At a time when he is being pilloried by the Opposition for being “pro-corporates”, Prime Minister Narendra Modi’s bid to reach out to industrialists, bankers and economists, to understand the nature of opportunities for India in a time of global stress, was a bold move. Cynics may dismiss it as perfunctory. But in the absence of a structured or institutional mechanism, this meeting sought to open up an avenue for dialogue with the private sector. It sent out a powerful message — that the corporate sector is an important stakeholder in and contributor to Modi’s agenda for development, the poll plank that catapulted him to power last year.
Previous governments had established forums to hear out the corporate sector and seek policy inputs. The NDA government in 1998 under Atal Bihari Vajpayee set up a framework for periodic interaction. Under Vajpayee’s chairmanship, it set up two structured forums — the Economic Advisory Council (EAC) and the Council on Trade and Industry. As prime minister, Manmohan Singh continued with the practice. In fact, with C. Rangarajan as its chairman, the EAC became a powerful body, and apart from acting as a sounding board for the PM, it provided inputs on a range of sensitive issues, such as J&K reconstruction and the pricing of petroleum products. The finance ministry in UPA I had also set up an Investment Commission that made recommendations on sectoral issues. And the Trade and Economic Relations Committee advised the government on its agreements with other trade blocks in the larger global context.
Modi’s Tuesday interaction with Corporate India seems ad hoc in comparison, but it threw up ideas that the government could seriously consider. For instance, with expectations that low global crude oil prices — at less than $50 a barrel — may not last for over 18 months, the government could explore whether future supplies can be locked in at such prices. While dramatically lower commodity prices certainly provide a huge advantage to a net importer such as India, the prime minister was also made aware of the adverse impact of a slowing China. For his part, the prime minister reminded industrialists that risk-taking was in their DNA, and goaded them to invest. Such dialogue, if made regular, will also expose the government to scrutiny of its own action or inaction on various issues that affect economic activity. There should be more of such dialogue, not less.