Building an economic system based on trust: The Tribune India
Expectations for economic reforms have been consistently high since 2014. The level of aspiration of the Indian economy has increased. The overall ambition of the Indian industry is higher. But for Covid-19, Indian economy and industry might have been in a different place by now. Or, another way of looking at it would be to acknowledge that the whole world has been anchored by Covid-19 and India has necessarily been part of it. But in many ways Indian industry has weathered the massive challenges of the past two years with a new level of resolve, a tribute to entrepreneurs and managers.
A clear realization has been the role of the expanding, growing and multiplying private sector. The past history of the public sector occupying the heights of the economy has been set aside, except in the very strategic defense industries. But the remnants of post-independence distrust of the private sector are still reflected in the multiple processes and checks that exist. As the private sector questions itself and the centrality of its place in the Indian economy, does it think?
How to move to an economic system based on trust, which necessarily means that India would automatically rank among the best in terms of “ease of doing business”? Trust must be earned for trust to be given. The many scams make it very difficult to move to a system of self-regulation vis-à-vis the private sector, unless companies take responsibility for the voluntary and transparent disclosure of company information and take special initiatives to Gain someone’s trust.
An outstanding precedent was the Corporate Governance Code overseen by a CII task force chaired by Rahul Bajaj long before the government and/or SEBI came into the picture. This code has been implemented voluntarily by many companies and is an outstanding example of private sector leadership.
Therefore, to deepen and broaden the base of trust, businesses and industry must extend this example to other areas. And this is clearly achievable if mainstream private sector companies become more open and socially conscious. The best companies would also be able to influence and impact thousands of companies in their supply chains, creating a mass of companies adopting the highest standards of conduct.
The government can then respond by relaxing its compliance requirements so that the country can move towards a trust-based system. The initiative must first be owned by the private sector to build public trust, not just government. When the general public says it finds the private sector trustworthy, because it is not deceived, the government is able to act. Integrating the private sector into society is key.
The trust-based system will also have a positive impact on corruption at different levels, adding to the digitization dynamic that is already promoting transparency. Today, thanks to smartphones, bank accounts and Aadhaar cards of the poorest of the poor, the quality of life at the bottom of the pyramid has steadily improved, the great benefits of using technology to meet the basic daily needs of life!
Technology can and does take India very far, but corporate leadership must engage strongly and sustainably with its own action (not to mention), such as:
l Caring for workers and investing in their well-being, including health and education, provision of retirement and provident funds.
l CSR projects and programs, not to evade taxes, but to align with the community and support their true development.
‘Affirmative Action’ to voluntarily provide employment, especially to SCs, STs and other backward classes who have long suffered indignity.
l Address the growing level of inequality for which the industry must maintain a balance between the highest paid and the lowest paid so that the ratio is reasonable. This means raising the lower income levels and possibly lowering the higher pay levels.
l Invest in people, especially young people, through skills development programs and scholarships, to equip them for productive employment or even self-employment. Industry is the ‘user’ of people and it is only natural for industry to establish skills development centers across India and manage/lead ITIs.
l Invest in clean energy so that the environmental legacy for future generations is much better than today. Industry can make an enormous contribution to meeting the challenges of pollution and environmental degradation. Each company can take on specific tasks and set net zero goals
l Support women in their education and empowerment as they are at the heart of the family and society. Women can make a huge difference to the nation and the industry and must take special responsibility for that to happen.
l Maintain a balance in terms of price and profit in order to provide goods and services at the lowest possible cost. High prices, high profits and high dividends must have a self-regulating ceiling so that consumer interest and well-being are constant.
l Research, development and innovation help create new products and services and should be on the list of priority action points for industry. It is creativity for the future and benefits everyone, the producer and the customer.
l The customer is king. If this philosophy is embraced and followed, the Indian industry will be in a different place. For too long the consumer, the customer, has suffered from neglect. Many things have changed, but more changes are needed.
l Housing is an area of particular focus as hundreds of thousands of would-be homeowners have fallen victim to real estate scams. Real estate companies have a special responsibility.
This is an illustrative list of industry actions, not exhaustive. The ecosystem of a trust-based society must start with business and industry. They can do that if they want or continue with the existing system of complex compliance challenges that make life miserable for everyone. Some companies do some things right, most companies now have to do most things right. It comes with the promise of a bigger role.
All of this, and more, is the need for an economic system based on trust. It takes two hands to clap, but the hand that needs to move first is the industry hand. Change overnight can be difficult, but significant progress is possible.