The recently concluded India Economic Summit, organized jointly by the World Economic Form (WEF) and the Confederation of Indian Industry, began as a tame affair, without the traditional inaugural address by the Prime Minister or the Finance Minister. Instead, the three day summit, from November 24, 2002 started with a discussion by CEOs of world giants and Indian Corporates on “New Challenges of Today’s Corporate World”, chaired by the WEF President, Mr. Klaus Scwab.

Customarily, the inaugural session is addressed by the Prime Minister or Finance Minister who enunciate government policies and future course of action. Often, the Prime Ministers and other bigwigs of government have gone to Davos to address the WEF meetings with an eye on foreign investment. However, the summit in its 18-year history had gone without political heavyweights in the government, which perhaps might have been caused by unending desires among chambers to show their political clout in their conclaves.

What is the reason that the government heavyweights refrained from addressing the inaugural session? Perhaps it had to do with the AGM earlier this year where two titans clashed — Congress President, Mrs. Sonia Gandhi and the Prime Minister, Mr. Atal Bihari Vajpayee. Diverting from the norm the event was inaugurated by Mrs. Gandhi who told the industrialists to observe which side the wind is blowing. “When the leader of the opposition is invited by the country’s leading industrialists to start off their annual get together, it is natural to speculate what could be the motive? What sort of political winds are blowing in what direction”, she quipped.

This infuriated Mr. Vajpayee who took on the CII headlong. “It does not make business sense to count one’s chickens before they are hatched. If invitations to inaugurate or conclude conferences could make them speculate about an impending change in the direction of political winds, then I must say such people seem to think that chambers of commerce and Industry have more powers to make and unmake governments than the people of India”, the Prime Minister told the industrialists.

Nevertheless this, CII put up a bold face at the summit with Mr. Tarun Das, its Director General saying, “I was wondering that took us 18 years to understand that we do not need a politician for our inaugural”. Mr. Scwab questioned the wisdom of inviting top political leaders to listen to their monologue. He exhorted the business community to use the occasion instead to tell the government what it should do. He asked the corporates to use their clout with politicians to further the industry’s agenda.

The organizers, however, did rope in some key ministers for other sessions. The corporates called upon the government to give a big push to the languishing reform process, including disinvestment and labour reforms, to achieve the targeted eight per cent annual growth during the Tenth Plan period. The message was as clear as the day that any attempt to stall the reforms would mean that the world would stop looking at the economic juggernaut, India, as an investment destination. “Time is running out and the country is faced with the risk of losing out to other competing countries”. The Prime Minister should take courage and announce bold reforms. There was need to rise above politics and achieve consensus among various political parties on the economic agenda that the country needs to adopt to catapult the growth from around five per cent to eight per cent.

There was good news.  Moody’s Investor Services announced that it would soon upgrade India’s foreign currency rating.  The reasons – substantial improvement in India’s foreign exchange reserves and the fact that the country is not a borrower in the United States or the European markets like Euro bonds.

At an impressive dinner session, the External Affairs Minister, Mr. Yashwant Sinha asked Indian industry to invest abroad in a big way, despite the lure of the vast domestic market. “Go out. Go beyond exports. Go out and invest abroad”, Mr. Sinha remarked. He asked Indian businessmen to emulate the Chinese. Despite a huge domestic market, Chinese businessmen did not become prisoners of its vast domestic market but constantly exported to and invested abroad. Mr. Sinha said despite border problems, India and China have decided to move ahead on all fronts.

Ironically, the Communication and IT Minister, Mr. Pramod Mahajan, asked India Inc. to get over their “Chinese Phobia”. Addressing another session, he warned “this is the last seminar I am attending where the China factor has been raised and if any such thing comes up in the future, I will not come ... We are not competing with China but rather building our own nation. We have to pick something from them, it should only be positive and nothing beyond that.”

Expressing government’s commitment and continued support to furtherance of industrial development, Mr. Mahajan said that the Finance Ministry had agreed ‘in-principle’ to lower the burden on telecom service providers by bringing the charges related to license fees, revenue sharing and spectrum down to match international levels in the next 2-3 years. Likewise, the Communication-IT Convergence Bill would take final shape after May next year. It would be introduced in the Lok Sabha in the later half of the Budget Session.

Eight Percent Economic Growth

At a stimulating interactive session on “A road map to success: 8 per cent growth for 20 years” ideologues from different political parties, some of whom were part of the reform process during the tenure of their respective governments shared their perspective. The session was addressed by the Minister of State for Law, Mr. Ravi Shankar Prasad, the former Finance Minister Mr. P. Chidambaram, the Secretary of Economic Review Committee of Congress Mr. Jairam Ramesh, the BJP economic thinktank member Mr. Jagdish Shettigar, and CII’s chief economist Mr. Omkar Goswami.

Mr. Chidambaram was highly critical of the government, as not a single reform initiative had been taken by the present regime. There have been only intentions and announcements but no concrete action. Achieving 8 percent growth would require massive investments in agriculture and manufacturing, which were not forthcoming.

Mr. Jairam Ramesh argued that India needed another external crisis to spur economic reforms. “Reforms happen in India out of compulsion and not conviction,” he said adding that the country currently lacked the governance capability to implement reforms and move on to a higher growth path. Some of the weaknesses of the system are the nature of financing political parties, the adversarial nature of institutions that harm consensus building, the dysfunctional nature of incentives in the administrative system and fiscal pressures.

Mr. Jagdish Shettigar felt that political consensus was a crucial aspect of economic reforms. Otherwise, measures such as agricultural reforms and labour reforms would continue to get projected as being anti farmer and anti-labour notwithstanding the real facts to the contrary.

It was brought out that industry had to play a key role in the development process by bringing in financial disciplines and incorporating the principles of corporate governance in their business operations. Nevertheless, the survival of the industry in the global village scenario hinges on a pro-active government that paves the way for competition.

By arrangement with Kaleidoscope