How we got smart in 2008

A business family with a small promoter shareholding in a blue chip company uses company cash to bail out concerns run by the sons of the paterfamilias. Big name independent directors of the blue chip's board greenlight the deal. All hell breaks loose. What could be a more damning indictment, as 2008 draws to a close, of India's institutional frailty, its tendency to prioritise chums and chachas over rules and regulations, its hollow governance, corporate or otherwise, core that's ignored by a self-congratulatory and self-obsessed elite?

Were I smart and famous enough to be a columnist for London's Guardian, I would be writing that the Satyam scandal is proof again that New India is just so full of dirty, old tricks.

But being a simple kind of chap, I have a different take on the Satyam scandal: it's the year-end marker for a clean, new trend in India. Those who have power of any kind are having to reckon with the fact that those in whose name power is vested are getting a lot more discerning.

There's no reason to get breaking news style breathtakingly excited about this. No one is arguing that a revolution has been spotted. But there's enough evidence to say that in the big, complicated, messy thing that's public space in India, the public has started posting a different sort of message. There are demonstrations of this from business, policy and politics.

Satyam's volte face was thanks to, as has been widely noted, shareholders' voting in the market. This kind of judgment call on a decision, as opposed to on results, rarely happens in India. Typically, even institutional shareholders in India look at ends, not means. True, foreign institutional investors raised the first flag against the Satyam deal. But Indian shareholders were as severe. This is a new, tough deal for promoters.

Promoter shareholding is high by global standards in India (Satyam is an exception). So the big corporate governance problem in India is not a conflict between management and owners, as is typically the case in the US and Britain, but majority shareholders ignoring minority shareholders. True, promoters were a minority in the Satyam case. But promoters with large holdings will not sleep easy from now on because markets have a new benchmark. Plus, companies may be judged in part now by their willingness to broaden shareholding.

It is wholly valid to move from Hyderabad (Satyam's HQ) to Bhopal or Delhi or Raipur and point out that in politics also the powerful have had to deal with a different, more discerning and tougher message. But the ink is barely dry on analyses of voter maturity in recent assembly election results. Let's look back earlier in 2008. This will also address a justified reader suspicion about attempts to sum up a year commentators are near-sighted, influenced by events that happen closer to year-end.

So recall something even Manmohan Singh may have forgotten as he worries about whether Pakistan will bend and public sector banks will lend. The nuclear deal. Given today's news flow the deal looks so humdrum. But its politics was and is transformational. Voters or public opinion at large have shown no signs of being appalled by the following implications. First, coalition governments should recognise that risk-taking can be rewarding. Second, politicians should consider that some policies are worth taking a risk for. Third, attempts to communalise India's foreign and strategic policy Muslims are against the deal pay little dividend. Fourth, Marxists have learnt India has little time for paranoid anti-Americanism.

Even if terrorism was not the supposed macro issue before the assembly poll electorate, the farrago of fear-mongering that informed nuclear deal politics wouldn't have cut much ice with voters. And as we know voters subverted the linear relationship imposed on terrorism and voting patterns.

Much before that and throughout a year marked by murderous thugs killing in the name of god knows what, the link between terrorism and communal tension was broken. No one even talks about this now. Not even after Narendra Modi's Gujarat was hit by terrorism. But not so long back this was a genuine fear. What is this if not the failure of those who wanted riots to read how people may react? And what are Jammu and Kashmir's voting figures showing? A similar failure on the part of that state's agitpropists.

Sixty per cent plus voting in J&K after J and K were locked in a bitter fight that started over matters relating to Hindu pilgrimages in a Muslim-majority area. Who would have predicted this? Which mainstream politician or commentator wasn't apprehensive? Which anti-Union troublemaker wasn't hopeful?

That's not all from smart aam aadmi in politics in 2008. Those who thought the BJP could only break new ground by using old-fashioned polarisation were chastened this year by Karnataka, where the verdict was for governance. After Karnataka, Madhya Pradesh and Chhattisgarh, it must be acknowledged that 2008 has shown voters can live with a centre-right party that doesn't need to peddle that strange thing Sangh Parivar ideologues call Hindutva.

This year has been full of lessons for the other big political parivar the Nehru-Gandhis. You saw TV footage and newspaper photographs of Rahul Gandhi talking to city students and working with village Indians. All that, because the Nehru-Gandhis have truly learnt they have to earn their vote. Intimations that the electoral brand value of the Nehru-Gandhis wasn't what it was, have been there for a decade now. What forced the issue was that before its weeks-old victories in Delhi and Rajasthan, the Congress had won nothing significant since 2004. And a general election next year is going to test the newest Nehru-Gandhi. So, 2008 saw the first ever admission from a Nehru-Gandhi that the brand needed brushing up.

We should hopefully have made our case by now. But there's one more thing. It's boring fiscal and monetary policy but the implications are as interesting as they are important. Economists are sceptical whether the fiscal and monetary stimuli being applied now and being planned for the near-future will work. This year won't provide the answer. But it has already proved a larger point. The fact such coordinated policies are being implemented shows the political class knows the constituency for economic dynamism has increased vastly. It is no longer possible for politicians to assume that a sharp dip in economic growth would leave Indians largely indifferent.

That's a great thought to begin 2009 with.

saubhik.chakrabarti@expressindia.com

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