Manmohan’s ten commandments

Manmohan Singh is a gentle and kindly man, not generally given to stirring up trouble. But his recent CII speech surely set the cat amongst the corporate pigeons.

But first things first. The Prime Minister’s speech was a long, thoughtful address with an underlying common theme. He had, in fact, broken it up into 10 convenient sections, of which the suggested cap on CEO salaries was only part of a section. The media, as is its wont, zeroed in on it because it makes good copy. And corporate leaders fell into the trap with knee-jerk reactions which suddenly turned the PM’s appeal to Indian industry’s conscience into a kind of confrontation.

Yet, shorn of brouhaha, was Manmohan Singh saying anything he shouldn’t have said? The 10 sections might suggest to some that here was God laying down the Ten Commandments. Yet we all know that Singh never plays God, so he wasn’t casting his words in stone but was making suggestions in the context of the transition period our nation is going through, in some ways similar to 19th century Europe. He quoted Maynard Keynes, the influential British economist: “The new rich of the 19th century preferred the power which investment gave them to the pleasures of immediate consumption. If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a regime intolerable. But like bees these captains of industry saved and accumulated.  They were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion.”

What’s wrong with that? Curb conspicuous consumption, reinvest money in growth, make the pie bigger and share it more equitably with all your stake-holders. What Manmohan Singh didn’t say, but what he implied was that industry often forgets that its stakeholders are not just its shareholders. If you see that your objective is only to please your shareholders, you try to maximise your profits, which could be by means such as forming cartels, profiteering by excessive mark-ups, reducing expenditure by cutting corners. And, most importantly, by reducing the cost of labour by paying the work force low wages. But if your perspective is wider, and you see your work force and your consumers as important stakeholders too, the equation changes dramatically and society as a whole has a share of the cake (or pie, if you prefer that culinary analogy). That to me was the essence of Dr Manmohan Singh’s message. And I ask again, what’s wrong with that?

And what is wrong with saying that conspicuous consumption should be curbed? We may now have more billionaires than Japan, but we are still a poor country. The disparity in the living conditions of the rich and the poor, the first thing a foreigner sees when he comes to India, we refuse to see at our own peril: farmer suicides, the rise of Naxalism, the short fuse needed to start a riot are all manifestations of an unspoken unrest caused by these disparities. To put it simply, are the millions spent by Lakshmi Mittal on his daughter’s wedding edifying in a country where millions live below the poverty line? If Vijay Mallya wants to live in a particular way, does he necessarily have to flaunt it?

The media is to blame too because it looks at India through the same prism as industry and, increasingly, plays up the vulgar ostentation of the rich and the famous. Perhaps that explains the hysterical reporting of the PM’s speech and the flaming editorials decrying it, some even suggesting that the government intended to put a curb on executive salaries. That leads me to a small suggestion. Before we denounce Manmohan Singh’s speech, we should first read it. And having read it, it wouldn’t hurt to think about it.