Lead Story

Populist or pragmatic?

The rise of the Aam Aadmi in business

Published 10 years ago on Feb 01, 2014 24 minutes Read

In the bustling metropolis of Bengaluru, Cottonpet is an anachronism. Old-timers willingly launch into anecdotes from days gone by when the area was a booming wholesale market for cotton textiles, which is also what gave it its name. With the industry eventually falling on hard times, the development engine just whizzed past Cottonpet, leaving it seemingly frozen in time. People constantly jostle for space in its narrow, dusty lanes, where cows often block the way by sprawling across any available space. Here, you don’t locate an office or a home by its address; you ask for directions that involve locating obscure landmarks and moving forward. This hit-and-miss approach gets us to a somewhat decrepit building and we are ushered on to the third floor. The blast from the past continues here — groups of people in white cotton caps shouting zindabad in unison could be a scene from any old movie about the independence struggle. But it’s not. 

This is the office of Aam Aadmi Party (AAP), the political party that has rekindled the imagination of ordinary citizens and united them with the common agenda of bringing about societal change. The large room is a hub of activity. There are at least 50 people around, busy checking posters, tracking new registrations or simply answering endless telephone calls. Stickers, caps and copies of Swaraj, the book written by AAP founder Arvind Kejriwal, are stacked on every available surface and the upbeat mood is hard to miss. AAP’s sweeping victory in its maiden election — the recent Delhi Assembly polls — has been a shot in the arm for this fledgling political outfit. It’s been several decades since politics stopped being a flag-bearer for societal change, as money and power took over as the prime driving force. So, this transformation-in-the-making is generating enthusiasm across wide swathes of the population, even attracting several members of the intelligentsia and the business community to throw aside their suits in favour of the khadi topi. People like V Balakrishnan (ex-CFO, Infosys), GR Gopinath (founder, Air Deccan), Meera Sanyal (former head, Royal Bank of Scotland), Sanjeev Aga (former CEO and MD, Idea Cellular) and Sameer Nair (former head, Star Network), have all joined AAP (see: profiles below), even as leading businesspersons such as Anand Mahindra and Kiran Mazumdar-Shaw have spoken openly in support of the party.

At the same time, there is a nagging fear whether this newfound enthusiasm for common-man politics will take us back a few decades in terms of economic policy. Already, there is some disquiet in Mumbai’s business circles after AAP came to power in Delhi. How justified are these concerns? To answer that, you perhaps need to also answer whether the aam aadmi phenomenon itself is just a fad that will wither away after the initial euphoria or whether these eminent newbie politicos can contribute meaningfully to AAP and its agenda.

Who’s afraid of AAP? 

India Inc’s worries about AAP and its intentions aren’t entirely unfounded. The party’s track record to date, short as it is, is hardly reassuring. The most recent development is the decision to pull the plug on FDI in multi-brand retail in Delhi. The new government in Delhi has written to the Department of Industrial Policy, withdrawing permission for FDI in multi-brand retail, a decision that had been cleared by the Congress, AAP’s predecessor, which incidentally supports the new government from outside. 

Then, there is the way AAP has handled issues such as water and power supply. The party has promised 700 litres of water free of cost to all households in Delhi each day. There are some caveats, of course: the subsidy is only for households with metered connections and those consuming over 20 kilolitres a month will have to pay the entire bill. Still, the general outcry is that such populist measures will be financially ruinous and will breed inefficiencies in the system. 

Power is an even more contentious issue. Just days after coming to power, the party promised Delhi residents that their power bills would be halved, since it believes distribution companies are inflating bills. This move has drawn flak from the regulator, political observers and economic experts. The Delhi Electricity Regulatory Commission (DERC) has clearly said that the government cannot fix tariffs but can subsidise consumers. Meanwhile, distribution companies have ruled out any further cuts in tariffs since they are already sitting on losses of over ₹11,000 crore. Their contention is that, over the last decade, costs have increased by 300% but prices have been hiked by only 70%. 

FDI and utilities are specific issue-based worries. The greater worries of big business in India centre on a less easily articulated, but no less real, concern: Kejriwal’s power group and the people who are part of it. In particular, Prashant Bhushan. The well-known Supreme Court lawyer has been a part of Kejriwal’s and AAP’s core group right from the start, but his run-ins with big business houses go back even longer. 

In 1997, Bhushan, as a counsel for the Centre for Public Interest Litigation (CPIL), challenged the awarding of the Panna-Mukta oilfield contract to a Reliance Industries-Enron joint venture. The Delhi high court then issued notices to both companies and questioned the CBI on misplacing crucial files related to the case, without which a criminal case could not be lodged against the then petroleum minister Satish Sharma, who was accused of accepting a bribe to award the contract. Six years later, in 2003, Bhushan scored a major victory for CPIL when the Supreme Court disallowed the Union government’s decision to privatise HPCL and BPCL without Parliament approval. In 2005, the lawyer trained his guns on the cola majors, accusing PepsiCo and Coca-Cola of luring consumers through misleading ads. Then, in the Cairn-Vedanta deal of 2012, Bhushan again took up the cudgels on CPIL’s behalf, stating that the government would lose over ₹1 lakh crore if the deal went through. Bhushan’s stand was that ONGC held a 30% stake in Cairn India and had the right of first refusal if the MNC wanted to sell its remaining stake, which the government was not allowing the PSU to exercise. And in the 2G case, Bhushan’s stand has been that the CBI’s investigation against Dayanidhi Maran has been less than honest. He has also questioned the investigating agency’s failure to file charges against the Essar Group and Loop Mobile, despite strong evidence of corruption. In the process of battling corporate houses, Bhushan has sealed his reputation as a potentially painful thorn in the flesh of India Inc.

Business groups aren’t the only ones concerned about which way the AAP wind will blow. Well-known journalist and former editorial director of India Today, MJ Akbar, is clearly apprehensive of AAP and believes some of the party’s policies could take the economy back by a few steps. “Change is about taking the present to the future and AAP will be the only party that takes present-day India back to its past. They are talking of nationalisation of airports and some industries, which is a throwback to the policies of the 1960s and ’70s,” he declares. He fears the economy being back under government control and a tightening stranglehold. “Over the years, through various effective measures, we have been doing the opposite. AAP is a bizarre concoction for modern India,” he says.

That viewpoint is echoed by Cho Ramaswamy, political commentator and editor of Tamil newsmagazine, Thuglak. “AAP has announced populist measures such as free water, cheaper power tariffs and waiving off bills of defaulters. Now, it is already speaking of ‘considering’ some of these issues. When you take the populist route, it is impossible to become responsible. Anarchy will eventually prevail.”

Hopefully, that will not come to pass. It would be an extreme extrapolation to suggest that Bhushan’s law career is proof that he, and the party he represents, is anti-business. Each of the cases where Bhushan took on corporate houses were already mired in controversy and in most cases, his grouse has been against corruption and crony capitalism. And while he did call for nationalising mining in Goa about a year ago and, more recently, said airports should take the same route, consider the context of these comments: Bhushan was speaking up against illegal mining in Goa, Karnataka and Andhra Pradesh and wanting to break the vice-like grip of the mining mafia in these states. Santosh Hegde, a former SC judge and Lokayukta Justice, points out that a minimum ₹16,000 crore was lost in the iron ore mining scam in Karnataka. “At least another ₹25,000 crore was lost in Goa, with another ₹40,000 crore in Odisha,” he adds.

Even if the comments were made in the backdrop of rampant corruption, Arvind Kejriwal & Co will have few takers for the nationalisation idea, if it was really meant. Air Deccan’s Gopinath plays down the controversy and says nationalisation may not be the right word, though it is legitimate and in the interest of the larger good of the nation to create anti-trust laws and break oligopolies where necessary. “Monopolies need to be broken in some cases by amending laws and bringing in more competition. This is the fairest way to keep prices and malpractices in check,” he says.

The decisions on power, water and FDI, too, aren’t surprising. As far back as 2010, Kejriwal had accused the Delhi government of being in cahoots with distribution companies to overcharge consumers. This was based on the statement of the former DERC chairman, Brijender Singh, who had recommended a 23% cut in tariffs since distribution companies were making hefty profits through sale of surplus power before he was out. The Sheila Dikshit government did exactly the opposite after that. Now, the Delhi government has asked the CAG to audit the accounts of the three distribution companies in Delhi and is appointing an independent agency to inspect electricity meters across the city.

Moreover, all these were mentioned in AAP’s election manifesto and, so, all the party is doing is keeping its poll promises. And as Vinod Mehta, Outlook Group editorial chairman, points out, the subsidy burden in Delhi isn’t all that much: the water freebie will cost ₹340 crore a year. “You can’t assume the power companies are angels. An audit is necessary: there is the feeling that these companies tend to overplay their costs.” Ditto for roads, says Biocon CMD Kiran Mazumdar-Shaw. “Costs are inflated by at least 50% because of corruption. Reducing corruption will mean we will get good roads at affordable prices.” Indeed, there is a sense that the high cost of many public-private services is a result of corporates inflating costs — something AAP will want to take up for investigation and companies obviously won’t like. 

Be that as it may, there’s no denying that AAP’s thoughts on business and economy are worryingly unclear at present.

It’s the economy, stupid

“There is no need to be scared of us,” says Prithvi Reddy with an amused look when asked if businesses need to be apprehensive of AAP. “We will, in fact, need to work closely with businesses to understand what they want.” The AAP national executive member and member of the party’s economy and ecology committee is himself a second-generation entrepreneur, the managing director of the Bengaluru-based Plasma Precision Engineering. Like other party members, he is not unaware of the high expectations — and serious concerns — of the business community and citizens in general regarding AAP’s economic agenda. But while AAP has announced its national ambitions and decision to contest the Lok Sabha election later this year, so far it hasn’t come out with any document outlining its ideology regarding growth, business and development. 

What we have, instead, are stray voices citing must-have and nice-to-have priorities. Reddy, for instance, joined AAP in 2012 and has a clear view on the role of government in business. “The government has no business to be in business. Its role needs to be restricted to being a regulator or facilitator,” Reddy outlines. 

What is also still not clear is where the party stands on crucial issues such as taxation and foreign investment (while FDI in multi-brand retail has been vetoed, no comment has been made yet on other sectors). Arun Kumar, professor at the Centre of Economic Studies and Planning at Jawaharlal Nehru University in Delhi, who sits with Reddy on the AAP economy committee, articulates two radical ideas to increase resources for the economy. One is to curb black money. “If black money drops by even 25%, it will give us additional resources, which could be invested in critical sectors such as health, education and infrastructure. Much of this can be done without increasing the subsidy burden and having an adverse effect on the deficit,” he says. That’s a tall order, although not impossible with the use of technology and, importantly, intent. The other idea is to control outflow of capital from the country. But if that, indeed, means levy of capital controls, it’s not something investors will take kindly to. 

It’s this sort of thought process that has created a perception that AAP is not in favour of free markets. But Reddy counters that and says the thinking is to encourage “true competition”. “We are certainly not anti-free market,” he adds. And subsidies? “We are not in favour of giving out rice at ₹2 a kg but would rather ensure the people have ₹45 in their pockets so they can afford it themselves,” he says firmly. But that’s directly in contrast to how AAP has handled the power and water issues and underlines the absence of a clearly stated and followed guiding principle in the party. “There is no comparison between AAP today and the BJP of 30 years ago. The BJP had an ideology, while AAP has no ideology whatsoever,” states Ramaswamy.

But going by the above example regarding handouts, the opposite seems to be the more likely case. Rather than the complete absence of ideology, AAP could well have a surfeit of individual beliefs and principles, especially with so many professionals and corporate executives coming on board, all with their own vision for solving the country’s ills. Managing them to create a cohesive, unified body may well be the party’s greatest challenge going forward.

Unity in diversity

Right now, AAP is on a recruitment drive, seeking 10 million new volunteers ahead of the Lok Sabha election. It is also reaching out to various social movements such as the Narmada Bachao Andolan, the anti-nuclear movement in Tamil Nadu and the anti-mining brigade in Odisha. The idea is to not just get easily recognised and respected candidates to field in the upcoming election but also get support from these groups in campaigning. Of course, this makes just one more reason for corporate groups to worry about AAP — activists spell trouble even when working independently. Imagine the chaos they could create if they were in Parliament!

But if there is a sense of comfort about professional achievers coming together in one party, there is also a high degree of worry on how these minds will work together. AAP leader and member of the party’s electoral reforms committee, Yogendra Yadav, agrees that unlike an established party, members of AAP have come on board with different ideologies and beliefs. “One person may have a certain point of view on the matter, while others may not hold the same view. However, there are more common beliefs,” he defends. 

Swati Ramanathan, co-founder of Bengaluru-based think-tank Janaagraha, says going by the evidence, Kejriwal isn’t against business. But does he know how to promote economic growth? “He will need to build a team of advisors in key areas to guide him impeccably.” That’s exactly what AAP is doing: 31 groups have been set up within the party to decide on the party’s stand on various issues. “We will go through their recommendations and then incorporate them in our draft manifesto. This process should take about seven or eight weeks,” adds Yadav. New members are also being assigned projects based on their strengths and interests. “It is important for us to understand the person’s strengths. In the case of Bala, for instance, we could not have assigned him to a rural sector focused project,” he points out. Instead, Bala will help AAP in the areas of information technology infrastructure, building the organisation and also in raising funds. 

Reddy points to an item on the to-do list: drawing up a common minimum programme. “As long as the objective is agreed upon, there is no cause for concern,” he states. But that’s true only in theory. For instance, the same objective of employment creation can be reached by promoting small scale industries or by supporting large businesses, which are on opposite sides of the spectrum. Kejriwal will have to get consensus on key issues from his party members and that may not be easy. 

The challenge in building consensus even with people who have a common background and agenda is evident. The 45-year-old Kejriwal is a mechanical engineer from IIT, Kharagpur, who quit the Indian Revenue Service to work full-time in social service. Similarly, 58-year-old Jayaprakash Narayan quit the IAS to join politics and fight corruption. But Narayan, the founder of Lok Satta, is brutally frank in his criticism of AAP, although the two movements have been trying to work together for some time. “The populism route they are taking is extremely worrying. Anything that is temporarily popular has very serious ramifications in the long term,” he says. For instance, he points to a nation-wide electricity loss of about ₹300 crore a day, which will be exacerbated by AAP’s recent decision to cut power tariff. 

Defending AAP, Reddy says too much is being made of the ideology issue. “We have seen instances of domestic industry in the US being protected or China clearly moving in the direction of capitalism. In that context, there is actually no need to be wedded to an ideology,” he says. Yadav adds that it is erroneous to say AAP is left of Left [more Left than the Left parties]. “The term Left loosely refers to state control and licensing, while Right means free market and deregulation. AAP is neither Left nor Right,” he says succinctly. Yadav maintains that the process of firming up economic policy is still underway and AAP would rather be seen as taking a pragmatic stance on matters and be viewed as problem-solvers. “We do know subsidies are inefficient in some cases or, in the case of education, can’t be left to the market. AAP will take an agnostic view on issues and our stand will be based on empirical evidence,” he adds. That agnostic approach is actually a plus, as serious corporate professionals are teaming up with AAP. “Eminent corporate personalities  joining the party will have a moderating effect on policy making. AAP won’t go too far out,” says Mehta.  

Hand in glove

Regardless of how AAP’s final economic blueprint shapes up, one issue is certain to occupy significant space: crony capitalism. Lok Satta’s Narayan points out that crony capitalism is not a new concept; the difference is in the scale it has assumed. “Fundamentally, crony capitalism is about picking the winners. In genuine capitalism, the market picks the winners. In most cases, a process has no bidding and it just becomes a sham,” he points out. And, as recent evidence shows, there’s certainly a lot of that going around in India. Gopinath, too, speaks of the perils of some business houses having an unfair advantage. “Kejriwal’s point of view is rather simple. He believes in taking that largesse and putting it back in the system,” he says. According to him, in India, a company that is in possession of a natural resource such as spectrum or coal is, in one stroke, placed in a great position. “That is the essence of crony capitalism. A clean businessman has absolutely no reason to fear AAP,” he declares.  

Naresh Khatri, associate professor at the University of Missouri, has written extensively on cronyism and says it thrives where there is government intervention. “It is more so in India, which is a collective society, where decisions are based on relationship and not on merit. Favours are doled out on the basis of connections.”

Not everyone in the system is convinced about AAP’s ability to tackle crony capitalism. TV Mohandas Pai, board member and former CFO and HR head at Infosys and now chairman, Manipal Global Education, points out that crony capitalism has stunted the growth of entrepreneurship in India. “Crony capitalists spend all their time in managing the government and ensuring that there is no level playing field, making it difficult for small entrepreneurs to survive,” he explains. But will AAP be able to weed out this menace? Pai thinks the party has a challenge ahead. “The awareness AAP has created about crony capitalism is creditable but they lack the ideas to tackle it.”

To be fair, it may be early days yet to speak of AAP tackling such national-level issues. In the rotten world of Indian politics, where ideology is for sale at the right price, AAP is a bit of an oddity. Its rise has been swift  and the way ahead is unknown. It is a party that is ambitious and wanting to do a multitude of things all at the same time. Mark Tully, former bureau chief of BBC  India and considered the voice of India abroad, observes that none of the powerful establishments in India seem to be with AAP. “The big political parties are against them and the bureaucrats will eventually turn against them. The corporate sector is already wary and the media is tracking them closely for any slip-ups,” he says.

That’s despite there being no real threat of AAP upsetting the apple cart with its Lok Sabha debut. “Even by the most optimistic estimates, it will not win more than 30-35 seats,” says Outlook Group’s Mehta. Adds Ramaswamy, “AAP will remain a regional party and will have an impact in Delhi and adjoining areas such as Haryana. In other states, you need a popular leader and AAP does not have that. In Tamil Nadu, for instance, it will not make any progress. Kejriwal is not known in the villages of Tamil Nadu nor does he speak the language of the people. AAP gained greatly in Delhi because of Anna Hazare and Kejriwal’s participation.”

All forecasts point to AAP sitting in Parliament, if at all, in the Opposition benches for the next five years at least. If it does astoundingly well, it might end up with about 50-odd seats at most. Big business, then, need not be anxious. Yet.

Members of  the business community to join AAP 

 Sanjeev Aga, former CEO and MD, Idea Cellular

He makes it clear that he has joined AAP as an ordinary party member. “I will work in a small way in the background. I am not comfortable with a public role,” says the former managing director of Idea Cellular, slamming the door on the possibility of contesting a election. Sanjeev Aga joined the party a month ago and his role is still not very clear, though it is clear that he will have much to contribute in anything related to telecom and convergence. He says the thought of joining politics had never crossed his mind until the emergence of AAP and its emphasis on transparency and honesty. 

A background in telecom means he had a ringside view of the increasing nexus between the government and business, which eventually led to alleged corruption in 2G spectrum allocation. “Corruption not only leads to inefficiency but is soul-deadening and exploitative. Making the government completely free of corruption is impossible, but the present levels are frightening,” says the 61-year-old. He terms corruption as the filth retarding the engine, which eventually leads to engine seizure.

Aga says he is fully aware of how the success quotient in politics is very different from what he has experienced in his last assignment. “Even in the corporate world, one success does not necessarily lead to the next success. Today, I am not in any new innings or chasing success and I am just being myself,” he sums up.

 V Balakrishnan, ex-CFO, Infosys

Infosys’ former CFO did not need too much convincing before joining the Aam Aadmi Party (AAP). One brief meeting with Prithvi Reddy, the party’s national executive member, was enough to seal the deal for V Balakrishnan. But then, he’s not a complete stranger to politics: in the late 1960s, his father contested and won the Corporation elections in Tamil Nadu on a DMK ticket. 

 Bala, as he is popularly known, says he is prepared for this innings to be very different from his high-flying, two-decade stint at Infosys. In his own words, a corporate is characterised by defined stakeholders, while that is not the case in the political sphere. “Besides, in the corporate world, everything is in black and white, while politics is ruled by shades of grey,” he explains.

Speaking for his own role, the 49-year-old is yet undecided on contesting the Lok Sabha election in 2014 and maintains there is enough time for the Election Commission’s (EC) deadline for filing nominations. But the buzz in Bengaluru is that he is a certain candidate. Bala hasn’t made any financial contribution to AAP so far and isn’t worried about campaign costs in case he does contest the election — the AAP model in Delhi, he points out, was to raise money and fund deserving candidates within the EC-prescribed limits.

Given his own track record at Infosys, AAP is looking to slot Balakrishnan in an area that he will be most productive. Bala is tight-lipped on his role, but Reddy says it will be largely around IT infrastructure and building the organisation apart from the key task of fund raising. 

 GR Gopinath, founder, Air Deccan

When he lost the Bangalore South Lok Sabha election in 2009 as an independent candidate, Captain Gopinath’s friends gave him important feedback. “They said they would have voted for me if I had represented a party,” he recalls. Now, the former boss of Air Deccan, which brought low-cost aviation to India, has joined AAP and smiles faintly when you ask him if he will contest the 2014 election. “I have not decided so far,” is all he is willing to say.

For Gopinath, the decision to join AAP followed the realisation that the middle class finally had political relevance. “They did not matter earlier and that was very worrying,” he says. Gopinath also emphasises business houses in India have become extremely powerful, which does not augur well for the country. “When a few powerful people secure for themselves large critical national resources such as coal, oil or gas, mining rights for minerals or vast tracts of land of airports, they are in a position to control the government. This is not fiction but hard and cruel reality,” he thinks. According to him, AAP will work towards taking that largesse and putting it back in the system. “To that extent, it will be a fair and equitable system with no one having a serious advantage,” he says. 

Perhaps one of the reasons Gopinath lost the 2009 election is that he spent only the permitted 25 lakh whereas the winner, he claims, spent over 35 crore. It will be interesting to see what happens at the hustings this time around.

Meera Sanyal, former head, Royal Bank of Scotland

In 2009, the then country head of RBS surprised many people by deciding to take a sabbatical and contest the elections from South Mumbai as an independent candidate. Meera Sanyal took on Congress heavyweight Murli Deora’s son Milind and lost, but ended up realising that public life and politics was her calling. In March 2013, Sanyal took the plunge, relinquishing her position as RBS Bank’s CEO. “I decided to enter public service full-time. I felt it was necessary to take a stand and participate constructively in the political process rather than merely criticise the system,” she says. 

A couple of months later, Sanyal and her husband met Kejriwal. She says she was impressed by the AAP founder’s line of thinking, his idealism, integrity and courage. “Our interaction with people at all levels of the party gave us the comfort that this was a party driven by ethical values. This was something we really identified with, so we decided to join the party,” says Sanyal, who campaigned for AAP in the Najafgarh and Greater Kailash constituencies for the recent Delhi Assembly elections. “Had I not joined AAP, I would have remained independent, just as I was in 2009,” she says. Sanyal has contributed in her personal capacity to the party and has plans to contest the elections. “I will be submitting my application for contesting in the Lok Sabha elections. If selected as a candidate, the funding strategy will follow, but it is premature to comment on that at this stage.”

She is also looking forward to contributing to the formulation of AAP’s economic policy and manifesto. Sanyal disagrees with the view that the party is Leftist and believes that the policies are focused on removing crony capitalism and the unfair advantages it gives to some players. The final goal: a business environment offering a level playing field to all entrepreneurs. 

 Sameer Nair, former head, Star Network

The former CEO of Star TV and NDTV Imagine was a self-confessed armchair activist for many years, complaining on social media and at cocktail parties about the deteriorating political system and administration in the country. That is, until the Jan Lokpal agitation caught Sameer Nair’s attention. On a visit to Delhi, AAP leaders Pankaj Gupta and Prithvi Reddy convinced him to join the party. “I was excited by their manifesto of intolerance towards corruption, clean candidates and the right to recall. For the first time, voters have the right to recall their elected candidate if they feel he has not performed well,” he says. After joining AAP, Nair worked closely with Kejriwal on a couple of ad films for the Delhi Assembly elections. “I found him to be very inspiring and I do not get inspired very easily,” says the 48-year-old with a smile. 

Nair’s role in the party will involve creating a communication strategy and fund raising. “We will need an honest voice in the Opposition and AAP will be that voice. My job is to get that message across.” While he has made a financial contribution to the party, Nair has no intention of contesting elections. “I am very clear where my strengths are and I have no plans to be a politician.” Nair’s view is that professionals are attracted to AAP for a very clear reason. “Many of their principles come from the corporate world, and this includes full disclosure of political funding, corporate governance and performance appraisal.”

With inputs from Kandula Subramaniam