Brakes on Growth
Anantbaramakrishnan Memorial Lecture, 'Business and Industry in the Seventies – Tasks and Obligations', Madras, December 15, 1969.
oday, let us face it, the reputation and image of private enterprise is far from being commensurate with its massive contribution to India's industrial and economic development during the last half century. To those of us who believe in private enterprise and are anxious to work for the economic revival of our country, such a state of affairs is a source of deep concern and frustration. A more serious consequence, however, is that as a result of the suspicion and hostility which this poor image of the private sector has generated in the minds of the Government and Parliament, it is being increasingly denied the opportunities to play the full part of which it is capable, along with the public sector, in developing the country's economy.
To the innumerable restraints against exercising initiative and responsibility, to which it has been subjected in the past through a host of legislation, controls and regulations, is now added the concept that however resourceful, honest and competent a large company may be, and therefore however capable it is of expanding the wealth and income of the country, it must be prevented from growing further, lest too much power be concentrated in the hands of its Management. As a result, many sound projects of importance to the country put forward by honest, competent and resourceful companies are being frustrated to the detriment of the economic development of the country.
It is to me one of the most tragic features of India's economic history since Independence that, having wisely chosen a mixed economy as the pattern for industrial development most appropriate to its needs, our rulers and legislators then took, over the years, every possible step, in the name of socialism, to impede the effective functioning of one of its two basic elements.
The private sector has today reached a stage of development and expertise where it can make a massive contribution to the country's further economic development. The majority of India's entrepreneurs, large and small, are patriotic men who do not ask for special favours or large profits, nor do they seek monopolies or any concentration of wealth and power. What they want are the opportunities to exercise their initiative, their skills and their resources for the benefit of their shareholders, labour and customers and, above all, to be allowed to get on with the job. Yet, mistrust of the private sector, particularly in large-scale industry, has been such as seriously to impede economic growth in the sixties and it now threatens to make it impossible for it to meet its targets in the current Plan.
If we, in private enterprise, are to play our legitimate role in the decade to come, it is clear to me that we must prove to the Government, to the Parliament and to the public in general that we deserve to be trusted.
What are the main causes of the suspicion and hostility towards the private sector?
There is, of course, the irreconcilable opposition of those wedded to the Marxist ideology, to whom the abolition of private enterprise is a sine qua non of their creed.
There is also the opposition from socialists in our country who, though opposed to the violence and regimentation of communism, accept its economic policies in the mistaken belief that private enterprise is incompatible with the achievement of socialist goals and that even if it were, Indian businessmen and industrialists do not believe in those goals or are unwilling to make the necessary sacrifices.
Both these assumptions are clearly unjustified because, in regard to the first one, in the highly evolved socialism that exists today in most western socialist countries, there is no longer the old dogmatic insistence on public ownership of means of production and distribution but instead an insistence on the maximum production of wealth by public, cooperative and private enterprises and its equitable distribution through widespread welfare services financed by taxation. On the second point, Indian spokesmen of private industry have repeatedly and unequivocally expressed themselves in complete agreement with all progressive elements regarding social objectives.
We must admit, however, that the great majority of business and industrial enterprises in the private sector have not in the past, and do not today, consider as part of their duties or responsibilities any function other than those directly involved in the manufacture and sale of their products or services. Most of them believe that if they make a good product, sell it at a fair price, pay their taxes and decent wages, they will have discharged in full their obligations to the community.
Again, there is the opposition to big business based on the fear of concentration of economic power in their hands. This is a cherished slogan in India today, but largely mythical, for in a tightly controlled economy such as ours, all economic power is concentrated in the hands of Government officials and ministers. That is possibly the main reason for the socialist penchant of most of them.
But the most important and damaging cause of suspicion and hostility towards private enterprise in our country is the fact that ethical standards adopted in the past by some elements in trade and industry have not been as high as they should have been, and in some cases have been atrociously low.
Immense damage has been caused to the image of private business and industry during the last twenty-five years through the depredations, misdeeds and conspicuous expenditure of a few individuals, heading large enterprises, who in their pursuit of wealth, profit and self-aggrandisement, have wantonly disregarded the public interest. Tax evasion, black marketing, illegal foreign exchange transactions, bribery, corruption and political intrigues have been the main instruments of personal gain used by such anti-social elements.
Whatever the causes of the existence of malpractices in industry, and not-withstanding the fact that they prevail only in a miniority of cases, there can be no doubt of the damage they have caused to the public image of private enterprise in this country and of the need for all who condemn such malpractices publicly to dissociate themselves from the guilty elements in our midst. The adoption of a code of conduct and membership of the Fair Trade Practices Association has not, I fear, had as significant an impact on the public mind as we hoped it would.
Government and political leaders themselves have made our task all the more difficult by their refusal to differentiate between those who honestly serve the community and those who exploit it. Thus, over the years, individuals with a bad record have continued to get licences of all sorts and to sit at national conference tables and Government appointed councils. We, on our side, have allowed them to continue as members and spokesmen of trade and industrial associations.
I have no simple solution to offer for this admittedly difficult and delicate problem. I strongly feel, however, that each and every one of us who believes in clean, honest and socially conscious business and industry should take every opportunity to demonstrate our bonafides and to dissociate ourselves from anti-social elements. If we find it impossible to eliminate them from existing trade or industrial bodies, we should be prepared to form ourselves into fresh bodies, membership of which would be restricted to those with a proven record of straight dealing and the constitution of which would ruthlessly make it mandatory to expel any member found guilty of malpractices.
Further, in order to demonstrate our bona fides, we should, I suggest, consider setting up some voluntary machinery for a management and social audit to which we would periodically submit ourselves, such audits to be conducted by independent men or organisations of proven competence and integrity. On the basis of such audit reports, the Government and the public would know for sure which were the firms and groups with whom they could deal with confidence.
Merely to seek to improve our public image, however, is not enough. For most of us, it would only mean doing no more than we have done all along. While for offenders, the object of wanting to create a better impression merely in order to secure business or ensure survival of the system which had allowed them to acquire wealth, would be only a little less discreditable than their greed.
What then can we do beyond conducting ourselves as honest and useful citizens?
There are many ways in which industrial and business enterprises can contribute to the public welfare outside the scope of their normal activities. Apart from the obvious one of donating funds to good causes – which has been their normal practice for years – they could, as some of the companies with which I am connected have done, use their own financial, managerial and human resources to provide task forces for undertaking direct relief and reconstruction measures. This form of public community service could be expanded by the cooperative effort among members of various industries.
A Helping Hand
I suggest that, in addition, every company has a special continuing responsibility towards the people of the area in which it is located and in which its employees and their families live. In every city, town or village, large or small, there is always need for improvement, for help, for relief, for leadership and for guidance. I suggest that the most significant contribution organised industry can make is by identifying itself with the life and the problems of the people of the community to which it belongs, and by applying its resources, skills and talents, to the extent that it can reasonably spare them to serve and help them.
In the case of factories established in the countryside, away from any large town or city, we shall probably, depending on local conditions and the size of our operations, have put up a colony to house a good number of our employees. Apart from decent housing, most of us also provide services and amenities for employees' families commensurate with our resources and the size of the operation; but what about the surrounding community? There are the employees and their families who are not housed within the factory colony, the farmers, the tradesmen and the servicemen and women, the children, the aged, the unemployed, the sick and the destitute, all of whom are found in every village, every community in India.
I suggest that industrial enterprise, whether in the private or the public sector, can and could do much within their means to improve the conditions of life of the surrounding population, relieve distress where it exists, help find work for the unemployed and extend a helping hand to those who need it. Is there a village in our country which does not need some improvement to its scant services and amenities – a school, a dispensary, a road, a well and pump and above all, opportunities for gainful employment.
While obviously some expenditure – direct or indirect – would be involved, valuable help can be given in many ways involving little outright expenditure. A company with its labour force and their families need many supplies which, instead of being brought in from outside, could be made in and obtained from the surrounding villages. For instance, poultry and dairy products, vegetables and fruits for the colony, bandages for the hospital or dispensary and a host of articles and goods produced by village carpenters, masons, blacksmiths or by cottage industries in the villages.
Let industry established in the countryside 'adopt' the villages in their neighbourhood; let some of the time of its managers, its engineers, doctors and skilled specialists be spared to help and advise the people of the villages and to supervise new developments undertaken by cooperative effort between them and the company. Assistance in family planning in the villages would be a particularly valuable form of service.
None or little of this need be considered as charity. While no doubt some free services and financial relief may at times be required, most of such activities could and should be in the form of cooperative self-help ventures between the company and the people of the villages. The benefits of such a joint venture will no doubt initially flow chiefly to the village, but it is also clearly in the interests of industry that surrounding areas should be healthy, prosperous and peaceful.
What about those enterprises that happen to be located in a town or city? Obviously their contribution to the community must take a different form for it would be difficult and probably ineffective for them to attempt direct activities of the kind suitable for agricultural communities. Yet, the needs in a town or a city are just as great, or greater. The monstrous slums and squatter colonies of cities like Bombay and Calcutta, which grow every year, have almost reached a point of no return.
While the solution of this appalling problem is a long term one, which can only be tackled by official agencies with adequate authority, I believe that it would be possible for private business and industry to make a significant impact on the problem by pooling their financial, technical and managerial resources and cooperating actively with the official agencies. Apart from slum clearance and the resettlement of squatters, there are, I am sure, innumerable areas in which business and industry could, singly or cooperatively, render invaluable help and service and earn considerable goodwill in the bargain.
In a commendable but small way, much good work is being done by such groups as the Rotary and Lions Clubs and other voluntary organisations. With their immensely larger resources, organised business and industry in large cities could re-enforce and multiply such voluntary efforts. There is almost infinite scope for them to contribute to the relief and welfare of the under-privileged in their home towns and I would earnestly recommend that a concerted move be initiated, in which I shall be happy to play my own part, to explore the possibilities of such a cooperative programme.
I believe that the Municipal authorities, far from resenting such an offer of assistance of private agencies, would welcome their help and cooperation. There is unlimited scope for constructive and helpful work amongst the youngest generation, educated and relatively well-to-do or impoverished. Although it is blindingly obvious that the youth of today will be the grownup generation of tomorrow on which the whole of the future of the country depends, business and industry take far too little interest in them, and much could be done in one way or another to help them towards a better future and a better attitude to life. The spectre of unemployment faces most of them in our country, and there is great scope for us to guide them and help in training them for a brighter future.
I have spoken at greater length than I should have on a subject which has for years caused me deep concern as I saw gradually dim the vision I had as a young man of a fast developing India which, in my own lifetime, would emerge from its poverty, misery and ignorance, into a bright era of growth and widespread prosperity. However disappointed some of us may be, let us never forsake that great vision or fail to do what we can to bring it to reality, for the day will surely come when the people of India will at long last reap the fruits of their centuries of toil, patience and sacrifice.
For relief of distress, the Tata Trusts and Companies have set up the Tata Relief Committee, which undertakes the work of reconstruction such as schemes in the wake of the Andhra cyclone of 1977 and the Gujarat cyclone of 1982 - six hundred concrete houses and eleven large shelters for Andhra Pradesh, and one hundred houses for Gujarat.