27March

Our politics mirrors our opaque business culture

A July, 2013 study by the Association for Democratic Reforms (ADR) and the National Election Watch (NEW) almost conclusively established that a candidate with a criminal record had double the probability of winning an election in India than a clean candidate. An equally disturbing postulation was the extremely slim chance of an Independent candidate winning a poll at all.  All this was before the game changing AAP made a stunning electoral debut in the Delhi assembly elections later in the year.Read More

Following AAP’s sensational win and the still more unexpected formation of a government (though a precarious minority one), many political pundits have had to eat humble pie. Assuming that AAP deployed all of the Rs 20 crores that it mobilized for the Delhi elections across the 70 seats, the average per constituency spend would not have exceed Rs 30 lacs. The Election Commission prescribed limit for an assembly seat is Rs 16 lacs (and Rs 40 lacs for Lok Sabha). All these numbers are laughable at best.

BJP leader Gopinath Munde ( a self-proclaimed entrepreneur) reaffirmed Indian politics’ worst kept secret by claiming that he had spent Rs 8 crores to win his Lok Sabha seat in the last national elections. Expectedly, he was promptly served a notice by the Election Commission for breaching the EC prescribed unrealistic limit. Even as I script this piece, Munde has not been debarred from contesting the upcoming 2014 polls. It might have been more fruitful for the EC to ask Munde to spell out his funding sources in addition to asking for a comprehensive statement of expenses. What did the reported Rs 8 crores buy? Free lunches for mercenary voters (quite like softening up analysts prior to an IPO through an all-expenses paid junket)? Hiring muscle men to intimidate anti BJP voters on polling day (just as pesky shareholders are kept away from company AGMs if they can’t be bought off)? Printing hand bills containing patently false premises (like our desi companies, especially the mushrooming chit funds and pyramid marketing firms do, ahead of a product launch)?

Mumbaikars would have liked to hear from Congress dynast and businessman, Milind Deora, who won the South Mumbai constituency about his poll related expenses that, included parading Salman Khan in an open top truck through all of SoBo. Did Salman make a pro bono friendly appearance (what might have been the tradeoff behind closed doors?) or did he merely fulfill a professional commitment as he recently did in riot hit Muzaffarnagar?  If the latter, how was he paid? By means of a crossed cheque? Was TDS deducted? What might have been the source of Deora’s poll funding? What are his known sources of income? And that of his family? Or does Deora merely represent a much bigger, malevolent & barely visible force in the background like most of the BVI and Mauritius centered FIIs who are registered with SEBI?

The idea is not to demonize Munde or Deora but address a wider malaise since the guitar strumming Congress MP has been at the forefront of some heavy duty public posturing lately. Recount his comment on the “Kill Bill” campaign that his boss, Rahul Gandhi, executed with greater aplomb than Uma Thurman to the utter chagrin of Lalu Yadav. Also recall the morally edifying noises that Deora made about Ashok Chavan that were endorsed by the Gandhi, scion as if on cue though nothing came of it finally in an election year when a Chavan can bring many sacks of dirty notes to the party.

The irony of traditional Indian politics, like most of Indian business, is that the accused is also the jury and often the judged. Thoroughly compromised entrepreneurs wax eloquent about governance at AGMs and also at stage managed TV appearances just as political dynasts weaned on a gargantuan diet of public loot preach the credulous about probity in public life. 90% of listed Indian companies trade at a single digit multiple. For those who are not stock market savvy, it simply means that discerning investors don’t have too much faith in the integrity of their business practices or the reliability of their growth prospects.

In the stock market of nations (Davos is the closest possible indicator) India does not attract enthusiastic investor attention any more. If AAP has been changing the narrative of Indian politics, Infosys has tried but not quite succeeded in redefining Indian business due to its flip flops with separating the second generation of owners from the management.  And with no signs of the dynasts (including those who nonchalantly drive their super expensive automotive toys over hapless pavement dwellers) letting go of their family inheritances that characterizes the average Indian company, it is not just a generational change that will align Indian business to globally acceptable standards.

The paradigm change that is warranted would have to be unleashed by absolutely meritocratic fund managers who are not advocates of economic tribalism or support a crony capitalistic oligarchy which is the typical construct of most of our industries. Who will build this Silicon Valley type eco system that knows no caste, creed or community and does not consider the entrepreneur’s ability to corrupt the environment a competitive advantage?

Posted in Talent Market Trends

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