Economic reform, now as easily digestible as a McDonald’s cheeseburger washed down with Coke, wasn’t so well thought of by many in the early 1990s. Phrases such as ‘competitive forces’, ‘core competence’ and ‘globally oriented’ terrorised a majority of Indian industrialists back then—just like the phrase hire-and-fire scares today’s workforce but didn’t mean a thing two decades ago. Seventeen years ago, India’s most important businessmen got together and discussed ways and means to stall liberalisation. This protectionist lobby, also known as the Bombay Club, met at the Belvedere in Oberoi (now Trident) hotel in Mumbai. They struck at the very heart of what the P.V. Narasimha Rao government was trying to do—encourage Indian industrialists to compete with foreign firms in the local market.
The Bombay Club’s unofficial spokesperson turned out to be Bajaj Auto’s Rahul Bajaj. In August 1997, Bajaj wrote in Frontline magazine: “People have been given the wrong impression that the Bombay Club is protectionist and wants the reforms process to be rolled back. Let me clarify that there is no such thing as Bombay Club. As I am perceived to be a spokesperson for this Club, let me make myself clear: I believe that almost all the big Indian companies in future should not become foreign-controlled.” Recently, his son Rajiv Bajaj tweeted that the Bombay Club was a “figment of the media’s imagination”. That remark isn’t entirely accurate, says Sucheta Dalal, the reporter who broke the story about the meetings at the Mumbai hotel in 1993.
Dalal says she coined the phrase Bombay Club as a “short-hand way” to describe the informal grouping. “It wasn’t a Bombay ‘club’ in the sense that there was no constitution, nor a clubhouse. Also, some industrialists such as the late Lalit Thapar who attended its meetings were from Delhi. But those meetings did take place and their agenda really was stalling or slowing reforms,” says Dalal, now the managing editor of Moneylife magazine. Dalal says Rahul Bajaj didn’t attend the first meeting—it was later, at a cii meet she attended, that Bajaj confessed openly to supporting the Bombay grouping.
Though details remain sketchy, the core group also included Nusli Wadia and Hari Shankar Singhania and one more unnamed senior industrialist. Others included Jamshed Godrej, M.V. Arunachalam, C.K. Birla and Bharat Ram. Many of the club’s supporters were members of the prominent business lobbies, FICCI and CII. Of course, both agencies now strongly advocate liberalisation of businesses still under government control such as defence equipment manufacturing or insurance.
Dr Shankar Acharya, a key member of the government’s economic team back then and now with think-tank icrier, says that in the mid-’90s reforms were “touch-and-go”. So active were groups of Indian businessmen against competition from abroad that things could have turned either way. There may have been no reform, says Acharya, “if their views had prevailed politically...and they were all politically connected. Fortunately, the government held firm or the outcome would have been different”.
So what made economic reforms stay its course? A number of experts and India-watchers say it hasn’t. Reform, if loosely defined as allowing technology, products and investment from abroad into India, and allowing foreign companies to compete with homegrown industry, has had massive impact but has remained “piecemeal”. It’s not that reforms haven’t taken place though. “Reforms have been painfully slow precisely because of arguments like ‘infant industries need protection’, espoused by the Bombay Club and others,” says commentator Gurcharan Das.
