Corporate governance in India even
now means government governance
Dong Hyuck Shim, the deputy president of South Korea's largest
bank Hanil Bank (1996 assets: $60 billion), was impressed. In October,
Hanil Bank had put in an application to open an Indian branch.
Six months later the bank started its operations in New Delhi.
"There wasn't much of bureaucracy and red tapism. It usually takes about three months to start operations after you have
put in an application. I am sure India will catch up with that.
It is truly becoming an economically liberalised country,"
he confessed.
It is? How does one go about getting work done in India?
Can anybody do business in India independent of bureaucratic sloth? Can business
with the government be done in a swifter, transparent way? Can
our babus become managers?
In March, former prime minister H D Deve Gowda and Finance Minister
Palaniappan Chidambaram had held an hour-long meeting with secretaries to various
economic ministers and infrastructure-related departments about this. Both
complained the bureaucracy was extremely slow in implementing
decisions already taken by the Cabinet. Administration has to
become more people-friendly and result-oriented.
That's easier said than done. Here's one example of how the government's
economic team takes swift decisions. On March 31
P G Kakodkar, the chairman of India's biggest bank, the
State Bank of India, retired. Was there a successor immediately named to take
his mantle? No. Why?
"I don't know," says Kakodkar,
adding wryly, "They have had my date of birth in their records
for almost 40 years."
The reason for the delay is that the prime minister did not have the time to
look at the file. Why the
PM -- and not the SBI's board of directors -- must clear the chairman's name is a good example of how corporate governance in India even now
means government governance.
Foreign Institutional Investors must
wonder (after all, they own about 24 per cent of
SBI's equity) how India's biggest bank managed without a CEO for several weeks after Kakodkar's retirement.
If you think that is alarming, hold on. Another highly successful public sector bank, Canara
Bank, was headless for almost six months!
So why blame the bureaucracy? But to be fair to Deve Gowda and Co,
decisions were taken much faster than before. One
senior bureaucrat admits, "In the last three years of the
Congress regime, 3 out 10 economic decisions taken used to be implemented. Now the ratio has jumped to 6 out of 10."
One reason why businessmen are still getting in the quagmire of
babugiri is the power tussle between bureaucrats and their masters -- politicians. And between bureaucrats and bureaucrats. An example
of the former, as one additional secretary points out, is Uttar Pradesh. Six months after President's rule (read
inaction), now you have chief ministers who rotate their posts
for six months! What can business do? Daewoo is still scratching
its head for its plant's expansion in the state upon which hinges
its plans to launch a small car. Honda's officials (who have tied
up with SIEL) are running from pillar to post trying to obtain
minor clearances.
To check misuse of powers, Cabinet Secretary T S R Subramaniam
has asked former department of personnel secretary N Ranganathan
to draft a code of ethics for bureaucrats. Funnily, one of the
codes in the draft reads, "Bureaucrats owe their loyalty to
the government of the day and not to any political party."
Wonder how the bureaucrats in the Centre and in Uttar Pradesh
will interpret this code.
Now for the tussle between bureaucrats. In the finance ministry,
the winds of change are no longer blowing from Finance Secretary
Montek Singh Ahluwalia's desk. Instead they are now flowing from
Revenue Secretary N K Singh. Chief Economic Advisor Shankar Acharya
has, as one unkind businessman put it, nobody to give advice to.
How does all this affect business? Simple: Some time ago,
one of India's leading chambers of industry put in a proposal
to the finance secretary asking for clearances to hold a seminar
on small scale industries. One month later nothing happened. An
official of the chamber met the FS himself and asked
why there was no action. "Oh, I am just a
Post Box No, yaar," confessed the FS.
The proposal
was sent again, this time to the additional secretary in the ministry.
It was promptly cleared.
One encouraging trend is that delicensing and deregulation is
now de rigeur (the new Exim policy has put more than
500 items on the OGL import list -- which means you don't need
to approach the babus for these 500 odd licences). Accountability
is in. The Foreign Investment Promotion Board has to make its
decision clear within 31 days of the application.
Remarks a bureaucrat in the administrative
reforms department. "If you want to have results, then you
have to break rules."
Will anyone break them?
Mahesh Nair, writer and commentator, currently produces the popular Business Agenda programme for the Star Plus television channel.
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