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Wednesday, Oct 02, 2002

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Can influencing govt be ended?

IT IS SOMEWHAT curious that Mr L. K. Advani, should be talking of the business community interfering with the Government's decision-making process when he spoke to Assocham members. As the Deputy Prime Minister, he ought really to explain to the public what the situation is in governance. For, perhaps the Government has allowed itself to be influenced in its policy formulations by vested interests in the business community; in which case, the public ought to be told why this is so. Or, decisions in recent years have indeed been taken solely in public interest; so the public must be reassured that such attempts would be persisted with in future, as well. By being somewhat equivocal, Mr Advani has only triggered public anxieties on the question.

Historically, businesses have always been interested in tailoring public policy to their interests. A transparent pursuit of such interest would be entirely in order, as Mr Advani himself admitted in his speech. In fact, its failure to do so might well be regarded a breach of the fiduciary obligation it has towards stakeholders in these businesses. That there has been unfortunately, over the years, a distortion of this process can be ascribed to a combination of circumstances. In an era of restrictions on capacity creations and import of critical production inputs prior to 1991, the scope for monopoly profits were indeed enormous if decisions could be manipulated to favour some, while excluding others. Since there is vigorous competition among business groups, the attempt at such influencing must be quite vigorous and often starts very early in the process of a party attempting to capture power. Added to that is the phenomenon of winning popular mandate in itself becoming an expensive a proposition forcing political parties to court financial backers from among those in the business community. Throw in the venality of politicians themselves who see in the institutional arrangements under democracy as sources of private profit, the bonds that tie politicians and the business elite can only be described as exceptionally strong. The liberalisation process initiated in the early 1990s may have altered the old circumstances, but has surely given rise to new sources of opportunities. The controversy that has dogged some of the PSU disinvestment initiatives is only a manifestation of the changing profile of the distortions in the decision-making process in the government.

The Congress, which ruled India for nearly five decades of its independent existence, may have much to answer for the current state of affairs. But it is futile for the present Government to continue to harp on it. In the final analysis, how the business community responds to a given situation or, not to put too fine a point on it, how it exploits opportunities that the environment offers depends entirely on the quality of governance that the political elite provides. To expect of the business community a level of morality that is more stringent than standards of ethical behaviour that the ruling establishment sets for itself would be unrealistic. Rather than plead for a bout of self-denial by the business community, Mr Advani would do well to ask of his Government if it can do something to prevent meddling by vested interests.

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