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OPINION | Why Every Indian Must Wholeheartedly Support PM Modi's Defence of Private Sector

File photo of PM Narendra Modi speaking in Parliament.

File photo of PM Narendra Modi speaking in Parliament.

PM Modi's vigorous defence of India’s private sector and its contribution to nation building not only reflects his statesmanship and his genuine vision for country, but is also an inspiration for millions of aspiring entrepreneurs.

For India to grow, it must acknowledge the contribution of its private sector, and junk the Jurassic era’s deranged ideas of India’s political socialists who, for their own political agenda, wrongly project India’s Industrialists and entrepreneurs as ‘Class Enemies’ of people.

Political socialists in India, who preach socialism for petty political gains, have some unique idiosyncrasies. Even though one would often find them lecturing about wealth distribution among the mass, yet they would, with impunity, always criticise, abhor and have utter disdain for wealth creators. They never spare an opportunity to denigrate or destroy wealth-creating institutions or organisations.

One does not need to go beyond Bengal to find an example where, during 34 years of Communist rule, more than 58,000 factories had to shut down because of violent trade union culture, general apathy that Leftist parties genetically have for industrialists and entrepreneurs, and humiliation that many industrialists often had to face there.
As a result, millions of ordinary Bengalis lost their jobs, who along with factories, migrated elsewhere for better livelihood. Ironically, the champions of socialism did all this in the name of social welfare.

Likewise, most socialists of India, including those from left of the centre political parties and academia, have often voiced their reservations against integration of India with the global economy. They have equally been against FDI. If given a chance, they would put a blanket ban on all imports. And yet, ironically, political socialists have shown utter contempt for every Indian industrial house which was started from scratch by a persevering mind, and which produces all those products that reduce India’s dependence on imports and foreign investments.

Also, one would often find socialists clamouring loud for more job creation and would not spare any opportunity to create a political issue out of it. Yet, as usual, ironically, the socialists of India never spare an opportunity to either display their revulsion for every private sector enterprise of India which has strived to create jobs through growth.

From morning to evening, India’s unproductive socialists use every product, made by some or the other private company in India, and then, with an air of an intellectual, fake though, would give sermons, as to how those very productive Indian private sector companies, which make those products ‘are not good for India’.

It is therefore, not at all surprising that most of India’s socialists have more or less lost their relevance. The working class in general, don’t anymore wait for wisdom from foolhardy socialist leaders and professional activists, or anarchists, for whom creating trouble between private sector organisations and their employees, itself is a profession.

Practise Capitalism for Their Own Families but Preach Socialism for Mass

India’s self-proclaimed political socialists may not mind sending their own kids to top private schools, followed by stints in Ivy League Universities, (all of which are funded by private sector of US), and even possibly jobs in American investment banks. They may themselves be going to Europe or US frequently for vacation or treatment. And yet for the sake of their own self-serving political agenda, they would not spare any opportunity to denigrate Indian corporate houses through all kinds of name calling.
Many of India’s private sector enterprises have been founded by people from extremely modest family backgrounds who rose to great heights through their persistence and grit, and yet when they prospered, India’s regressive socialist gang, with anarchist mindset, mocked them and termed them nothing less than ‘looters’.
Political socialism, like elsewhere, thrives on poverty and destitution in India too. And therefore, anyone who has made it big, and has created example for millions of others to follow, is an anathema for India’s political socialist class.

Why PM Modi Deserves to be Applauded

Therefore, Prime Minister Modi’s vigorous defence of India’s private sector and its contribution to nation building, during his speech in Parliament, not only reflects his statesmanship and his genuine vision for country, but is also an inspiration for millions of aspiring entrepreneurs who are on the cusp of taking the giant leap of faith into the challenging world of starting an enterprise of their own, instead of depending on someone else to offer a job to them, or migrating abroad for a better life. Few politicians of India have the conviction to acknowledge the contribution of India’s private sector.

To understand the profundity of what the Prime Minister stated and why it is of immense value, one has to look back at where India was in 1947 when the country, recently released from the clutches of colonialism, was left with extremely rudimentary manufacturing proficiency. India’s nascent private sector those days, booming with enthusiasm to contribute to nation building, was, however, greeted with rude shocks when it realised that the ‘British Raj’ was only to be replaced by ‘Licence Raj’, wherein the state would simply not give freedom to India’s budding entrepreneurs from producing goods and services in a seamless ecosystem.

How Obstructive Socialist Culture Prevented Private Sector Growth till 1991

The restrictive ecosystem created by the ‘Licence Raj’ was almost like an apartheid for the Indian private sector, which had to seek clearances from almost 80-odd government agencies for getting a licence to commence production in India. Not just that, price control, production control, reservation for small-scale industries and ‘inspector raj’, created the most disruptive and adverse environment where it was next to impossible to flourish by gaining scalability and through innovation.
For almost everything, permission from the ‘sarkari babus’ was necessary and keeping them in good humour was essential. Such was the restrictive environment presided over by ‘babus’, that hundreds of thousands of bright minds with a spark to achieve big, gave up their passion for India and left for greener pastures in the US and elsewhere.
There they flourished by starting their ventures that got the necessary seed capital and institutional support to make them success stories. And, thus, bright Indians cast aside by India started creating wealth for the US.
A significant number of Silicon Valley-based tech start-ups in US were, therefore, founded by Indian immigrants thanks to the socialist culture and the stifling bureaucracy, even as India remained an ‘also ran economy’ which made shoddy products, which exported rudimentary stuff, which depended much on expensive imports and which was perpetually in shortage of foreign exchange reserves.

Bollywood’s Depiction of Private Businessmen in Movies of Socialist Era

Bollywood too played its part in vilifying industrialists. A typical Bollywood movie of socialist Seventies and Eighties, would essentially project the ‘hero’ as an angry, young and unemployed man while the ‘villain’ was always the quintessential ‘businessman’ projected as smuggler, molester, exploiter of mass, black marketeer and even anti-national. It took decades for India to acknowledge that some of India’s brightest and most successful industrialists deserve to be treated as national icons.
The ‘hero’ in movies was perpetually the unemployed man because ‘License Raj’ had made sure that businesses could not expand without numerous permissions and, thus, job creation was a distant dream.

How India Paid the Price of Socialist Follies

The net result of ignoring and refusing space for private entrepreneurs to germinate was that by 1991, India was on the verge of a severe balance of payment crisis and the economy barely remained afloat. Not that India’s state-owned enterprises did not do anything for the country. They did their part but it was not sufficient since the Socialist state did not allow the Indian private sector to become the perfect complementary partner of India’s PSUs to make India an economic force to reckon with.
In less than 30 years since their utter devastation in the Second World War, when private sector companies from Japan and Germany were creating world class automobile and electronics goods, India, in spite of all the potential, was still dependent on imports because it never allowed India’s private sector from becoming the next Sony, Mitsubishi or Mercedes Benz.

How Post-1991, Private Sector Metamorphosed Indian Economy

Post-economic liberalisation that was initiated in 1991, witnessed a fundamental metamorphosis of the Indian economy. With India’s private sector unshackled from restrictive laws that stifled their growth, they found wings to fly and make it big. In less than two decades’ time, India made a name for itself in sectors like information technology, automobile industry, telecom services and pharma industry to name a few. And needless to say, India’s ‘Babu’-led PSUs had little contribution in India’s meteoric rise in sunshine sectors. Almost the entire credit for the same goes to the ingenuity of India’s private sector driven by passionate entrepreneurs.

India’s Private Sector-Driven IT Revolution

Take for example India’s IT services sector, which in the year 2019-20 had cumulative revenues of $190 billion, employing 4.36 million people directly and many more indirectly. Names such as TCS, Infosys, Wipro, Tech Mahindra, HCL Technologies or L&T Infotech are globally admired for their proficiency.
India’s private sector created an industry and provided sustainable jobs to millions, which no wealth destroying socialist can ever dream of. For decades before economic liberalisation, it used to take months and sometimes even a year, for a business house, to get permission to import a computer to India. From there to create a $190 billion sector in less than three decades, only shows how much India’s private sector has contributed and how much Nehruvian Socialism stifled them up till 1991.

The Pharma Revolution that India’s Private Sector Created

The story of the rise of India’s private sector-driven pharmaceutical industry goes along almost the same trajectory. The country is home to thousands of registered pharma companies and more than 10,000 registered drug manufacturing entities. India exports around $20 billion worth of pharmaceutical products every year, is the largest manufacturer of generic drugs in the world, takes care of more than 50% of global demand of vaccines, and supplies more than 80% of global requirement of anti-retroviral drugs used for treatment of AIDS.
With a sectoral turnover of $40 billion, India’s pharma sector is slated to be a $130 billion industry by 2030. As is in case of IT sector, this sector too is known by the feats of India’s private sector enterprises like Sun Pharma, Lupin Laboratories, Dr Reddy’s Laboratories, Cipla, Aurobindo Pharma, Alkem Laboratories, Glenmark, Torrent, Mankind, Wockhardt and Biocon, to name a few. The list though is endless.

Driving the Automobile Revolution: From Tatas to Mahindras

The story of India’s automobile sector is no different either. For a country, which for decades produced shoddy cars, thanks to socialist India’s ‘License Raj’ policy, where people, deprived of access to quality products, used to froth in the mouth, at the sight of foreign cars, and where the elite projected their place in the social echelon by flaunting their imported vehicles, who would have thought that same country in less than three decades post-liberalisation of economy, would become a global hub of automobile manufacturing. Today, Tata Motors, Mahindra & Mahindra, Force Motors, Eicher Motors and Ashok Leyland are names to reckon with in the automobile industry. Today, Hero MotoCorp is the largest manufacture of two-wheelers in the world, Bajaj Auto is the largest manufacturer of three-wheelers and third largest manufacturer of two wheelers globally, while Mahindra & Mahindra has revolutionised the SUV sector and is the largest manufacturer of tractors in world.
When TATA Motors acquired Jaguar Land Rover from Ford Motors, Tata Tea acquired Tetley of UK, Tata Steel acquired Corus of UK, Bharti Airtel acquired Zain Mobile in Africa, Hindalco acquired Novelis of Canada to name a few, those were matters of pride for India and imbibed an unprecedented level of confidence among Indians to pursue global excellence.

How Private Sector Empowered India through Telecom Revolution

One of course would also have to make a special mention of India’s telecom sector and how India’s private sector has contributed towards it. Those who know how Indian telecom was when it was a monopoly of Department of Telecom and how it has metamorphosed today, know that it is a saga in itself. From a time when possessing a landline was an exclusivity of only the rich and the connected, when keeping the local linesman happy or standing in queues for hours to make a call at phone booth were norms than exceptions, when keeping an eye on number of minutes one has talked on phone was more important than the call itself, when pleading with ‘babus’, throughout the hierarchy, to get a phone connection or against inflated bills were routine, when helplessly accepting both the pathetic service and ego of telecom department officials, were a regular affair, the transformation that today’s India witnesses when call rates have transmuted themselves to ‘unlimited call’ packages, the journey could not have been more astounding.
Entry of private players unleashed a new era where the telecom customer was now the king and no more a subservient subject at the mercy of ‘babus’. It paradropped India to a new era of telecom-based services industry and created the foundation of India’s digital economy. In this revolution, the contribution of Bharti Telecom, Vodafone, Idea telecom and, of course, Reliance Jio simply has to be respected. Reliance Jio, in particular, brought in the second generation of metamorphosis in the telecom sector.

From Nowhere to Second-Largest Mobile Manufacturer of World

Also, in the realm of mobile manufacturing, today, India has more than 300 companies making mobile phones in India that generated revenues of $30 billion in 2019 thereby making India the second-largest mobile manufacturer of the world. In this sphere too, it is almost entirely the private sector that has contributed. Therefore, if today India has more than a billion mobile connections and if even an Indian with modest means can afford to buy a smart phone or make unlimited calls in a month, the credit for that goes to India’s private sector.

Saga of Private Sector Contribution Same Across All Sectors

The story remains the same across most sectors from aviation services to FMCG and from consumer durables to textiles, and of course the services sector, which contributed to more than 50% of India’s GDP. In all of it, the role of Indian private sector is simply remarkable in turning around a moribund economy on the verge of balance of payment-driven bankruptcy to be on the threshold of a $3 trillion economy (just before Covid pandemic) with more than $500 billion in forex reserves.

In this turnaround the role of some major foreign private companies who have almost made India their second home, namely Hyundai, Samsung, LG, Suzuki or Honda need a mention as well.

Contribution of Top PSUs Deserve a Mention Too

It is not, however, to say that no PSU is good enough. There are definitely PSUs like BHEL, NTPC, Indian Oil Corporation, ONGC, GAIL, BPCL, HPCL, DMRC and Power Grid Corporation, to name a few, who are giants and are profitable. But it is equally true that on their own they would not have been able to take India to where it is now.
There are several instances where state-owned entities have joined hands with private sector to create world-class results. HAL’s LCA Tejas programme involves 500 Indian MSME companies while the role of companies like L&T, Godrej Aerospace, Inox Technologies and many more, can simply not be undermined in ISRO’s successful space programmes. Moreover, hulls of India’s indigenously developed nuclear submarines are made by L&T.

Making Loss or Being Shoddy Cannot be a Virtue

In fact, India has to come out of the quintessential socialist culture which projects making ‘loss’ as a virtue and making profit as a ‘sin’. There are hundreds of PSUs at the state and central level whose cumulative loss would be in several thousand crores every year. Its resultant impact on their inability to pay back the banks or failure to invest in capacity enhancement and then depending on the government to bail them out with taxpayers’ money is deplorable and is a sheer burden on the economy.
The whole culture of cost and time overruns that has become synonymous with PSU functioning has to change. One has to ask any Army officer how the armed forces have suffered, for long, due to shoddy products, lack of professionalism of state-owned Ordnance Factory Boards, which never spared an opportunity to charge much higher than market price even for those shoddy products.
As per an Army report, due to poor quality of OFB ammunitions, it was facing an accident almost every week of the year. It is not to say all private sector companies are great. Those who are unscrupulous deserve to be dealt with strong action but the benchmark cannot change if the same is done by a PSU.

Respect Every Entrepreneur for Making India What it is Now

Founders of every Indian enterprise, starting from the 6.39 crore-strong medium, small and micro enterprises (MSME), 50,000 odd registered start-ups and creators of giant industrial conglomerates, are winners and patriots in their own way, because each of them strived to do something on their own instead of either waiting for government to provide them with a job or exiting the country altogether. They create wealth not just for themselves but also create jobs for countrymen and pay taxes in hundreds of thousands of crores to governments. Social welfare for the downtrodden would not have been possible without the tax paid by corporate entities and those employed in the industry.
While it is very easy to do name calling and denigrate some of the top industrialists of the country, for the sake of furthering petty political agenda, one has to remember that some of India’s iconic industrialists could have simply migrated elsewhere or taken citizenship in some European country to live a life of comfort after having earned enough here. Yet they did not. They stayed back and continue to strive harder for creating better products and services for making India self-reliant and to empower the mass.
Also, large companies and industrial giants create the ecosystem to integrate the MSMEs into the components manufacturing supply chain and develop a sustainable symbiotic relationship from which both benefits. One cannot sustain without the other.

Time for India to Junk Jurassic Age Ideologies of Political Socialists

For India to grow, India needs not just one or two but millions of successful entrepreneurs with passion to create billion-dollar enterprises. For India to grow it must junk the Jurassic era’s deranged ideas of India’s political socialists that wrongly project India’s industrialists and entrepreneurs as class enemies of people. The strength of US, Germany, Japan, China or Israel does not come from the size of their military arsenal alone but the strength of their economies and the number of globally competitive business enterprises they have. India must learn to respect the incredible contributions of its iconic enterprises and visionary industrialists, and inspire the coming generations to follow their footsteps instead of the path of cynicism and anarchy taken by political socialists.

The author is a geopolitical analyst. Views expressed are personal.

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first published:February 15, 2021, 19:27 IST