Business’ new old decade

Business’ new old decade

It is a year that will see a new takeover code and, if Parliament gets down to business sometime, a new Companies Act. It is a year that will see India moving closer to a unified tax regime and a tax code (both will have a significant impact on companies). And, it is a year when India will adopt new accounting standards.

Yet, it is almost as if Indian companies will enter a new decade in a new century, only to find themselves back in the last century, and in the 1980s. This has got nothing to do with the formidable Pranab Mukherjee, the veteran Congressman who was the finance minister in the 1980s and occupies that post now.

The 1980s, when India took its first tentative steps towards opening up the economy, was also a decade that saw Indian companies displaying their considerable powers to manipulate the controlled regime that is now popularly referred to as the licence-quota-permit Raj.

It was a decade when the government took sides in hostile bids for two iconic Indian firms—Larsen and Toubro Ltd and Escorts Ltd (ironically, the government ended up on the losing side in both, thanks to a proactive judiciary in one instance, and a change of regime in the other). And it was a decade that popularised the term crony capitalism.

The 1990s and 2000s marked an effort by Indian companies to become respectable, go global, adopt best-in-class practices, and start speaking of corporate governance and corporate social responsibility. In some ways, 2010 saw at least some of them losing all the ground they had gained in the two intervening decades.

The 2010s, which we will enter on 1 January 2011, begin with an ongoing investigation into several companies that received telecom licences in 2008, and several others that did so between 2001 and 2008. If conducted properly, the investigation will cover almost all telcos in the country and, given the way Indian telecom policy has evolved over the past decade-and-a-half, at least some of them will be found to have done something wrong. There are other investigations and reviews on as well, some concerning environmental clearances and others financing deals.

The question that will get asked of Indian companies will not be about performance or their ability to go global. It will be about the way they go about their business, governance and the kind of people who sit on the boards of companies or represent them. And, going by what has happened towards the end of this year, many companies will be found wanting.

The 2010s: better or worse for business? Tell us at