An Awkward Corner

Satyam And Public Policy

The government agencies and the interim board that managed to sell Satyam Computer Services to Tech Mahindra deserve credit for a job well done. Read Mint's editorials on this here and here.

But what do these last three months tell us about the nature of Indian public policy?

The question popped into my mind when I read this piece by Ashoak Upadhyaya in Hindu Business Line. (Disclosure: Ashoak was my boss many years ago.)

In 1983, the Government of India passed legislation taking over sick textile mills in the then Bombay a year after the workers had begun what was to become the world’s longest strike. In its preamble, the Textiles Undertakings (Taking Over of Management) Act provided an explanation for the nationalisation of the city’s iconic mills located in the heart of the metropolis.

“Whereas by the reasons of mismanagement of the affairs of the textiles undertakings…their financial condition became wholly unsatisfactory even before the commencement in January 1982 of the textile strike in Bombay…” The Government was assuming charge to ensure investments necessary “to protect the interests or the workingmen.”

Ashoak goes on to discuss how the government avoided a nationalization and how "the Satyam takeover poses dangers of moral hazard unless accompanied by swift action against the swindlers".

I want to focus here on something else.

The government intervened in the Mumbai textile industry because it wanted to protect the interests of workers. The entire debate between Ramalinga Raju's infamous mea cupla and the eventual sale of Satyam this week was on different lines altogether: would scandals such as this one destroy investor confidence?

From the rights of workers to investor confidence --- the goal post of public policy seems to have been moved a fair bit.