Modi’s greatest feat: Booting out big corruption

Narendra Modi’s biggest achievement in his first year in office is, arguably, a huge reduction in big corruption (involving top politicians and industrialists). Hard data on corruption doesn’t exist, so assessments can be subjective and incomplete. But for the most fascinating, credible insights into the government-business interface, please read a May 5 report in The Economic Times, on how India Inc views Modi’s first year.

ET spoke off the record to top industrialists, politicians and civil servants across India. The major findings:

Many top businessmen are disappointed and disillusioned with Modi. Economic growth has not picked up as expected. Many complain Modi is giving priority to populism (Jan Dhan Yojana, Swachh Bharat etc) over hard economic reform (like the land acquisition bill).

Industrialists complain of “neglect” and “lack of access”.

Among those interviewed “there was virtual unanimity that corruption at the top had declined dramatically”. This finding — first highlighted by TOI which interviewed prominent businessmen in February — represents a sea change.

“Weeding our corruption from the highest levels of the government was much needed,” says a Delhi industrialist. But “in the short term, this may have led to decisions not being taken on various projects”.

Modi worries that Opposition jeers that he favours rich industrialists may sully his image with voters. So he addresses only policy matters, not projects affecting individual industrialists. “But there are issues with individual projects,” says an industrialist “which no one wants to iron out”.

As chief minister of Gujarat, Modi wooed industrialists and was very accessible. But as Prime Minister, he neither woos nor wants to be wooed, and has become inaccessible. “We met him more when he was the Gujarat CM.”

This inaccessibility applies also to Amit Shah. “He is concentrating on building the party and does not wish to get into sorting out the problems of companies or socializing with them…So who do we go to get our legitimate issues resolved?”

A BJP member says: “There are Rs 6-7 lakh crore of stressed assets (unviable projects). That’s the biggest problem for industrialists and government is not doing anything to address them. The government is only looking at future projects such as bullet trains.”

Top industrialists at a CII meeting complained they had expected more from the government. “The PMO was furious and a strong message was sent to CII not to organize such forums,” said a bureaucrat.”There is a sense of fear among corporates, and people are wary of speaking up or giving suggestions.”

One industrialist complained about a few bureaucrats who he felt were “not working properly and should be changed”. Modi’s rejoinder was scathing: “Aap apni company chalaiye, aur mujhe apni Sarkar.”

Earlier, appointments of public sector bank chairmen entailed hectic lobbying by industrialists.”That has almost come to an end now because the PM is strictly against it.”

One investor speaks of a governance transition. “Most big industrial groups are used to fixing things, which is not happening in this government.”

The police raids on the Petroleum ministry and the arrest of officials as well as corporate employees in the “corporate espionage” case have alarmed India Inc.

Ministers are largely powerless because every file goes to the PMO. Over-centralization, say some industrialists, is leading to policy paralysis of a new sort.”This is a one-man show. The PM is trying to run everything from defence policy to foreign policy to finance.”

A Mumbai industrialist says, “We fund many parties but with Narendrabhai we can’t expect a quid pro quo. No one can tell him that just because I gave money to the party for the elections you do this for me.”

I am delighted that so many industrialists are unhappy with Modi for refusing them access. This indicates a totally new situation where industrialists cannot negotiate clearances and policy changes at private meetings. I am delighted that businessmen can no longer influence the appointments of bank chairmen, or get inconvenient bureaucrats transferred.

A single news report cannot be conclusive. New scams may crop up. But I agree with a foreign bank chief that “Modi is bringing about a fundamental change in the paradigm of doing business in India. If he succeeds, connections will not matter. Industrialists will have to focus on their competence rather than manage connections.”

What about Congress accusations that Modi’s changes have benefited only “suited-booted” businessmen, not ordinary folk? What about the claim Modi’s business friends and financiers, such as the Adanis and Ambanis, are now reaping the rewards of cronyism? These issues merit a full column. I will deal with them next week.

2 thoughts on “Modi’s greatest feat: Booting out big corruption

  • 2015.Jun.07 at 12:20

    and biggest failure?
    administrative reforms perhaps

  • 2015.May.27 at 10:57

    The article seems a little conclusive, how can we be judgemental or in other words be presumptive about the way the govt. is handling things. Not wooing the industries can be negative in the fact that making policies and implimenting them needs the top investors and the public to be satisfied, thus it sounds more as a diplomatic move ncidenting an impression of no clear path on driving the application part of it.


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