Naina Lal Kidwai, country head, HSBC India and president, Ficci and The Indian Express columnist Sunil Jain in a discussion, on CNBC-TV18, concur that Narendra Modi's thumping victory at the assembly polls in Gujarat was ensured by placing the traditional spirit of entrepreneurship and the entrepreneur at the core of governance and policy.
Below is an edited transcript of the discussion on CNBC-TV18
Q: Corporate India has come out in support of Narendra Modi’s victory. Does India Inc identify with Modi’s style of governance?
Kidwai: At the end of the day, Gujarat is seen as very industry-friendly and Modi’s victory is a vote not just for industry and progress therein, but the ability to deliver across all the human factors and social indicators. It is a model that many states can look to follow in terms of infrastructure development, industry and employment.
But let us not forget that Gujarat has always had the Gujarati’s entrepreneurship and ability to work at its core. Gujarat has, ever since I can remember, has been one of our top three or four industrial states. So, at the end of the day it is about ensuring that the part of growth and progress remains at the fore.
Q: But what is it about Modi's style of governance that appeals to corporate India so much?
Kidwai: Any investment decision is based on predictability, regulation, lower levels of corruption and the ease of doing business. It is about the availability and employability of labour, and the on ground perception and experience. So many of the corporates that show up to offer support are already operating in the state and sending out a message about the quality of services, infrastructure and economic environment present in the state
Perception is as important to manage. So to manage an environment which is investment-friendly is very critical and to recognise that industry - both manufacturing and the service sector – are huge employment opportunities for the youth is important.
But employment opportunities will be available for the youth only if they are educated. So a very high level of education, commitment, work culture and infrastructure has become key to making Gujarat a favoured investment destination.
Jain: Before I answer your question, let me clarify that the positioning of Narendra Modi as the BJP’s prime-ministerial candidate versus the Congress’ Rahul Gandhi in the general elections of 2014 has not been appreciated across the board. Narendra Modi is not going to be the BJP’s prime-ministerial candidate but will be the chief campaign manager of the party.
Q: Will the BJP allow Narendra Modi take centrestage at the national level despite this victory?
Jain: Being the campaign manager entails being in the centrestage and will keep Nitish Kumar mollified enough to stay in the NDA.
Q: Why would you say that? Is it the threat of Nitish Kumar and the other NDA allies walking out of the NDA or is it power play within the BJP itself that will prevent them from making him the prime ministerial candidate?
Jain: As far as the BJP is concerned, he is got 115 seats and no other BJP leader can come even close to him. As far as the BJP is concerned that leadership challenge is over. He is the leader, but you don't want to disrupt the NDA, so the party carders want him.
The BJP is going to put Narendra Modi as the chief campaign manager. If he can galvanise the cadre, if he can get things worked out and he gets enough seats and he becomes the Prime Minister, but if he doesn't then he just goes back to Gujarat. It is a great strategy because the other guys don't walk out.
Why does corporate India love Narendra Modi? it is very simple. Go back to Godhra and look at the revulsion in corporate India, among corporate leaders Anu Aga, Ratan Tata. Ratan Tata was one of the guys who came out and talked about Narendra Modi behaving in a partisan communal kind of manner. The moment you get confronted by Mamata Banerjee the same Ratan Tata has no compunctions in going back to Narendra Modi.
Q: Are you saying corporate India's alliance or corporate India's support is based on convenience?
Jain: You can call it convenience. I wouldn't be so cynical. I said you have got to run business, so you want to go to a chief minister who can give you land. You don't want to go to a government, which is going to give you reservation among promotions. You want to go to the government, which says that I will give you industry. I will bring industry. You don't want to go the government, which says I don't want industry. Corporate India is being sensible.
They want a gentleman who can give them some work. Narendra Modi's ability to deliver to industry will be dramatically different as a prime minister, if he becomes the prime minister, as it is when he is the Gujarat chief minister. But it is that promise, which is getting the industry to move towards him.
Q: How do you explain the fact that the very same Narendra Modi then would at least publically will oppose things like FDI in multi-brand retail, opposes vehemently the Goods and Services Tax (GST), negotiations haven't moved forward because of opposition from states like Gujarat. He is also trying to balance that pro development face in the state and the anti-Congress reform style face at the centre?
Kidwai: Certainly, GST for us in industry and at Federation of Indian Chambers of Commerce and Industry (FICCI) is a very important and we have engaged with Mr. Modi on this and we will continue to.
I can only think that we had just not been persuasive enough because a man of his ilk and intelligence, I am sure appreciates that GST is good for the country and industry wants it. We have to now make sure that if he has reservations that we can tackle those. I am very confident that we will.
Q: Do you see Narendra Modi changing his mind on either the GST or FDI in multi brand retail?
Jain: To be honest I am quite surprised by what Naina is saying about GST because the assumption seems to be that Narendra Modi is balancing the interest of the anti-congressism with development. It is very clear that there are enough Chief Ministers in the country who oppose GST.
These are Congress Chief Ministers, BJP Chief Ministers as well as the Bihar Chief Minister for example. The reason is very clear under Pranab Mukherjee the Central Government had said that they would not compensate any state for a loss in revenue. Now, you cannot introduce a GST and not promise to compensate for the loss in revenue.
Q: Do you believe that Narendra Modi perhaps could now drive those negotiations forward?
Jain: No, the negotiations on GST are not being driven by Narendra Modi, Arun Jaitely, or by Sushma Swaraj.
Q: But the opposition of Gujarat has been a big stumbling block?
Jain: No, the opposition of Gujarat has been because there has been no compensation. Now that Mr. Chidambaram has come in as finance minister, he said that this is a valid demand of the states. I will set up a committee and I am going to examine it. So, the moment the finance minister starts being conciliatory and say I am going to examine demands, Narenda Modi or anybody else would concede to those demands.
We need to be very clear that some of these things are not pure political. FDI in retail, I am convinced is political. There, I would agree with what Narendra Modi says, but GST is not one of them.
One more point, just to address a point made by Rajdeep that Narendra Modi never got enough seats in Gujarat and therefore vibrant Gujarat is really a city-specific kind of phenomena. Gujarat is the only state in the country, which for 10 years, for year-on-year has delivered a 10 percent agricultural growth, nobody else has done it. You cannot have a 10 percent agricultural growth year-on-year and yet believe that you didn’t have a rural prosperity. So, I don’t know why he never got votes in rural Gujarat, but there is clearly rural prosperity.