Is Bjp'S Honeymoon With Industry Over?

Congress president Sonia Gandhi's visit to Mumbai last Sunday was significant not so much for the tough, political message that it sent to the BJP and its allies, but for the extremely encouraging response that she got from unexpected quarters in corporate India.

At the public meeting, Ms Gandhi launched a blistering attack on the Maharashtra government and demanded that chief minister Murli Manohar Joshi tender his resignation in the wake of the Sri Krishna Commission report on the 1993 Mumbai riots. Politically, it was an astute move. It sought to win back the Muslims and liberal Hindus, a constituency which the Congress had lost in the last elections through its sheer indifference to them. Coming as it did a few weeks after her first public rally in New Delhi to debunk the Vajpayee government for its "all-round failure", Ms Gandhi's castigation of the Maharashtra government put all her political rivals on the alert.

 

But a more significant development took place after the public meeting. A large group of industrialists met Ms Gandhi. It was an informal meeting. But the industrialists decided to talk to her about the virtual paralysis that had gripped the government at the Centre. Implicit in their disenchantment with the BJP rulers was a plea that the Congress should galvanise its forces and throw out the present government. Ms Gandhi did not make any promises to industry leaders. But she must have surely felt encouraged to see how Indian industry's honeymoon with the BJP rulers had ended abruptly and in a relatively short time.

She would also have been surprised to see how several industrialists who swore by the BJP in the last elections were now disillusioned with the party and were about to switch their loyalties to the Congress. According to an industrialist who attended the meeting, the shift in industry's stance towards BJP is quite dramatic. If 80 per cent of industrialists were in favour of the BJP during the last elections, today the number of BJP sympathisers will not be more than 20 per cent.

Why is corporate India disillusioned with the BJP-led government? There can be many reasons. One, the expectations from a BJP government, the first at the Centre, were very high. Indian industry hoped for quick and effective decisions to put an end to its woes caused by an industrial recession and a depressed market. Instead, the BJP-led government has moved very slowly on many issues that needed to be tackled to revive the sentiments.

For instance, finance minister Yashwant Sinha had proposed to introduce buy-back of shares. The move was expected to help Indian promoters consolidate their stake in their companies and, as a consequence, boost market sentiments. But the government is yet to make up its mind on how the buy-back provisions should be introduced in the company law. Should it be an ordinance now or should the corporate sector wait for a Bill to be introduced in Parliament's winter session?

Take the proposed Bill for opening up the insurance sector as another example. Within the government, there are divergent views on the question of allowing private sector competition in insurance. Chances of resolving these differences are quite remote. Nor does the BJP government have any strong leader at the helm to push these proposals through the Cabinet.

And when the finance minister imposed an 8 per cent special import duty on imports, believing that he had done it at the industry's behest, there was all-round hue and cry over it. Even industry started clamouring for its withdrawal. Finally, the finance minister was forced to reduce the proposed duty by half. But yet, industry remains dissatisfied.

Should the BJP leadership get worried over the industry's disenchantment with its government's policies and performance? One view is that no industry is ever fully satisfied with any government. But what has happened with the BJP is quite unusual and, therefore, quite serious. Here was a political party that seemed to be the darling of Indian industry. Even as counting of votes after the last general elections was going on, industry leaders were asked if they would prefer a BJP government at the Centre. The general refrain then was: Give BJP a chance at the Centre.

True, the BJP did not get a chance the way it wanted. It had to form a coalition government after failing to muster a clear majority on its own. But what has the coalition nature of the government to do with its performance? What stopped this government from presenting a budget that could have speeded up reforms, facilitated increased investment and expedited removal of infrastructural bottlenecks?

Much of industry's disillusionment with the BJP-led government's performance is on account of the internal bickering among party leaders and various party organs. Beginning from the allocation of the finance ministry portfolio to the opening up of the insurance sector, Prime Minister Atal Bihari Vajpayee has been hamstrung by internal pulls and pressures from within his party and the party organs. A depressed capital market and a prolonged industrial recession may have made the government's task of economic management more difficult. But there were no other external agents that restrained BJP's functioning.

So, if today, the industrialists talk about the need for a change in the government at the Centre and wonder if the next budget would be presented by the present government, the BJP leadership should do some serious soul-searching.