Almost exactly a year after the Indian government told a gathering of industry bigwigs that they ought to rein in runaway salaries for their senior executives , Prime Minister Manmohan Singh made yet another appeal this week. He asked companies to find ways to tighten costs and avoid passing price hikes to consumers.
He has every reason to plead. His government is entering into elections within a year. Inflation is already at a three-year, vote-busting high. Some of this price inflation is global and will likely get worse. It is being driven by high oil prices and foodgrain shortage—hardly Singh’s doing. So, he can’t really bear the blame, at least not entirely.
Trouble is, his vote bank won’t really see it that way. To them, the man in the blue turban and his government have made life far more expensive today than it was yesterday, making the family bills longer and threatening to halt the party minutes after the music started.
Mix that all up and Singh may seem an unpopular man—especially against the backdrop of stories about Indian firms buying out global brands, astronomical salary increases and private jets to ferry industry chieftains.
In short, it would seem that the common man ails as Indian firms get fat.
To address this perception, the easiest thing to do would be to ask the fat ladies to take their little excesses to a dark corner and bury it away from public glare and not to charge much for the lavish meals they lay out. A little like telling a blushing, gushing bride not to celebrate her wedding and stay away from trousseau shopping.
Singh has gone another step forward by calling upon industry to “cooperate”’ and insisting that industry has a “societal obligation to assist the government in moderating inflationary pressures”.
There is one problem with the appeal—this is a modern-day bride and, really, she doesn’t care about keeping the in-laws happy because she isn’t the stay-at-home variety.
When the government in the early 1990s started worming itself out of enterprise to focus on its task of administration, it freed up Indian industry.
The resultant boom has made India one of the world’s fastest growing economies and helped it discover, among other things, a workforce which could feed global companies, an ability to make world-class goods and attract top-dollar talent. The bottom line is that companies need to remain competitive and be players in the global arena, and not just in India.
To now ask Indian industry to slow down, bite the bullet for an undefined “greater societal good” and be a bit like the outmoded government-run enterprises that were based on the socialist rather than capitalist model shows how little progress this government has really made in truly letting go of Indian enterprise—and how making money is still a bad word in India.
Industry’s business everywhere in the world is simply to stay in business. Because thousands of jobs depend on it and because a lot of enterprise is now in private hands.
With job seekers increasingly opting for private firms over government jobs, the risk of asking private firms to kill a bit of their appetite for profit is a dangerous one. Profits by nature are subject to conditions that Singh can’t and shouldn’t seek to control, just like the global challenges he can’t contain.
And unless Singh can verily promise that he will bail out any private enterprise that may collapse in its bid to measure up to his calling, he should really do what governments must do to keep their credibility—keep their nose out of business and manage their own finances better.
Anjana Menon is national corporate editor at Mint. Comment at email@example.com