Lacking Courage

After the more than substantial tax cuts by government for corporations, particularly the automobile industry, Maruti Suzuki has announced piffling cuts of around Rs 5000 in the price of some its cars. Other manufacturers have not even done that much. In other words, the priority is to ‘absorb’ the savings by mostly enhancing shareholders’ earnings and recovering their losses. What kind of leadership is this? The government is willing to take great risks in all kinds of ways in the hope and expectation that Industry and other sectors will respond positively, giving the much needed boost to the economy, but this is the result. The sad fact is that no matter how much business might talk of free market policies and competitiveness, its roots remain firmly established in the crony capitalism of the past. Having benefited greatly from tariff protections, subsidies, cheap land, etc., this entire class of promoter and manager is simply not capable of taking risks or innovating. So secure have they felt in the traditional ways, that anticipating and responding to future challenges is simply not in their DNA. Under the circumstances, business will need to face even more difficult days to become competitive, which will involve large scale closures and job losses. Going by the trend of the talks between PM Modi and US President Donald Trump, it will not be long before trade deals lead to reduced tariffs and greater international exposure. The fault lies as much with the failure to understand the nature of the Indian economy and market. India supposedly has great institutions of management such as the IIMs and certain universities, but the sad fact is that much of the academic content is mere replication of which exists in the developed countries. There is no indigenous school of thought. This is why students of business management go on to do well in western countries, but can barely make an impact in India. A large percentage of entrepreneurial success is enjoyed by those from the grassroots who have come up the hard way. If only such businesses could benefit from a management class versed in their methodology and practices. Everybody knows that a cut of Rs 5000 in the price of a Maruti automobile is not going to encourage prospective car owners to start buying. It needs action on the same scale as demonetisation and abolishing Article 370. The focus should be on drastically clearing inventories so that the public sentiment turns positive. But those who have made money largely from replication and regulatory manipulation are just not psychologically prepared to take such chances. Too bad for the automobile sector!