It is important to examine the context and implications of what Mr Bajaj said in Mumbai last week in the presence of a galaxy of Indian industry leaders and senior ministers seated on the dais from where he spoke out his mind. Note that the octogenarian industrialist prefaced his critical comments by saying that the Modi government
was doing some good work. But what hurt him was that industry leaders were not sure if their critical comments about the government would be appreciated and received in the right spirit.
This is a slightly different narrative from the general criticism of the manner in which the Modi government has handled the challenges faced by the Indian economy. Mr Bajaj’s comment was not on the way the Modi government was dealing with the challenges that have arisen out of the current slowdown. He was a founder member of the Bombay Club that in the early 1990s had demanded a level playing field for domestic industry to help it face the challenges from the opening up of the Indian economy. Today, Mr Bajaj could not have been uncomfortable with the Modi government raising tariffs or even pulling out of the Regional Comprehensive Economic Partnership or , which would become the world’s largest trading arrangement.
Thus, the criticism was not for the Modi government’s economic policy stance, but for the manner in which it had shut itself off from any feedback from industry, which was now afraid to make any critical comments. Biocon Chairperson and Managing Director Kiran Mazumdar Shaw endorsed Mr Bajaj’s observations and hoped that the government would now reach out to India Inc to discuss how economic growth could be revived. So far, industry leaders were all pariahs and the government did not want to hear any criticism of the economy, Ms Shaw said in a social media comment.
What Mr Bajaj, therefore, was actually pleading for was that the Modi government must revive the communication links between India Inc leaders and the ruling political establishment. He seemed to be articulating the desire of India Inc leaders that the terms of engagement between industry and the Modi government must be reset. Those terms had been reoriented early in the life of the first term of the Modi government. Indian industry had hailed the Bharatiya Janata Party (BJP) government because it believed that its leader, Narendra Modi, would usher in more economic reforms. True to such expectations, Mr Modi did try hard to amend the land acquisition law, but eventually gave up after recognising the growing political resistance to that idea. In the remaining years of that government, Mr Modi did introduce many reforms like the launch of the goods and services tax, real estate regulation and a legal framework for insolvency and bankruptcy resolution. Even in its second term, the Modi government has taken a few bold measures like the cut in the corporation tax rates and a roll-out of an ambitious privatisation programme.
But it was becoming clear that the Modi government would not like to be seen to have come close to the Indian industry. To be seen as very close to India Inc seems to carry a political risk that can create hurdles in the BJP’s way to acquire more political capital and gain electoral mileage. In such a situation, Mr Bajaj’s criticism that Indian industry leaders are afraid to criticise the government actually helps strengthen the BJP’s political image of not being close to India Inc. Even after returning to power after the general elections of 2019 with a greater majority in the Lok Sabha, the BJP leadership continues to be obsessed with the idea of increasing its political capital and political footprint in the country.
That is largely because the BJP’s performance in the Assembly elections in Maharashtra and Haryana was a setback. It needs to bounce back with victories in the forthcoming round of Assembly elections. To be seen as a government that has no cosy relationship with Indian industry leaders, who as a result are afraid of speaking out against government policies, can politically help the BJP in the coming round of Assembly elections. Mr Bajaj’s comments have only helped bolster that image.
The fact is that a close relationship between India Inc and the government cannot help the BJP win elections. On the contrary, an India Inc that is comfortable with the BJP government and has a special or friendly relationship with it can have an adverse impact on the party’s political fortunes. While opposition political parties may feel good about Mr Bajaj criticising the Modi regime, the BJP should actually be seeing the indictment as a political boon.