Until just a few months ago, the Indian economy was supposed to be booming, among the world’s fastest growing. Suddenly, high-level discussions are going on about a slowdown amidst disbelief and confusion. Although the Prime Minister welcomes businessmen as wealth creators, others in authority browbeat (like threatening a jail term for not spending corporate social responsibility or CSR
budget), bureaucrats interpret data to avoid upsetting ministers, while bankers and economists diagnose ailments from 30,000 feet height.
I have no doubt that government wants to appreciate the real problem, but it must first admit that there is a problem. Maybe it can follow the reductionist approach of understanding a complex system by studying the interaction of its parts as Descartes advised in 1637 in his Discourses Part V.
At an atomic level, the problem is that people feel bullied and threatened by the system. Important people have inadequate empathy for the unimportant people.
Power diminishes the mirror neurons in our brain, resulting in a lack of empathy. This affliction has been observed for centuries. The lack of empathy manifests as powerful people do not listen. They behave defensively, maybe even arrogantly. Molecular level issues are dismissed as stray, so leaders do not perceive the ground-level view. In this situation, leaders must assemble the ground level signals from the level of those who drive the economy — business and entrepreneurs.
With constructive intent and in good faith, I present a ground-level perception of the empathy problem that ails the economy through five stories of business. These examples are at the molecular level. This perception is the reality.
A well-known and successful entrepreneur committed suicide. In a note, he expressed his unbearable tension from the attitude and behaviour of tax authorities. This accusation may be incorrect, but it was his perception. The entrepreneur has surely expressed great pain.
An entrepreneur complained that he and his ilk were harassed by an “un-angelic” angel tax. Harshly worded demand notices were issued to many start-ups, and the advocates of entrepreneurship cried out in agony. This persisted for months, until energies began to get sapped and stocks of newsprint began to run out.
A mindless intent is announced that a shortfall in CSR expenditure will be treated as a criminal offence.
A retired manager was served a notice by the Service Tax Audit Department to furnish documents pertaining to 2014. His tax advisor’s response carried a covering letter which merely stated that “since the matter of the jurisdiction of Service Tax Audit is in the courts, the documents were being submitted without prejudice to the client’s rights”. The Service Tax Audit officer became furious. He threatened that he would pass a unilateral order and that the matter would go into appeals for the next 20 years. What a crude threat to a lawful tax payer!
A company director was served a non-bailable arrest notice by a criminal court in Bengaluru. The shocked director discovered that the Registrar of Companies, Bengaluru, had filed a criminal complaint that the director had served as director on more than 10 companies after the new Companies Act came into force on April 1, 2015. The director had to neutralise the non-bailable warrant by appearing before a criminal court in Bengaluru. After an expenditure of Rs 1.5 lakh (fares, lawyers’ fees, surety bond), the director submitted that the RoC had erred and that he had not been a director of more than 10 companies as alleged. (It is, anyway, unclear how this could be construed as a criminal offence). It took the RoC Bengaluru six months, including sending files to Delhi, to withdraw its original complaint without a word of apology to the distressed director.
Apart from the hardware of macro-economic policy, officials in power must implement a software solution of listen, listen and listen. There is a problem. If officials listen and switch on their empathy neurons, a more positive mood will surely emerge.
The author is a corporate advisor and distinguished professor of IIT Kharagpur. He was director of Tata Sons and vice-chairman of Hindustan Unilever. Email: firstname.lastname@example.org