COVER STORY

'The playing field favours foreign companies'

In an interview to Suhrid Sankar Chattopadhyay in Calcutta, Rajive Kaul, chairman and managing director, Nicco Group, and former president of the CII, presents his views on political donations by industry, the expectations of big business f rom the political establishment, and the direction of economic reforms. Excerpts:

What does big business want in terms of political outcome?

I cannot say what big business wants, but I would like to see the next government, of whichever party it may be, continue the liberalisation process which has been set in pace over the last seven to eight years. The biggest requirement, apart from a user -friendly regulatory framework, I feel, is for the government to focus on massive investment in the area of infrastructure - in particular, power, roads, railways and ports. This is desired also as a vehicle of bringing back strong robust growth which th e industry urgently needs.

How far have the verdicts in the last four elections contributed towards providing stability in the policy environment - in terms of tax rates, currency parities and an industrial regulatory framework?

The last four elections have provided continuity in the reforms process, irrespective of the different governments in power. The degree of success in the implementation of the policies has been varied, but the direction has been the same.

Which party is perceived as being the best equipped to deliver on these counts, and why?

I am no political pundit to forecast the elections, but what we need is a stable government which will continue the process of economic reforms, liberalisation and deregulation at a faster pace.

Is the direction of economic deregulation and liberalisation appropriate? Is there a need for acceleration, or should the pace be tempered to take into account the vulnerabilities of the Indian industry?

Rapid growth can only come through an accelerated growth of investments, which in turn will have to come from savings, be they domestic or global. India has been doing well on the domestic savings front. What we need to fund our large infrastructure requ irements are global savings flowing into this sector. This can by achieved by accelerating the reforms process.

Is a limited degree of protection seen as essential in the context of the current industrial downturn?

What we saw in the last phase of reforms was the opposite of protection. In most cases, the playing field is tilted in favour of foreign companies. This aspect is of great concern and is extremely unfair. The playing field should either be level or tilte d in favour of Indians.

Do you feel that there has been a gradual dilution of the partnership role between Indian industry and overseas multinational enterprises?

Yes, I do feel that. MNCs are keen to take complete charge in the case of erstwhile joint ventures. This is an aspect which Indian companies must keep in mind when they enter into joint ventures. MNCs will always have deeper pockets and therefore the edg e in the ultimate race for control.

Would it be necessary to regulate the entry of MNCs into certain industrial sectors?

Not really. In any case under future WTO requirements, there will be no entry barriers.

How has the Indian industry historically related to political parties?

In the early days of our independence, there was partnership and trust. Thereafter, the industry became the favourite whipping boy for the politicians. Thanks to the reforms process, a sense of partnership and working together is emerging again.

What have been the methods and purposes of corporate donation to election funds? Is the example of transparency in political donations that the Tatas have tried to establish worthy of emulation?

My personal belief is that elections should be funded through levies and taxes, which would provide requisite resources for the same. There should not be any connection between industry houses and political parties. In fact, if government funding and tra nsparency is brought about, it would do a lot of good to our system.

Do governments still have some residual leverage from the licence-quota-permit system to induce political donations from corporate houses?

With progressive liberalisation, it is reducing.