Shourie slams industry for double standards

The industry on the one hand wanted competition, but on the other wanted assured high rate of returns even at the cost of bankrupting the state electricity boards (SEBs) as in the case of Maharashtra, he said.

Reacting to the criticism voiced by the industry about the slow pace of economic reforms, Shourie said on the one hand business wanted that the government should facilitate and exit from certain area, but at the same time companies wanted it to ensure that they were not eased out of the market by foreign companies.

Attributing the "perceived" slow pace of privatisation to fractured political class and unionism, he pointed out the industry grew in spite of controls, licence raj and rigid tax regime.

Shourie called upon the business community to use their influence with the political parties in a positive manner rather than creating dissidence on issues of economic reforms and privatisation.

Shourie asked foreign investors to look at greenfield investments rather than mergers and acquisitions as they were likely to find resistance locally. "If we go in for acquisitions we are likely to inflame a backlash. You should therefore focus on greenfields rather than acquisitions," he said.

Products and services should be demand-oriented he said, adding "demand for products and services with felt need would receive much greater response in India than products which are introduced merely because they have succeeded in the West."

Shourie also asked the industry to be cautious about the hype created about the information technology industry. "A new sector tends to get hyped and mixed with speculation. A fall in the New York Stock Exchange has a tremendous bearing on the venture capital companies operating in the country as on the profit margins of IT companies in India," he said, adding that this was a tendency that India had to guard against.

Assocham, CII differ: Assocham and CII have taken opposite views of the provision to appoint a nominee for small shareholders in the board of directors, which has been made optional in the Companies (second) Amendment Bill that was passed in the Lok Sabha on Monday.

Associated Chambers of Commerce and Industry (Assocham) president Shekhar Baja, while welcoming the Bill as it facilitates the exercise of shareholders’ franchise through postal ballot, said that the provision to appoint a nominee for small shareholders would create unnecessary complications.

"Such a provision will lead to lack of cohesiveness in the functioning of the board. The directors have a fiduciary duty to the company and not to a section of the shareholders and, therefore, such sectionalism should not be encouraged by a statute," Bajaj said in a Assocham press release.

Confederation of Indian Industry (CII) president Arun Bharat Ram, while welcoming the Bill, said the appointment of a nominee for small shareholder, which had been made optional was appreciated. CII president said the other provisions in the Bill were aimed at achieving the twin objectives of good corporate governance standards and protection of small shareholders.