A chorus of agreement

Why does India Inc praise every Budget?

The National Democratic Alliance government's first Budget presented last week disappointed several analysts and commentators. Many of them saw it as a missed opportunity to have seized the political moment, and the large and transformative mandate that the general elections provided the government, to launch far-seeing reform. An incremental and workmanlike Budget, when seen from that perspective, could hardly have enthused reform-minded observers.

Yet there is one set of well-informed, reform-friendly observers who nevertheless think the Budget is the finest thing since sliced bread: several leaders of India's private sector. Many of them are united in their praise for the visionary prime minister, the bold finance minister and the far-seeing Budget. Listening only to such brave leaders of India Inc, any observer might be fooled into thinking this Budget set off a second generation of vital reform. However, those who have been familiar with the ways of India Inc knew better. After all, previous Budgets were also hailed thus, as were the finance ministers that presented them. Even the "retrospective" Budget of 2012, now being seen as a crucial nail in the coffin of the India growth story, was hailed at the time by many leaders of corporate India. There is no Budget in India's history, in fact, that has not been liked by them. Like doting mothers, they have unerringly found cause for hope and signs of brilliance in even the most depressing and statist policy programmes. The upshot is this: few will turn to the statements of even the smartest of corporate leaders for elucidation about what was actually right, or wrong, with a Union Budget.

In case anyone was wondering, this loud, one-sided optimism from several leaders of India Inc about everything the Indian government does is not born of experience, or of patriotism. It is in fact a simple cost-benefit calculation: no harm is done by praising a Budget, but much harm may be done by criticising one. Partly, certainly, this mindset is the fault of Indian business. It needs to be more forthright about what it needs to grow, instead of relying on a benevolent government to ensure a comfortable stream of profits. Too many companies will see no profit in reform, and are happier wallowing in the swamp of rent-seeking that many sectors of the Indian economy have become. Yet, to a large extent, the fault is that of the unreformed economic system that the Indian private sector must endure, and of the thin-skinned government functionaries that refuse to change it. As long as powerful Union ministers see nothing wrong with the idea that they can respond with personal anger to business leaders' impersonal criticism of their decisions, this state of affairs will continue.

In other countries, the act of policy advocacy by companies is much more sensibly conducted. This maturity in the government-business relationship extends to more than just lobbying. This is also about attitudes to larger questions of economic openness. Disagreement over the pace or quality of administration or reform is expressed by business - never as forcefully as by political partisans, but clearly. It does not mean that they are supportive of the opposition to whichever party is in power. In India, unfortunately, these distinctions have yet to be drawn. Perhaps this is because so much political funding is opaque; if an American businessman says something that criticises a political party, they know it is criticism, and nothing else. In India, because monetary support is not transparent, greater suspicion reigns.

Perhaps it will take a long time for Indian politicians to grow less suspicious. But, at the very least, it can be hoped that their untrammelled power to enfeeble robust companies or enrich their rivals will not last too much longer. Once that power is taken away, it is possible that India Inc's constructive and objective criticism of government policy will be heard. But, till that time, don't hold your breath.