How the Relationship between the Present Government and India Inc. Needs Repair

Why the Indian Government and India Inc. Need Each Other and Must Work Together

The government and the business community are like two pillars of the political and economic system and any disturbance in their mutual coexistence can disturb the entire nation and the structures on which it is built.

In other words, the government needs the business community to invest and to create jobs as well as spur economic growth and in turn, the business community needs the government to be business friendly and to make laws that catalyse entrepreneurship and encourage investments and overall economic prosperity.

While the fully Free Market Economies in the West have the government and the business community going about their functions with little friction, in developing and just reforming countries such as India, there is a latent tension that sometimes erupts into the open whenever the business community feels threatened and harassed by the actions of the government and whenever the government feels that the business community is not pursuing strategies to its liking.

However, such tensions have to be managed to the mutual satisfaction of either so that the overall climate for doing business is not affected.

Moreover, with each needing the other, there is also no point in taking feuds and disputes to breaking point of the relationship.

Of course, in recent years, this relationship has been strained as we would discuss next.

Why Businesspersons are Up in Arms: Tax Terrorism, Action for Past Deeds, and GST

There have been man such instances where businesses and business leaders have openly chastised the government for the repeated harassment of the business community in the form of Income Tax Raids and other moves, and the Indian government in turn, pouncing on the businesspersons for not embracing the GST or the Goods and Services Tax which it believes is vital to the economic growth of the nation.

On the other hand, there have been other irritants such as the Modi Government indulging in what is known as Tax Terrorism wherein it unleashes the Income Tax Department to conduct raids on businesses and businesspersons, which while warranted in many cases, have the industry up in arms against what they perceive as undue harassment.

Having said that, the government is also right in opening and reopening the cases against India Inc. for their deeds done during the last decade or so when the Manmohan Singh government was in power.

The justification for this is that India Inc. ought to follow the laws of the land and hence, nobody is above the law.

Accounting for Bad Loans, Past Mistakes, and Sourness when the Good Times are Over

Another potential flashpoint between Indian Industry and the Modi Government has been over the management of the Bad Loans in the Banks or the NPAs (Non Performing Assets).

The Modi Government contends that businesses have borrowed liberally and without thought for the consequences during the previous two decades and as the Chickens are coming Home to Roost now, India Inc. has to either cooperate or face the music.

However, Indian businesses feel that this part of the cyclical economic trends and hence, sooner or later, economic growth will pick up and the NPAs will turn performing.

Talking about economic growth, it is the case that the Indian Economy is in the Doldrums and this present state of the economy is leading to much angst and outright loathing between India Inc. and the Modi Government.

Indeed, one must point that the Good Times are over and as in any relationship that sours when the happy phases are over, similarly the business community and the government now have to re-evaluate their relationship.

This is the crux of the problem that has emerged in the relationship between the government and the business community.

The Present Atmosphere of Fear is not Conducive to Businesses and Entrepreneurs

If one were to ask how this relationship can be repaired, it is worth noting that the Modi Government has been especially proactive in favouring certain business houses and hence, perhaps it is time for it to extend the favours to all instead of a few.

On the other hand, Industry should not complain too much because it has lost preferential access to the Corridors of Power since Big Ticket Corruption has come down and this surely must be a relief to businesspersons, at least the honest among them.

However, the way in which the government is hounding entrepreneurs’ leaves a lot to be desired as pushing them beyond a point is counterproductive as the case of the Late VG Siddhartha, of Coffee Day, shows.

Another worrying aspect is that normally staid business leaders who usually do not comment on politics are now speaking up making the government uncomfortable and in turn, face the heat for their comments, which includes regulatory action and cancelling of licenses and other approvals.

In other words, adding to the economic woes are the curbs on Free Speech and the Chilling crackdown on dissent that creates an atmosphere of fear and uncertainty everywhere.

Conclusion

Last, given the fact that the Budget is to be presented in a few weeks time, it can be an occasion for this relationship to be repaired to the satisfaction of both and which would hopefully lead to the revival of business sentiment and the rejuvenation of the Indian Economy.

Neither exists in vacuum and hence, both sides have to walk towards each other for the good of the nation.

To conclude, the present frosty relationship between the Modi Government and the India Inc. does not benefit either and hence, it is high time they make amends and work together.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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