This has been the most destructive period of regulatory environment I have seen in 16 years.”
India Inc spent much of 2011 complaining about policy paralysis in the UPA Government. The spectre of corruption, and the prospect of being investigated, had made jittery bureaucrats terribly shy of putting their pen to the paper of Government files. Then in 2012, the empire of Government awoke from its slumber to strike back at its detractors. Large sections of India Inc would no longer suffer from policy paralysis. They would suffer instead from policy action of the most arbitrary, retrograde kind. Evidence suggests that sectors which have a close interface with Government, like infrastructure, mining and natural resources, are struggling. Those at an arms length are doing reasonably well.
An analysis by a leading business daily of the January- March 2012 quarterly financial results of 989 companies that make up 52 per cent of the total market capitalisation of the Bombay Stock Exchange showed that just five sectors were propping up the net profits growth of India Inc. None of these five sectors— banking, IT, pharma, fast moving consumer goods, and cement— have extensive interface with Government. With these sectors taken out, the net profits of India Inc actually