Book: J. R. D. Tata Keynote

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The Merits of a Mixed Economy

The Balance of Forces


The Tata Iron and Steel Co.Ltd., Chairman's Statement, September 3, 1953.


ur Government has adopted the concept of a mixed economy for the country, a concept which has found broad public acceptance and in which business and industry are anxious to cooperate. A mixed economy, however, implies the co-existence of State enterprise and free enterprise, and cannot mean a wholly State-dominated economy where the private industrial class is temporarily tolerated and permitted to survive only pending further developments. A mixed economy can only function if there is within the community a balance of forces, with free enterprise operating as one of the autonomous forces pulling its weight alongside State enterprise, trade unions and other elements in society.

I am led to make these observations because I have noted a tendency on the part of the Government, perhaps not deliberate, to deny to free enterprise a voice, or even consultation, in matters in which its views or advice could be valuable. For instance, the Indian air transport industry was recently nationalised on terms which seem to indicate that the Government sees no reason to carry with it the industrial sector and its representatives before making up its mind on important economic decisions affecting them. May I suggest that the time has come for the Government to clarify its position and to state whether its ultimate goal is in fact a mixed economy in which both sectors are permitted to function efficiently, or a State monopoly of all industrial enterprise?

In contrast with conditions in our own country, a clear reversal of trend is taking place in most other free countries of the world after many years' experience of State ownership and rigid control of all economic activities. The truth is beginning to dawn, elsewhere at least, that socialism in action as distinct from theory is hardly the economic and social panacea claimed by its advocates and that it does not lead to a classless society but to a dangerous concentration of all economic power into a few ministerial and bureaucratic hands, which while acceptable in a totalitarian state is irreconcilable with real democracy.

This is not a plea for a return to the old time laissez-faire in economic matters. The interests of the nation as a whole must prevail over the interests of the few. The State may, where necessary, exercise a reasonable, but not a paralysing, degree of control over industry and business. It may also take a positive part in production in such fields as are best suited to its organisation and methods, within the limit of a realistic assessment of priorities. But, in the process, it should not lose sight of the primary objective, which is to expand production and employment. That object cannot be achieved by discouraging creative enterprise and initiative, inhibiting savings and destroying the confidence of the investor.

I earnestly believe that realistic and well thought out policies, free from doctrinaire considerations and aimed at encouraging production, fostering savings, recognising honest and efficient Management would, while deterring anti-social activities, go a long way towards energising free enterprise. They would also help to instil in the private sector the sense of trusteeship advocated by Mahatma Gandhi and would put squarely upon it the responsibility for placing national above sectional and personal interests.

Such policies in respect of the private sector combined with State enterprise in appropriate fields, assistance to small scale and cottage industries and to the cooperative movement, land and social reforms and measures to control the growth of our population, would in my judgement provide the right kind of programme to revolutionise the economic activity of the country and to make a real success of the concept of a mixed economy.


Shedding Preconceptions


The Tata Iron and Steel Co. Ltd., Chairman's Statement, August 26, 1954.


Members of Government and Parliament should, I respectfully suggest, cease giving the impression that the present policy of a mixed economy is a temporary affair and a mere step in the direction of full-fledged socialism or state capitalism.

More important perhaps than anything else, is the need to shed certain preconceptions which have long coloured official and political thinking in our country. For instance, that the profit motive is dishonourable, that profit is synonymous with profiteering, that about 3% net is a fair return on risk capital, that the population problem will solve itself, that mechanisation means unemployment, that it is more important to impoverish the rich than to enrich the poor, that a welfare state can be built without first creating the means to pay for it, that nationalisation creates additional wealth, that centralised State enterprise and management is socialism.

I would call attention to a notable expression of views by a great socialist leader who can hardly be charged with pro-capitalist or anti-socialistic views. In the course of an article on the Bhoodan movement published in July this year (l954)Mr Jayaprakash Narayan had this to say:


'In the present world the State, not only in its totalitarian form but also in its welfare variety, is assuming larger and larger powers and responsibilities. The welfare state, in the name of welfare, threatens as much to enslave man to the state as the totalitarian. The people must cry half to this creeping paralysis. The fact that the welfare state is a creature of the people in the sense that it is set up by them does not affect the matter. The device of democratic elections cannot equate five hundred representatives with eighteen crores of the people, counting only the adults. To the extent the eighteen crores look after their affairs directly, to that extent the powers and functions of the State are restricted and real democracy is practiced.'


I would call attention also to the remarkable change which has taken place in the United Kingdom in the last year or so since official policies in the economic sphere have been reoriented towards releasing and stimulating the productive energies of business and industry and freeing them from the burden of bureaucratic controls and ideological uncertainties, which had benumbed them since the War.

I am sure that if our own Government would similarly try for a while and within reasonable limits the experiment of freeing the private sector from its present handicaps and uncertainties, and allow it the necessary scope for initiative, it would be surprised at the results. No one would seriously suggest a return to complete laissez-faire in economic matters. Besides taking active part in expanding the economy, the State has to exercise general control over the economic activities of the country to prevent undesirable trends, to provide essential services within society's capacity to bear them, and to protect the underprivileged. These objectives are not served by policies which paralyse enterprise and initiative, encourage low labour productivity and concentrate economic power in the government to a self-defeating extent.

At the same time, however, those of us who within the private sector bear the responsibility of industrial and financial management, should be clear about one thing: The adoption of a new outlook by the Government towards the private sector, the confidence of the investor and the cooperation of labour, require that we show ourselves worthy of the trust placed in us. There is no place, in this great adventure on which our country has embarked, for the selfish and unworthy motives and the dishonest practices, which have in some instances in the past tarnished the name of free enterprise.


Theories Which no Longer Fit


The Tata Iron and Steel Co. Ltd., Chairman's Statement, August 30, 1956.


Let me say that we all realise that since Independence our Government has performed a tremendous task. Faced with an unprecedented array of political, economic and social problems, it has borne with ability, devotion and success an appalling burden of responsibility. We also realise that its task in the coming years will remain a formidable one, that the success of India's plans of economic development is essential to the future prosperity and happiness of our people. We, in the industrial and business field, are therefore at one with the Government in its objective of a prosperous, democratic and happy nation emerging from the years of toil ahead.

Where we differ is in the respective roles of the State and of the individual in the economic activity of the nation. We sincerely feel that some of the Government's policies are based on economic theories of capitalism and socialism, which no longer fit the facts, if ever they did. They seem to ignore the lessons of the social and economic experiments which have occurred elsewhere in the world during the last few decades; for instance, the fact that, apart from the U.S., countries in Europe which have relied largely on free enterprise and given it the necessary support and encouragement, have achieved not only economic prosperity but also, through realistic fiscal and administrative measures, the socialist dream of an equalitarian welfare state.


Our Priceless Asset


'Industry in the Second Development Decade', Golden Jubilee Conference, Associated Chambers of Commerce and Industry of India, Delhi, December 8, 1969.


Today, there is no longer any dispute or disagreement about social objectives. Calls for social justice, equal opportunities for all, the interests of the common man, rapidly rising standards of living, democracy and individual freedom – all those objectives have become almost trite in view of their total acceptance by one and all.

We have been repeatedly assured that ideology has nothing to do with the Government's policies or Parliament's legislative enactments. Yet, in announcing economic policies, it is always the achievement of a never defined socialism which is advanced as the principal goal of the nation, never the creation of a welfare state.

I put it, with the greatest respect, to those who frame the policies of our nation in the Government and in the Parliament, that our progress in the current decade now coming to an end, has been avoidably retarded by placing greater emphasis on the negative aspects of socialism than on the positive ones, by policies aimed more at preventing undesirable things being done rather than encouraging desirable ones, at reducing the income of the relatively well-to-do rather than at increasing that of the poor, at restraining initiative and action by good elements because of misconduct by a few bad ones, at pursuing ideological goals, however detrimental to the economy rather than harnessing all forces for producing wealth and taxing them for welfare purposes.

Must we forever refuse to look around us and see the immense economic gains achieved among others, by the people of Australia, Japan and other Asian countries during the same decade in which we have made such halting progress, and should we not ponder over the fact that their economic philosophy has been very different from our own?

There is in our country as much intelligence, skills, ability and determination as in any other. Our people have given undisputed proof that they can respond to the challenges of economic development. Said Matthew Arnold, 'the seeds of god-like power are in us still, Gods are we, bards, saints, heroes, if we will.' Herein lies the real hope for India in the second development decade. It is for her leadership not to waste this priceless asset.


A Grand Alliance for Progress


Address to the Rotary Club of Bombay, '19th or 20th Century Socialism?' August 25, 1970.


Should we not ask ourselves why and how many other developing countries have done so much better than we have in creating mass employment, widely dispersed prosperity and stability for their peoples while after twenty years of planning, draconian controls and Rs. 30,000 crores invested in development, our economy continues to stagnate, unemployment to grow and wholesale shortages to prevail? Could there be in those other countries a common factor, lacking in India, responsible for their progress?

Indeed, there is such a common factor in the economic policies of their governments.

All of them, unlike ours, are totally free from economic dogma and prejudice.

All of them, including those with socialist governments, rely mainly on private enterprise for production and distribution.

All of them go out of their way to create conditions favourable to private investment, initiative and enterprise.

None of them imposes on the business and industrial community India's nightmarish licensing system and paralysing all-pervasive controls.

None of them seeks to counter the mythical danger of a concentration of economic power in private hands by concentrating it in those of a handful of Ministers and bureaucrats.

None of them believes as our Government does, that socialism primarily means the nationalisation of trade and industry and a dominant public sector. On the contrary, they consider a dominant private sector entirely compatible with socialism, for theirs, unlike ours, is a twentieth century socialism.

None of them has adopted the savagely high rates of personal taxation prevailing here, which have provided such a powerful deterrent to investment and initiative, and encouragement to tax evasion and black marketing.

While Indian socialists cling to a nineteenth century Marxist form of socialism, notwithstanding the fact that almost every economic theory and prophecy of Marx has been falsified in the last hundred years, the democratic socialists of all the non-communist socialist countries of the world no longer concern themselves with theory but with the practical means of creating wealth and with it an egalitarian welfare state.

They not only know that Marxist economic programmes of the kind which our own socialists naively hope to implement by democratic means cannot, in fact, be executed except by ruthless authoritarian means, but also that communism has failed up to now to produce the affluent and egalitarian societies flourishing in many countries of the world today.

Thus we see modern socialist governments going all out to encourage private enterprise to create the wealth from which they can extract the tax resources required to pay for the welfare services of a socialist state. They have understood, what our socialists have failed to do, the crucial role capitalist enterprise can play in financing socialism, and in making the fruits of economic development available to the people in the very process of development: the cake, so to speak, being distributed while it is being made.

India went one better at first. Under the leadership of Jawaharlal Nehru, she adopted a mixed economy in which public enterprise would join hands with private enterprise in bringing about rapid industrialisation and economic progress. Despite misgivings in some quarters, Indian industrialists and businessmen supported such a mixed economy concept and looked forward to playing their full part in it.

I, for one, in my innocence, believed that India would thus progress even faster than other countries, which relied on only one source of entrepreneurship and investment. I had a vision of a partnership between the public and private sectors, each concentrating on those fields for which it was best suited, each complementing and supporting the other and both actively helped by the government in converting

India rapidly into a great industrial power and, in the process, in creating millions of jobs every year for its people.

The vision dimmed as the concept of such a grand alliance for progress itself dimmed and was progressively discarded.

Our Government, from the Prime Minister down, never failed to proclaim the establishment of socialism as its principal objective, never that of a welfare state. With socialism equated in their minds with a dominant and ultimately exclusive public sector, private enterprise could not be allowed to grow, while big business became anathema.

So, instead of harnessing to the task of economic development all the energies, abilities, resources and expertise available in the country, and where necessary outside it, the Government's economic and industrial policies became increasingly aimed at stifling the growth of the private sector, except in the agricultural and small scale fields.

I genuinely believe in modern twentieth century socialism as a politico-economic way of life, which embodies as so aptly stated elsewhere, 'the universal human ideals of Equality Freedom and Fellowship'. But I also believe that in a country like India where poverty and unemployment are still so widespread, it is freedom from want and freedom to work which for the present must take precedence over every other ideal. Socialism's primary aim should be to assure to every Indian the basic necessities of life and the right to work and to earn a decent living. In the economic, if not the philosophical plane, a welfare state is the very essence of twentieth century socialism to which I subscribe unreservedly.

In all sincerity and some humility, I suggest to my socialist friends in and out of the Government, that their policies are betraying the true ideals and aims of socialism and the interests of the masses whom they are supposed to represent. Let them look beyond our shores and see for themselves the magnificent achievements of twentieth century democratic socialism in action in country after country around the globe. Let them also understand that the sands of time are running out on them, that the people of India will not accept much longer the sacrifices needlessly thrust upon them in the name of a barren and outdated socialism, which brings them nothing but continuing poverty, unemployment and misery.


A Slow Boat to Marxism


Address on 'Why a Mixed Economy?' to the Associated Chambers of Commerce and Industry of India, New Delhi, April 4, 1975.


Let us be clear on what we mean by a mixed economy which, almost by definition, is not easily definable. Somewhat like the legendary elephant of 'the six blind men of Indoostan' who sought to describe it by touch, it can take many forms and has many aspects. To simplify matters, however, we may, for the purpose of this talk, exclude, at one end of the economic spectrum, those economic activities which, in our country, are nowadays accepted as falling exclusively within the Government sector, such as rail and air transport, telecommunications, armaments, atomic energy and the like, and, at the other end, farming, small scale and cooperative industries and all self employing activities about the private ownership and control of which no controversy arises.

In the present context, therefore, we may confine ourselves with that sector of the economy represented by organised industry, trade and finance, the ownership and control of which could, in a mixed economy, rest either with the government or with private enterprise, or with both.

There is today hardly any country in the world outside the communist bloc which does not have a mixed economy. In fact, even countries which call themselves socialist would object to theirs not being described as a mixed economy, for it would imply that it was a totalitarian one, while countries like Germany or Japan, usually thought of as having typically free enterprise economies, would do the same; for, otherwise, it would imply that theirs was a nineteenth century laissez-faire economy.

Thus, throughout the non-communist world, we have various models of mixed economies, although 'mixed-up' economies might, in some cases, be a more appropriate term. Even within the communist block, Yugoslavia, for instance, could be said to have a form of mixed economy of its own.

The concept of a mixed economy is a creation of the post Second World War era when nations sought ways of rebuilding their shattered economic life. It emerged as a rational compromise between the views of the Left and the Right, under which nationalisation is resorted to only where and when considered essential; the private sector is encouraged and supported as well as regulated by the State; taxation is high but not confiscatory; autonomy is the keynote of government-owned enterprises; and planning is indicative rather than authoritarian.

The essence of the concept is, therefore, clear. The respective share of the State and of private enterprise in the ownership and management of economic assets may vary from country to country, but they invariably co-exist.


A Pragmatic Approach


In India, at the dawn of its Independence, extraordinarily favourable factors existed for the creation and growth of a mixed economy. For, India had a highly intelligent and mature political leadership dedicated to democratic ideals and to evolution rather than revolution, a dynamic entrepreneurial class, an efficient and honest bureaucracy, the beginnings of a powerful industrial infrastructure, including what was then one of the biggest integrated steel plants in the British Commonwealth. Above all, there was a remarkable confluence of views between the newly elected leaders of India and leaders of private enterprise. In fact, the latter were in some respects ahead of the former, for the so-called Bombay Plan, which a group of them submitted in 1944, was the first to make the raising of the standard of living of the masses of India the principal post-Independence objective, to advocate centralised planning to call for massive investment in development in a mixed economy in which private enterprise must be truly enterprising and not an instrument of mere acquisitiveness, and the fruits of enterprise and labour must be fairly distributed and not withheld from the many for the benefit of the few.

On the other side, political leaders adopted a remarkably pragmatic and non-ideological approach to economic problems. Mahatma Gandhi strongly opposed an overpowerful State, while Jawaharlal Nehru, Vallabhbhai Patel and others supported the concept of a mixed economy in which nationalisation was to be resorted to only where absolutely necessary in the national interest; the growth of the public sector was to be in the form of creating new assets and not of confiscating existing assets, private enterprise was to play an important and continuing role; the private and the public sectors were to be looked upon not as separate entities, but as parts of a single organism.

Nowhere else in the developing world did the private sector so unequivocally support planning and restrained, socially conscious, free enterprise, and political leaders so clearly commit themselves to realistic economic policies and to an evolutionary, mixed economy in which both sectors would play their full part in building up the nation.

A striking example of this unity of purpose and mutual trust was the Government's approval, in less than a month, of the creation, as early as 1947, of Air India International as India's very first joint sector enterprise, with its management entrusted to the private sector partner. Another, which showed that this spirit of cooperation and mutual trust between the Government and private enterprise remained alive in the fifties, was the creation of ICICI, in which the Government of India, private banking and industry, together with foreign financial interests joined in creating in an innovative and practical way, an important new source of investment and loan finance for the private sector.


The Octopus


In negation of Jawarharlal Nehru's earlier pronouncements, major sectors of private enterprise, including air transport, banking, insurance, coal and copper, were nationalised, all of them on confiscatory terms. The Constitution was amended again and again to subserve the economic policies of the Government wherever they were incompatible with the Constitution; Fundamental Rights were abrogated, culminating in the 25th Amendment, which abolished the very concept of compensation; whole areas of economic activity in which the private sector had always operated were denied to it or severely restricted; a formidable panoply of laws, regulations and controls over the operations of private sector companies was created and constantly expanded until owners' rights and most of Management's freedom of action were extinguished; India became the most heavily taxed nation in the world and taxation on individuals was made confiscatory; a virtually total Government monopoly of investible and lendable funds was created by nationalising banking and insurance; the privately owned funds so seized were used to acquire an ever-growing share in the ownership of joint stock companies; a mandatory convertibility clause was attached to all term loans from financial institutions for the avowed purpose of bringing private sector enterprises under State ownership.

As a result, in addition to the 50% of industrial and mining assets which the Government has itself estimated will be under the direct ownership of public sector enterprises by 1980 or so, the Government will have acquired, directly or through its agencies, so dominant a share in the ownership of private sector companies that anything up to 80% of the country's total industrial capital will belong to the Government. Between such ownership and the Government's all embracing controls over the operation of private sector companies, under which they are deprived even of such clearly managerial functions as the right to appoint their top executives and fix their remuneration, the Government's stranglehold will then be so complete that, for practical purposes, the private sector, and therefore the mixed economy itself, will have ceased to exist as an effective economic force.


Socialism or Welfare State


We now come to the delicate and explosive subject of ideology, which I consider the principal cause for the drastic change which has taken place in the Government's attitude towards the private enterprise sector of the mixed economy.

Government spokesmen always assure us that ideology plays no part in their economic policies, but the evidence to the contrary is overwhelming, unless, of course, it is argued that socialism is not an ideological concept. The ideological inspiration of the Ruling Patty's economic policy may be seen in the spate of nationalisations on confiscatory terms; the continuous flow of legislations, enactments, ordinances, regulations, directives and controls, which have progressively vested in the Government economic powers so vast and so comprehensive as to be unknown in any other democratic country and surpassed only in totalitarian states. That ideology motivated the Ruling Party's economic policies was further demonstrated in the succession of constitutional amendments which deprived the people of some of their fundamental rights; the accession to critically important positions in the Government of a number of persons of strong Marxist persuasion, most of which had been members of the Communist Party; the widespread use of typically communist jargon such as dubbing all larger houses as 'Monopoly Houses', and their outright condemnation although the Dutt Committee had categorically exonerated the majority of them from any blame. Finally the repeated public declarations that socialism, not a welfare state, is the Government's goal.

Having established this point, let me say that it is perfectly understandable, in a country like ours, so large a proportion of whose population is desperately poor, that the human and philosophical aspects and the basic objectives of socialism should draw many to its fold. Thus, the socialism of the Webbs and Harold Laski attracted many of the world's non-communist intellectuals, amongst the most prominent of whom was our own Jawaharlal Nehru who, to his undying credit, called for a pragmatic approach to economic problems and refused to be stampeded into extreme socialist reforms. This is clearly reflected in a speech to the Congress party in 1955 in which he said: 'There is really no choice before us between having a private sector and allowing and encouraging it to function, and not having it at all. It is foolish to have a private sector and then to undermine it and prevent it from functioning. I personally think that even for the proper functioning of the public sector it is desirable to have competitive private sector.'

We do object, however, to the adoption in India of a socialism which is increasingly indistinguishable from the Marxist variety of a totally planned and regimented economy, to the incipient dangers of which neither our intelligentsia nor the public at large seems to be fully alerted as yet.

This failure to recognise, in time, the real shape of things to come and to resist it, is at least, in part, due to the insidiously soporific effect of the gradualness with which momentous changes have been introduced in our economic life. I have no doubt that if they had been sought to be brought about all at once, when those who won India's freedom and the founding fathers of our Constitution were alive, the reaction would have been intense, swift and decisive.

Another reason for the apathetic acceptance of the continuous erosion of private enterprise from the corporate sector leading to its ultimate elimination, possibly lies in the questions and doubts which exist in the minds of some sincere but naive intellectuals. For instance, they ask: how valid is the argument that a mixed economy is a sine qua non of democracy? Or that the disappearance of the private sector would automatically lead to a totalitarian economy? And why, once we have an efficient and autonomous public sector, should we need private enterprise at all? Why couldn't a totally State-owned economy co-exist with political democracy?


Totalitarianism or Mixed Economy


I will, therefore, content myself with asking them, in turn, two questions of my own: first, whether an economy in which all freedom of choice is absent and the State is virtually the sole owner, the sole employer, the sole investor, the sole producer and the sole distributor, can be anything but a totalitarian economy? Second, whether such an economy can function effectively without the people being subjected to strict political control to ensure that they comply with the State's decisions? In other words, whether a totalitarian economy can function except within a totalitarian political environment?

If they still believe that it is possible to establish an economy in which private enterprise is eliminated, except in agriculture, small-scale and self-employing industries, and the ownership, management and control of the means of production and distribution are centered in the government and at the same time to retain in the political sphere the free democratic way of life we have today, I would urge them to look around the whole of the world and ask themselves why this combination does not exist anywhere and why the economy of every democratic country is, in fact, a mixed economy.

There are, I submit, only two effective ways in which a developing country like ours can undertake and carry through the formidable and desperately urgent economic task facing it. One is to follow the totalitarian road, which through regimentation and enforced obedience at all levels has admittedly achieved results in communist countries. The other is the democratic road of a mixed economy, adopted by virtually every non-communist country of the world, where, by harnessing the enterprise and initiative of people and transferring the bulk of the fruits thereof to the masses, more spectacular economic and social progress has been achieved more quickly than by any totalitarian regime.


If a Mixed Economy is to Flourish


What do I suggest? Assuming that the majority of our people and their elected representatives do not want a dictatorship of the Left or the Right, today or in the future, a firm decision should be taken that, at least for a reasonable period of years, the mixed economy be not merely tolerated but encouraged and treated as the main instrument of economic growth with social justice. Once the above decision is taken, I suggest:


that such facilities and conditions be allowed to the private sector of the mixed economy as to enable it to function effectively and to produce the results expected of it;

that all economic policies be result-oriented and free from ideology, that economic controls which do not serve essential national purposes, encourage production, prevent abuses and protect weaker elements be abolished or liberalised;

that the economic effort of the nation be concentrated for some years primarily on expanding the purchasing power of the people through massive employment schemes in the rural areas where the bulk of the people live; on producing and distributing fairly the people's basic consumption needs, on making absolutely sure of the essential requirements of power, fuel and transport, without which neither the aims of fuller employment nor the needs of mass consumption can be met;

that the Government reward and not punish successful efforts at raising production in excess of licensed capacity at least in priority industries;

that new entrepreneurs be encouraged by providing them with specific incentives, assistance and rewards rather than by shutting out existing ones;

that fiscal and economic policies be such as to encourage private savings and investment instead of deterring them, so that the private segment of the mixed economy does not remain wholly dependent on Government financial assistance;

that recognising that stock exchanges and other private sources of finance have an important role to play in promoting and canalising investment, the Government subject them and investors only to such restrictions and controls as are essential to preventing abuses or malpractices;

that the right to convert into equity capital a part of term loans made by Government financial institutions not be made mandatory in every case as at present, but be left to the discretion of the Boards of the institutions concerned to exercise such rights, when on such terms, as they may find commercially justifiable;

that the Government spokesmen give up using misleading Marxist jargon such as the expression 'Monopoly Houses' to describe firms or enterprises which are patently non-monopolistic;

that the primary function of the Monopolies Act be to identify genuine monopolies and curb restrictive trade practices;

that the Government restore to the Boards of private and public sector companies the freedom to manage their enterprises, including the right to appoint executives and fix their remuneration, the Government intervening only to prevent abuses and to ensure that all large and strategically important industries are soundly managed and grow;

that the Government be ruthless towards those found guilty of malpractices in both sectors, but recognise and encourage good and honest management;

that the Government strictly enforce the ban on corporate contributions to the election funds of political parties, for the devious ways in which the ban is allowed to be flouted is a prime source of corruption in the country.


Having thus ventured, to proffer advice to our rulers and legislators, it is only right that I should take it upon myself to do the same to my peers in the private sector.

If a mixed economy is to survive in our country and prove itself the most efficient instrument of growth and economic progress, it is imperative that those in charge of the private sector recognise and fulfil their obligations not only to their shareholders, employees and consumers, but also to the community and the country as a whole. There is no room in the India of today for selfish men whose unrestrained acquisitiveness, tax evasion, black marketing, illegal foreign exchange transactions and conspicuous spending bring distrust and disrepute to the whole of the Indian business community and jeopardise its very survival.

Notwithstanding the somewhat cheerless view of the present and fears for the future I have expressed in my remarks today, I still believe that, with a return to sound and practical economic policies and with voluntary or compulsory adherence to the moral values of our forefathers and of those who won India's freedom by their sacrifices and dedication, India will overcome its seemingly intractable problems, bring to its people, within the next decade or two, relief from their poverty and distress, and, in the process, show to countries distraught despite their immense material prosperity, a way of life in which people can fulfil their material and spiritual needs and live in peace, dignity and contentment.





A crore is 10 million.

Under the 25th Amendment to the Constitution of India passed in 1971, the word 'compensation' was replaced by the world 'amount' and it was clarified that the said amount may be given otherwise than in cash.

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