Tata chief warns of India unrest

The $39bn telecoms corruption scandal in India is threatening to trigger popular discontent among the country’s 1.2bn people like no other scandal in the country’s post-independence history, the Tata Group, India’s largest company, is warning.

In an interview with the Financial Times, Kishor Chaukar, executive director of Tata Sons, the holding group of the Tata Group, said civil society’s growing frustration with widespread corruption threatened to lead to nationwide protests inspired by the recent popular uprisings in Tunisia, Egypt and Libya.

Mr Chaukar’s comments come days after Ratan Tata, the chairman of the Tata Group, appeared before parliament to face questions about his group’s participation in the controversial award of 2G telecoms licences three years ago. The mishandling of the auction was estimated by an official audit to have cost the national exchequer $39bn in lost revenues. Mr Tata denies wrongdoing.

“The dimensions of this [corruption scandal] are so large. The wrongdoing is being brought into focus in such a large manner,” Mr Chaukar said. “A large number of youth are saying: ‘This is enough’. To crony capitalism, they are saying: ‘Let’s get rid of it.’”

“It will lead to something that is big for India’s economic and political system ... What’s happened in Tunisia, Libya, Egypt is giving people encouragement. [They are saying] if we can demonstrate and network and we are unified then things can change.”

Others too have drawn parallels between the activist mood in the world’s largest democracy and the Middle East. Justice Santosh Hegde, a former Supreme Court judge, warned of an Egypt-like revolt if a public campaign against graft went unheeded.

R. Gopalakrishnan, another director of Tata Sons, said the Mumbai-based group was “bothered” by the threat to its reputation posed by the telecoms scandal. “It can happen to anyone to be caught up in a street brawl,” he said.

The Tata Group’s comments also came as a hunger strike by Anna Hazare, a veteran social activist, in New Delhi drew thousands of protesters on to the streets in the capital and Mumbai and received support from business lobby groups.

Over the past year India has been hit by a series of high-profile corruption scandals affecting the telecoms sector, the top brass of the military and the Commonwealth Games. Economists have voiced open concern about the rising level of crony capitalism over the past decade.

Mr Chaukar said Tata was responding to an “alarming” and deteriorating business environment in India by encouraging its companies to explore overseas opportunities in more stable markets to reduce “one-country risk”.

He said India’s troubles were part of an unavoidable phase of “regulatory arbitrage” that affected fast-growing developing economies as they liberalised. Opening up the economy was leading to some people making “humungous, unjustified profits”.

India was unlikely to be able to address the ills of corruption in the short term, he said, arguing that business leaders in a transitional economy would face ethical challenges for years.

Senior politicians, such as Sonia Gandhi, Congress party president, and her opposition counterpart, Nitin Gadkari, have bemoaned the lack of scruple in their ranks.

“The credibility of politics and politicians is very low. There are a lot of people who have reservations about [Indian] politics,” said Mr Gadkari, a leader of the Hindu nationalist Bharatiya Janata party.