Company they keep

Corporate battles off the marketplace sometimes produce only losers. The frequency of this outcome depends on political-economic structures. So Ratan Tata’s televised comments that fomenting the Singur agitation may be his rivals’ off-market business strategy needs to be read in India’s current political-economic context. India is now less prone to corporate-political intrigue than it was when Government licences and import quotas were the most important determinants of business fortune. Things may apparently look slightly better now than in the early reform years and the early part of this decade. Then we had seen, among other things, the premature death of airlines project joint ventures and controversies over Telecom technology and sale of public sector Oil units. But the recent airport reform came through amidst suggestions of lobbying. There have been other cases, over pricing of some natural resources and power projects, before Singur joined the list.

Our columnist today argues that such off-market corporate strategies can in part be disincentivised by laws like the one that guarantees the right to information. RTI, especially with file notings now part of the disclosure process, can make policymakers more careful about whom they award what and how. In cases where corporate intrigue takes the direct political, as opposed to policy-political, route, right to information rules will help less. There, the best disincentive is the possibility that today’s strategists may have to reckon with the same strategy being used against them tomorrow. Political support is both fickle and remarkably negotiable. And with both politics and economics becoming more competitive — the old order had a handful of big players in both — the chances of reaping what you sow off-market are higher now.

Another implication of India’s current transformation for the issue Tata raised is that society now increasingly looks at Corporates as role models — the middle class especially has got over its Nehruvian bias against commerce. Intrigue doesn’t do anything for a company’s social equity, which is important these days for market equity. And remember intrigue needn’t be proved. Credible sounding allegations repeated often enough are sufficient. Corporates would be well advised to restrict their fights to the marketplace.

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