India's conglomerates are getting too big for comfort
- India’s big businesses are thriving well while small and medium scale firms are still trying to come out of COVID-19 induced losses.
- According to an Oxfam report, the richest 1% of the country owned more than 40.5% of the total wealth in 2021, while the bottom 50% of the population only accounted for 3% of it.
- The share of assets in the non-financial sectors owned by the Big-5 business groups has risen from 10% in 1991 to nearly 18% in 2021, whereas the share of the next five has fallen from 18% to less than 9%.
- Democracies have battled hard to force governments to maintain some distance from private sectors in general and big business in particular.
- Those efforts have been partially successful in historical contexts, where only strong action against monopoly and trustification was achieved.
Need of conglomerates
- They help to increase GDP of the nation, provide employment to a large group of people.
- The Big industrialists and businessmen represent the face of their nation.
- Corporate Social Responsibilities (CSR) by conglomerates play a positive role in the community.
Threats due to big businesses
- Profit inflation or profiteering, through the manipulation of costs and prices.
- Inequality in income and various opportunities.
- It leads to nepotism, where the new generation inherit the business even if they are not worthy of it and this may lead to suffering of an economy in long run.
- It dilutes the role that civil society can play as a countervailing power.
Trends signalling the narrowing of political distance between the state and big business
- The embrace of neoliberalism by powerful voices within and outside the state.
- This implied adoption of the view that the role of the state is not to regulate private capital, but to facilitate its growth as means to all round economic progress.
- In areas such as telecommunications and civil aviation, there was an initial increase in the number of new players.
- But if a few were left, there might be signs of collusion among them and the consumer will be the loser.
- The state must help strengthen domestic big business to not just hold its own against giant global competitors, but to step beyond Indian shores.
- State policy, diplomacy and public resources, public banks had to serve as instruments for the purpose.
- Liberalisation has opened up Indian markets, and subjected Indian business to global competition.
- State intervention was modified to protect and promote sections of big business through large-scale subsidies and transfers.
- Closeness of the governments to big businesses has turned out to be a prerequisite for garnering the resources needed to “manage” elections and win electoral support.
- Over time, policy has been changed to legitimize corporate donations done to political parties, including through the electoral bonds scheme.
Distribution of wealth is one of the important criteria which helps to reflect a country''s economic equality and social welfare. Heterogenous distribution of wealth becomes problematic when the wealth remains concentrated among a small population and that further pushes the bottom section into poverty.
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