Is India Inc incurring the Anna anger?

Booking a residential apartment in India is to enter into a state of agonising uncertainty. Even after pledging funds and signing dozens of legal documents, buyers cannot be certain of when they will actually get possession of their homes or whether they will get what was promised. Delivery schedules are more often observed in the breach; construction quality is routinely compromised; and at times even architectural and landscape plans are changed at will.

Yet hundreds of thousands of middle-class Indians desperately seeking homes have no alternative but to take the plunge and put their lives’ savings into the hands of builders who offer no guarantees and who believe they have the right to deliver as and when they please.
The biggest defaulters are not so much the fly- by-night operators but the big and powerful companies who dominate the real estate market. This fact was brought to light by a recent judgment by the Competition Commission of India (CCI) against one of the country’s biggest real estate firm, DLF.
The CCI slapped a penalty of `630 crore on the company for abusing its dominant position in the industry and hoodwinking clients, who had booked apartments in one of its prestigious apartment projects called Belaire. Those who are aware of the case will recall that buyers promised apartments by 2009 have had to wait for years because DLF suddenly and unilaterally decided to double the number of floors in that project and cram in hundreds of extra apartments.
This was clearly not the home they had been promised. Yet when buyers protested, DLF officials calmly pointed to a clause in the sales agreement that pretty much allowed the company to make changes in its plans as it pleased. A tribunal has since stayed the CCI order after DLF appealed but the case is far from closed.
Such omnibus clauses conferring unfettered rights to builders is apparently standard and reflects the complete lack of transparency and accountability in most sectors of corporate India.
At a time, when civil society is raging against government institutions, politicians and the bureaucracy, demanding more probity, transparency and accountability in public life, the corporate sector continues to believe it is above scrutiny and persists in the flagrant abuse of consumer rights.
When the government came out with a much-delayed draft real estate bill, the builder lobby rose en masse in protest, claiming its provisions protecting consumers were too harsh and warned that it could lead to huge increases in real estate prices.
The real estate lobby’s response to regulation is both predictable and symptomatic of a larger malaise. A large section of the corporate sector in India today is neither accountable nor transparent; it has taken bribery, sleaze and political manipulation to spectacular heights to secure disproportionate profits, cut out rivals and bleed the ordinary consumer.
Dubious practices are not the preserve of real estate companies; a great number of financial institutions, mutual funds, consumer goods manufacturers, phone companies and many services have lined up to defraud, short-change or mislead consumers.
Kingfisher Airlines’ abrupt discontinuation of flights across the country hurt thousands of business and casual travellers. As protests broke out throughout the country, the airlines, which prides itself on its supposedly impeccable service, lamely announced that it was over `7000 crores in debt and was seeking government assistance. This was an astounding and rather belated disclosure considering that it is not possible for a company to suddenly notch up such huge losses. Fact is, Kingfisher has been constantly underperforming, not paying airport charges, fuel bills and other sundries.
Once on its knees, Kingfisher was reported to have petitioned for concessions from the government and a possible bailout, prompting Prime Minister Manmohan Singh to remark that the airlines should be helped. The notion that taxpayers money should be spent to prop up a failing private enterprise provoked such outrage that the government was compelled to deny Kingfisher any special favour, although the proposal to allow foreign investment in the industry is still pending.
Just how ingrained corporate unscrupulousness can become has been illustrated by the country’s telecom sector, where several major players are under criminal investigation and a number of top company executives are in jail. These executives and companies have been charged with criminal conspiracy, attempts to defraud the public exchequer and several other misdemeanours. The allegation is that these companies have massively bribed politicians to corner scarce spectrum and ultimately make the consumer pay.
Cutting corners and short-changing consumers have become an instinct with many consumer goods companies operating in India. Most large white goods companies have conveniently farmed off product servicing and maintenance to franchises, who routinely overcharge and provide shoddy services.
A number of banks too are anything but transparent in their dealings with consumers; many of them often overcharge consumers for services, are not transparent about their practices and hide important issues in the fine print. At times, RBI instructions are circumvented through manipulations and misrepresentation. For instance, some private sector banks are continuing to impose a penalty on those who wish to pre-pay their home loans, despite a clear RBI directive prohibiting banks from charging any such penalty.
Bribing officials and politicians to obtain business favours and damage rival interests has long been an accepted practice by corporates and business houses. Seeking favours and lobbying is legitimate up to a point. But when it subverts the very system, derails lawful procedures and ultimately abuses the citizenry’s faith in democratic and administrative institutions, it assumes the proportions of a severe menace.
Corporate opacity that hides mendacity and corruption is also a huge threat to an open society because it debases its very foundations and ideological moorings. If the corporate sector refuses to reform, then sooner or later it should be prepared to face a movement as intense as the one launched by civil society activist Anna Hazare.

The writer is an independent security and political risk consultant