Singh hits out at India’s business leaders

Manmohan Singh, India’s prime minister, has accused Indian business leaders of having an “ethical deficit” that could impair their ability to expand internationally.

In an unprecedented broadside on Indian business on Tuesday, Mr Singh appealed to corporate leaders to adhere to universal standards of good governance.

“Our business leaders are aware that business practices of some corporate houses have recently come under intense public scrutiny for their perceived ethical deficit,” Mr Singh said at the launch of a week celebrating corporate India's rise.

“Our corporate culture must be attuned to the universally accepted values of good governance ... we must trust corporate India, as indeed [corporate India] must trust us.”

Mr Singh’s comments come as his government is engulfed by several corruption scandals that have dented the credibility of his cabinet and threaten to tar him.

The most damaging scandal is a furore over telecoms licensing that has paralysed the world’s largest democracy for weeks, entirely jamming the winter parliament session.

An official audit citing “serious irregularities” and estimating that as much as $40bn had been lost by the exchequer precipitated the resignation of the telecoms minister last month. It has turned the heat on the leadership of the ruling Congress party.

Mr Singh also warned against business embracing “extreme models of non-regulation”, a reference to the increasingly freewheeling nature of Indian business, and also against concentrating wealth “unethically” in the hands of the few in a country of 1.2bn people.

His comments were his first personal response to the scandals that have erupted around his Congress party-led government in recent weeks. The revelations have precipitated a crisis of trust between government leaders and senior business people.

Sonia Gandhi, the president of the Congress party, has scurried to its defence over an issue that threatens to damage it in coming state elections.

“It is a painful fact that corruption seems to be widespread and I feel strongly that it is our responsibility as well as that of each and every political party to together seriously devise a way, a mechanism, to curb this growing menace,” she said on Monday.

Mr Singh also defended the wide use of phone tapping, including recordings of Ratan Tata, chairman of the Tata Group, and other corporate leaders, saying such covert surveillance was necessary in the “world we live in”.

The prime minister stressed that while phone tapping had to be done with “upmost care”, it was necessary to improve law enforcement in the country.

Meanwhile, more phone taps have surfaced showing the country’s lobbyists and corporate power brokers pushing for the placement of their own loyalists in cabinet jobs.

In one recording, the widely respected Tarun Das, a former senior adviser to the Confederation of Indian Industry, is heard describing his recommendation of Kamal Nath as new highways minister and suggesting that money could be made from the portfolio. Mr Das has since apologised for his remarks.

Business lobby groups fear the damage that corruption is wreaking on the international image of the fastest growing large economy outside of China.

The Federation of Indian Chambers of Commerce and Industry on Tuesday said it was “deeply concerned about the potential damage to brand India and the India story due to brazen acts of corruption by a select few”.