October 2007 | Ashok Ganguly
A time to cope and hope
The post-independence years leading up to liberalisation were a struggle for the Tatas and for private industry as a whole, says Ashok Ganguly*, but there would be light at the end of this tunnel too
Sustainability — that was the predominant theme of the post-independence era for private industry in India. It may not have been premeditated, but that’s the way the dice rolled. Preserve and progress were the bywords of the period, leading up to liberalisation, because it was deemed that in a democracy changes never happen in a hurry.
Sustaining existing businesses in the face of all the red tape and restrictions was no easy task for a group such as the Tatas. JRD Tata, who headed the group during this difficult time, knew Jawaharlal Nehru and Indira Gandhi personally and he was hugely respected by everyone in the country. Despite these advantages, his ideas for a progressive India were mostly ignored, because they did not match the mindset of our political masters.
JRD and GD Birla, his great contemporary, towered over the corporate world. Politicians frequently sought their counsel, but did not always accept what they had to say. JRD once told me a story: he would, every once in a while, be summoned by Mrs Gandhi for advice; he would get excited and start talking about what all Indian industry could do. If his views were not in tune with what Mrs Gandhi wanted to hear, she would start looking out of the window; this was the signal for him that the conversation was about to be concluded.
JRD may have been disappointed by the political and economic climate of those days, but he was never discouraged. This was a true-blue Tata; there were other well-known business leaders around, but he was after all, the Tata. JRD had, without a doubt, the country uppermost in his mind, even ahead of the group he headed. He wouldn’t have hesitated for a moment while saying that without a progressive India, the rest is nothing, and that our industries and everything else will progress only when the nation does.
Private enterprise in this country had to deal with a lot of frustrations up to the 1980s, when there was the first glimpse of liberalisation. During our work life, we did not quite realise how frustrating it really was; we thought it was the natural way to manage (we did not know better). In spite of the many frustrations the experience was enjoyable, if not rewarding. We grappled with red tape and, when we won sometimes, we were happy.
Managers were all poorly paid, we had modest lifestyles, there was no Page 3 those days and not too many parties at the Taj Mahal Hotel. India did not have malls or multiplexes, most people drove Ambassadors or Fiats and we discovered we were dressed out of fashion only when we travelled abroad.
All said and done, in retrospect, I think India needed many of the checks and balances that defined our pre-liberalisation economy. We did not have a choice between 1947 and 1970; the choices to change came after that, when we had a reasonably good base. The real damage was, I believe, done between 1970 and 1990, when inflation went out of control, growth rates sank, the population exploded and the economy was going nowhere.
If we had got economic reforms going in 1970 rather than in 1990, we would have had a head start on China, for example. Dismantling the huge edifice of control and red tape, which had benefited a large number of people, took some doing. Everybody underestimated the resistance to change from the beneficiaries of socialism: a particular class of business people, a whole section of the bureaucracy and the political class perceived liberalisation as a threat to their way of life.
You cannot judge the Tata group’s performance during the 1947-90 era in isolation; it stands side by side with that of the Indian private sector as a whole. The 1980s were the lowest point, a period marked by consistent and all round mediocrity. Were the Tatas an exception? I would say no. Companies like Hindustan Lever had to fight every inch of the way to grow profitably.
The group that brought about a paradigm change in Indian business was Reliance. Dhirubhai Ambani said he was going to build world-class industries and he used every method to do just that. He did business in a way that neither the Tatas nor Hindustan Lever could ever have thought of at that point in time.
Ratan Tata came along when Indian industry was opening up and he had to deal, in his initial years at the helm, with vested interests bent on maintaining the status quo. The parallel was striking: the Tata group, like India itself, spent a lot of energy transforming itself. Today’s Tata group is, consequently, a completely different organisation, with new people and a new culture, a 21st century Indian corporate giant.
Ratan has grown, from being a shy and soft-spoken person to a leader with an outstanding mind, the aptitude to spot and nurture talent, and the ability to get things done in a big way and in diverse areas. He is a totally different person from the one I had met 30 years ago. The one characteristic that has not changed — with Ratan as much as the group he heads — is the uncompromising commitment to ethics and human values. That remains embedded in the Tata genetics.
*Ashok Ganguly is a former chairman of Hindustan Lever and is presently chairman of Firstsource Solutions and ABP