Industry associations and chambers of commerce are no longer what they used to be even a decade ago. There has been a steady decline in their clout. There have also been significant changes in the way they function and lobby with the government. It is difficult to pinpoint the specific reasons for this change.
But an incident at a luncheon meeting organised by the Federation of Indian Chambers of Commerce and Industry on the occasion of its annual general meeting during the late 1970s should be an appropriate illustration to highlight the nature of this change.
Those were the days when the Janata Party had stormed to power at the Centre, comprehensively defeating the Indira Gandhi-led Congress in the elections held after the Emergency was lifted in 1977.
George Fernandes was industry minister and one of the first decisions he took was to throw out Coca-Cola and IBM from the country. And it was Mr Fernandes who had been invited to address a luncheon session of Ficci's annual meeting. Along with Mr Fernandes was another important guest -- Ghanshyam Das Birla.
The audience comprising the country's top industrialists was as keen to listen to Mr Fernandes as to Mr Birla. Such was the strong following GD Birla commanded within his own community. What did Mr Birla say in his address? No, there was no praise for either Mr Fernandes or for the Janata Party government.
Instead, Mr Birla launched a broadside against the government for continuing to keep industries shackled under various rules and policies. He pointed out how the government continued to penalise industries if they produced more than what was mentioned in their industrial licences.
Finally, he urged the government to remove such controls on industrial production. And if the government did not concede such demands, he asked industry to violate the laws by producing more than the licensed limits and court arrest if necessary.
A bemused industry minister did not know how to react to GD Birla's clarion call to industry to produce more in defiance of the industrial licensing regime. It is a different matter that the Janata Party government did not pay heed to this industry demand and it took another five-six years and a Congress government at the Centre for the industrial licensing regime to be relaxed in phases.
But the point to be noted is that industry leaders then could use the forum of a chamber of commerce to criticise the government and its policies without pulling punches.
This is the biggest change that has taken place as far as the relationship between the industry associations and the government is concerned. The GD Birla outburst was perhaps the last such public expression of dissent with the government and its policies. Since then, Ficci has been toeing a conservative line as far as criticising the government is concerned. One reason for adopting such a stance could be its objective to remain in the good books of the government.
As a chamber of commerce, it has to service its members by getting things done through the government. And its effectiveness is undermined if the government is antagonised. No government, more so its ministers, is comfortable with the idea of a chamber of commerce criticising its policies or the way it functions.
The rise of the Confederation of Indian Industry as a powerful and effective industry association took place at a time when the Ficci leaders were too busy building a relationship with the government and its ministers.
The CII worked quietly to effect policy changes and without showing any desire to come close to the government. But once the CII displaced Ficci as the country's premier industry association, it fell into the same trap.
In an attempt to retain its relationship with the government and maintain its numero uno status, it had to moderate its critical stance on many policy issues. One example was the manner in which a CII report on the financial sector was substantially modified at the behest of the government.
The irony of the chamber movement in this country is that an industry body grows in stature only when it retains its independence and remains candid in its reaction to government policies. But once it acquires a certain size and clout, it is forced to make compromises by moderating its stance on various policies. And when that happens, the chamber's credibility suffers.
Today, it is rare for a chamber of commerce to openly criticise the government or its policies. It will remain guarded in its reactions even to policies, which are blatantly flawed. It is the same problem that afflicts most industry leaders.
Few industry leaders have the courage or the desire to criticise the government's economic policies. If you do not believe this, take a look at the industry leaders' reactions to budgets or trade policy on television and in newspapers. Nobody has anything bad to say about either the budget or the trade policy.
Nobody takes these comments from industry leaders seriously. Soon, the reaction from the chambers of commerce and industry associations will also meet the same fate.
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