Business and Public Welfare

Summary

This pamphlet collects the background papers prepared for the Forum of Free Enterprise’s February 1970 convention on Business and Public Welfare, held in Bombay, together with the convention’s seven-point Final Statement adopted on 2 February 1970. The four papers — by V. K. Narasimhan (Resident Editor, Indian Express), Mrs. Krpshna Basrur (Editor, Consumer Guidance Society Bulletin), C. G. Vaidya (Principal, Chintamanrao College of Commerce, Sangli) and Dr. Ramu Pandit (Former Executive Director, Fair Trade Practices Association) — examine, in turn, the constitutional protection of property and enterprise, the consumer’s experience of adulteration and profiteering, the public-private balance in India’s mixed economy, and the image of the businessman in post-Independence society.

The volume’s argumentative centre is a defensive but reformist case for private enterprise: it warns that doctrinaire socialism and the dilution of Articles 19(6) and 31 threaten the constitutional foundations of business, but it also insists that businessmen earn legitimacy through self-regulation, ethical conduct, consumer protection and visible social responsibility. The Final Statement codifies these positions into a programme calling for a competitive mixed economy, restraint on nationalisation, professionalised self-discipline by traders, a stronger consumer movement, and an end to the inefficiency of State enterprises.

Essays

I. Business and Fundamental Rights

By V. K. NARASIMHAN

V. K. Narasimhan opens the volume by warning that the third decade of the Indian Republic begins amid crises of economy and democracy, with the split in the ruling Congress encouraging a competitive ‘doctrinaire radicalism’ that menaces the mixed economy and the property guarantees of the Constitution. He revisits the 1951 First Amendment and the inserted Article 19(6), arguing that its open-ended licence for State monopolies has been abused to nationalise without genuine public-interest test or independent inquiry, and treats the recent nationalisation of fourteen major commercial banks by ordinance as a case in point.

Narasimhan calls on businessmen — not in isolation, but together with all who value constitutional liberty — to fight for the retention of the Fundamental Right to property, to demand prior independent quasi-judicial inquiry before any nationalisation, and to insist on the Rule of Law against the ‘gherao’ tactics tolerated by State governments in West Bengal and Kerala. His closing warning is that without persistent vigilance and continual education of the public, the law of the jungle will displace the constitutional order.

• Frames the early 1970s as a moment when the Congress split has unleashed ‘doctrinaire radicalism’ against the mixed economy.
• Treats Article 19(6) (introduced by the 1951 First Amendment) as the constitutional opening that legitimised expanding State monopolies and recent bank nationalisation.
• Endorses a Jana Sangh proposal that no enterprise be nationalised without prior judicial enquiry in which the affected business can present its case.
• Calls on all who value constitutional freedoms — not businessmen alone — to defend the Fundamental Right to property.
• Names ‘gherao’ tactics tolerated in West Bengal and Kerala as a direct threat to the Rule of Law and to businessmen.

II. Business and Consumers

By Mrs. KRPSHNA BASRUR

Mrs. Krpshna Basrur surveys the consumer’s predicament in a scarcity economy: adulteration, profiteering, hoarding, price manipulation and shoddy workmanship are entrenched in a ‘seller’s market’ that places few costs on bad practice. She cites a Fair Trade Practices Association survey of Bombay housewives in which 50 per cent of tradesmen are believed to profiteer, a Union Directorate of Health finding that roughly 30 per cent of food samples are adulterated, and recent poisonings from contaminated edible oil and underground Vanaspati to argue that the harm is concrete and ongoing.

Her remedy is twofold. Consumer associations must shift consumers from passive grievance to active ‘demanding’ of quality, written complaints and patronage of certified shops; and business associations — naming the FTPA, the Forum of Free Enterprise and the Indian Merchants’ Chamber — must lead a programme of education and self-regulation for small traders, expand product certification (Agmark, ISI), publish prices and expiry dates, and create a standing joint body of business and consumer representatives to address scarcity and distribution problems together.

• Diagnoses the Indian consumer’s situation as a seller’s market produced by chronic shortages and weak buyer organisation.
• Reports an FTPA survey finding 50 per cent of Bombay tradesmen reputed to profiteer and a 30 per cent national adulteration rate from the Directorate of Health.
• Argues for active ‘demanding consumers’ using written complaints, boycotts and preferential buying from certified sellers.
• Identifies certification (Agmark, ISI) and labelling reforms — round weights, expiry dates, content disclosure — as a progressive path.
• Calls on business associations (FTPA, Forum of Free Enterprise, Indian Merchants’ Chamber) to lead trader education and a joint consumer-business standing body.

III. Business and Government in India

By C. G. VAIDYA

C. G. Vaidya frames the business-government relationship as the central institutional question of India’s mixed economy. He traces the post-1947 decision to adopt mixed-economy planning to the perceived inadequacy of private capital alone, and observes that since 1951 the public sector has expanded rapidly into almost all important areas of the economy — often, in his view, on insufficient grounds and without producing efficiency, returns or freedom from foreign technical dependence. The co-operative sector, in his reading, has functioned more as a Government movement than a genuine peoples’ movement.

His suggestions are characteristically Forum-of-Free-Enterprise in temper: neither sector alone can deliver development; the State should respect the spheres reserved for private enterprise by the 1956 Industrial Policy Resolution and refrain from fresh undertakings there unless absolutely necessary; the public sector should pause expansion in favour of consolidation and efficiency; the private sector must be assured conditions allowing it to develop fully; and high efficiency in all three sectors is the prerequisite for rapid economic development.

• Locates the origin of India’s mixed economy in the 1947 judgment that private enterprise alone could not bear the development burden.
• Criticises post-1956 ‘socialist pattern’ drift as taking over means of production without adequate justification or efficiency gains.
• Observes that the co-operative sector has functioned more as a Government movement than a genuine peoples’ movement.
• Urges the State to honour reserved spheres for private enterprise under the 1956 Industrial Policy Resolution.
• Recommends a pause on public-sector expansion in favour of consolidation, with the private sector given assured conditions to grow.

IV. Business and Public Image

By Dr. RAMU PANDIT

Dr. Ramu Pandit asks why the Indian businessman, who had earned national goodwill in the pre-Independence period, is now widely seen as a ‘profiteer’, ‘monopolist’ and ‘exploiter of the masses’. Part of the answer, he concedes, is real: businessmen have missed the public mood, tolerated bad apples in their own ranks, and failed to internalise their social obligations in a young democracy whose values are ‘in a melting pot’. He contrasts this with Japan, where post-war industrialists exercised strict voluntary controls and rebuilt national esteem within twenty years.

Pandit argues that the situation can only be reversed by visible self-discipline and long-term, ethically grounded political engagement by businessmen — not the expediency-driven, short-run lobbying that further taints them. Drawing on R. H. Tawney’s notion of business as a profession bound by service rules, and on the U.S. Business Ethics Advisory Council’s 1962 declaration that the moral standards governing ordinary life apply equally to business, he urges Indian business organisations (the FTPA, Better Business Bureau, Committee to Promote Social Responsibilities of Business) to set and enforce voluntary standards. The image of the businessman as ‘Mahajan’, he concludes, must be earned by accepting public values before the State imposes them.

• Diagnoses a sharp post-Independence decline in the public image of the Indian businessman from ‘Mahajan’ to ‘profiteer’.
• Holds Japan as a counter-example of how voluntary post-war self-discipline rebuilt business goodwill within two decades.
• Calls for long-term, principled engagement in public life by businessmen rather than expedient short-run lobbying.
• Invokes R. H. Tawney and the U.S. Business Ethics Advisory Council to argue that business ethics are simply general ethics applied at work.
• Treats voluntary, association-led standards as a middle path between unrestrained competition and direct governmental regulation.

Business-and Public Welfare — Final Statement

The Final Statement, adopted at the Forum’s Bombay convention on 2 February 1970, distils the four background papers into a seven-point resolution. It affirms a competitive mixed economy as the right vehicle for public welfare in India and assigns private enterprise an important but conditional role: legitimacy is to be earned through self-discipline, transparent obligations to consumers, employees, shareholders and the public, and the inclusion of small traders in business associations.

The statement names vigorous controls, the threat of nationalisation and the threat to the Fundamental Right to property as deterrents to private enterprise’s contribution; calls for winning over the public — especially employees and consumers — by treating business as a ‘sacred trust’; urges encouragement of a strong consumer movement; and refuses to accept the poor performance of State enterprises, whether the remedy be outright abolition, conversion to mixed units, or insistence on autonomy and sound business lines.

• Endorses a competitive mixed economy as the suitable framework for public welfare in India.
• Identifies vigorous controls, nationalisation threats and erosion of the property right as direct deterrents to private enterprise.
• Demands self-discipline and explicit obligations to consumers, employees, shareholders and the public from business.
• Calls for a strong consumer movement as both a check on business and a precondition for rapid economic development.
• Refuses to accept the status quo on State enterprises: they must be abolished, converted to mixed units, or made autonomous and run on sound business lines.