The Tragedy of Indian Politics: Pitch the ‘Common Man' against the ‘Successful Common Man'
Political parties in India often tend to target industry and use this as a means to reach the zenith. What Mamata Banerjee did with her tirade against the Tatas and their proposed car factory in Singur, Kejriwal is to a great extent doing by targeting Reliance Industries. Eventually Tata Motors shifted to Gujarat leaving Singur high and dry with all the dreams of locals hoping to witness Singur getting converted to another investment hub like Gurgaon or Pune vanishing into thin air.
While one should not be surprised about the iconic ignorance of Mamata Banerjee about the $100 billion Tata empire and its immense contribution to industrialise India against all odds, and that the holding company Tata Sons is managed by a bunch of charitable trusts who literally put 66% of the net profit of Tata Sons into charitable work, likewise Kejriwal too does not realise the immense harm he is doing by making his anti-gas price hike issue into an aam aadmi vs industry thing. What he does not realise is the fact that in a country like India with extremely high level of inefficient governments and slack governmental institutions, it has been the private industry which has been producing bulk of products used by the aam aadmi and has also been the place where the aam aadmi essentially goes to work. From the verge of bankruptcy in 1991, that India today is a $1.7 trillion economy, much of the credit for the same goes to the rise of the Indian private sector most of whose first generation companies in the last two decades were started by middle class Indians from extremely modest backgrounds.
Does Kejriwal Know about Dhirubhai's background and struggle?
Dhirubhai Ambani was born in an extremely modest family and had worked for quite some time in a petrol pump in Aden, Yemen. Yet in spite of not having any financial or educational backing whatsoever, the prodigal son of a schoolmaster, Dhirubhai Ambani had dreamt big and what he started as a polyester business eventually today has given shape to Reliance Industries which has over $73 billion in sales turnover and is not just of the largest companies of India but one which has helped India in making giant strides in becoming self sufficient in petroleum refining. If one adds to it the revenue of the companies under Reliance ADAG controlled by his younger son Anil Ambhani, the combined revenue of Reliance as a whole is around $90 billion.
In other words, Dhirubhai Ambani was another aam aadmi who strived hard to create a legacy which was ably carried forward by his two able sons, who instead of wasting what their father created, did justice to it and took it forward to expand the businesses which today have a significant contribution to the Indian economy as a whole. Incidentally both the Reliance entities together contribute more than 5% to the Indian GDP and have made millions of ordinary shareholders, mostly middle class Indians, into millionaires.
Dhirbhai's Crusade against the Destructive License Raj
It has become fashionable to accuse Dhirubhai Ambani and Reliance of manipulating the system. Yet what was the system which Dhirubhai was fighting? Was it a fair system? Did that ever encourage entrepreneurship? Did that appreciate individual creativity? Dhirubhai was facing a far worse bureaucracy stifling of private enterprises, nepotism, red tape and an elitist government with Jurassic age rules created by British, than the average Indian faces today. Most today would have collapsed if they had to face even a fraction of the ordeal Dhiruhai had to go through simply because he wanted to create a viable, successful and a world class Indian company right here in India.
Dhirubhai Ambani's contribution to India is thus more than just starting a company. For decades he actively questioned the system of license raj and production control. In 1960's, 70's and 80's when babus of socialist India were continuing with the Nehruvian legacy of massive control on private sector production, Dhirubhai Ambani used to advocate the idea of economy of large scale production which would massively reduce cost and would benefit both the producer and the end user. What he envisioned more than three decades back was surprisingly the same model which China followed to become the biggest hub of global manufacturing at the lowest cost possible which made them phenomenally competitive and created huge employment for the ordinary Chinese populace.
Most creative Indians thus preferred to leave India in the 60's, 70's and 80's of last century because of the deep rooted anti-private sector mentality of the government, and settle in US to create major companies over there. India's loss was USA's gain. More than 50% of Silicon Valley companies in US were started by Indians, the same Indians who were hounded out by India's bureaucratic idiosyncrasies and fascination of a socialist state. Dhirubhai stayed back, for perhaps he did not have the luxury of fancy degrees to go abroad. Perhaps his staying back in India, and not looking for greener pastures abroad, was the biggest boon for India.
Decades later, the Indian Government eventually brought in decontrol of industry and since then there has been an impressive rise in Indian private sector which has been contributing significantly to the Indian growth story. If today it is much easier for the ordinary Indian to start a venture and dream big without fear of being hounded time and again by government inspectors, most of the credit has to go Dhirubhai Ambani and also many others.
Dhirubhai Inspired a Million Entrepreneurs and he still does...
The Dhirubhai story is also important for another reason. It is the story of a poor struggling Indian eventually making it big. His is the story which inspired several Indians who later on created some of the best Indian companies. Today, probably every young educated Indian has aspiration hidden deep inside his heart, nerve and sinew to eventually one day become an employer from an employee. He dreams of it in spite of knowing some of the insurmountable challenges ahead of him. It is a fact that today one of the biggest challenges of corporate India is to retain talented people, many of whom eventually prefer to start their own entities.
Is Kejriwal Making it a Captialism Vs Socialism Issue?
A closer look at the gas pricing issue and the controversy surrounding it would reveal that Kejriwal did not reveal anything new and this case has been going on in the Supreme Court for quite some time now. Further, the issue of gas pricing has impact not just for Reliance Industries for also for several oil PSUs of India. The question then that arises is why is it that Kejriwal is targeting Reliance Industries alone? Is he trying to make it an industry vs aam aadmi face-off and a new era crusade against capitalism?
In the recent past Swaminathan Aiyar made some strong statements in his article in The Economic Times wherein he even went on to state, "Arvind Kejriwal is in cahoots with oil multinationals (Shell, Exxon etc) to make India dependent on gas imports, bestowing a huge windfall on the multinationals. Many power stations in India are closed for want of gas. India's gas imports have shot up to Rs 28,000 crore." He had further stated in the article that it is not just Reliance but also state owned enterprises like ONGC and GSPC who too have for long urged the Government to increase the gas prices in order to make the gas exploration business viable. Swaminathan Aiyar even questioned Kejriwal's intentions by terming his act as a conspiracy to ‘keep India gas scarce and bestow billions of dollars on foreign gas suppliers' and asked as to how much has been Kejriwal's own cut.
Can India do without Industry and Inspirational Entrepreneurs?
Issues of crony capitalism and corruption should always be fought but what is completely unacceptable is the manner in which some political parties like Trinamool Congress or Aam Aadmi Party tend to leverage the perceptual anger of the mass on issues of governance and channelize it to make it an industry vs aam aadmi issue. The question then that arises is whether the likes of Kejriwal or Mamata who claim to champion the cause of the common man, would always love to see the common man as poor and hapless or would also want to witness his aspirations taking him to better places and eventually the common man being able to fulfil his dreams of becoming reasonably affluent and economically successful. And for that one needs to create jobs which cannot happen without industry, investments and private sector. In the post liberalisation era, even a diehard communist cannot deny the enormous contribution of the Indian private sector in terms of adding value to the economy, creating jobs as well as entrepreneurial avenues. TCS alone for example employs near 3 lakh young Indian educated professionals, leave alone the huge number of indirect employment it generates through its establishments. Or for that matter takes the case of Wipro whose owner Azim Premji donated Rs 8,000 crore for the creation of Azim premji Foundation and Azim Premji University. It is such individual entrepreneurial aspirations which together have given rise to the $100 billion Indian IT industry. Can their contribution be denied? That same Mamata Banerjee as CM is now asking or rather pleading with industry to invest in the same Bengal from which she made the largest Indian conglomerate exit and used that so called triumph to catapult herself to the Chief Minister's throne.
Dear Kejriwal : Fight Corruption Not Industrialisation
Making it a Capitalism vs Socialism thing is not uncommon but most myopic political parties especially the smaller regional or the young ones tend to forget that the best kind of social work is to generate employment because it is employment generation only, both direct and indirect, that can solve most of the problems of the society. And employment generation cannot happen in the long run with pretension of work and creation of disguised unemployment through populist schemes like MNREGA which do nothing except for doling out money without creating any viable asset in return and eventually such schemes end up doing nothing but raising prices and becoming a drag on the economy. The likes of Kejriwal for all their posturing simply don't know the difference between crony capitalism and entrepreneurial ingenuity. A crony capitalist makes money and elopes with that money. A genuine entrepreneurial venture creates assets which helps the nation in the long run.
Can Welfare Happen without Industry?
Sathya Nadella's ascent to the position of CEO Microsoft is both a triumph as well as an indication of how much India has been losing out. It is a triumph because it exemplifies enormous respect and recognition that Indian talent has been getting abroad. And yet many like Sathya Nadella also exemplify the inability of the Indian state and the society to give the right kind of value, recognition and trust on millions of such talents to nurture their creativity in India and make a US out of India. For, every Sathya Nadella, had he stayed back in India and dreamed of creating an enterprise and had become successful would have had some Kejriwal or Mamata starting a crusade against him to put him down and question integrity.
Eventually it would not be the Kejriwals who would create jobs, make India a self sufficient economy and pay billions of dollars as taxes. It would be the same industry which is being hounded all the time. People tend to forget the massive impact of the revolution of cellular industry had on India. The irony is that pseudo-Socialists use cell phones, laptops, cars and even mineral water made by the private industry while going for rallies to criticise private industry. Destructive politics triumph over creative enterprise in India. And that is the tragedy of India.