Adventures in capitalism

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http://www.economist.com/node/21532448

ON AUGUST 1ST India’s finance minister, Pranab Mukherjee, gathered the country’s senior businesspeople for a pep-talk in New Delhi. The event (pictured) was notable for two reasons. First, the subject of discussion was the wobble in confidence that has taken place over the past year. Although a mini-industry has arisen of India optimists who predict that the country’s entrepreneurial spirit will make it an economic superpower over the next two decades, many business folk on the ground feel disillusioned. They worry that India’s notorious red tape, graft and lack of infrastructure are finally catching up with it. Largely unnoticed abroad and eclipsed by the rich world’s sovereign-debt crisis, the Indian economy has hit a sticky patch, with investment slowing, inflation high and growth expected to dip to perhaps 7%, from a peak of 10%. After two and a half hours, needless to say, the bosses emerged and expressed boundless optimism with the gruff air of men in the grip of a half-Nelson.

The second surprise, given India’s reputation as a land of red-hot start-ups and new entrepreneurs, was the dynastic nature of those captains of industry. They included Ratan Tata, the fifth-generation head of Tata Sons, a conglomerate; Anand Mahindra, the chief executive of the Mahindra group, which was co-founded by his grandfather; and Anil Ambani, who inherited a chunk of the Reliance empire built by his father. The main representatives of first-generation entrepreneurs were Shashi Ruia, who built the Essar group with his brother and who has handed day-to-day management to his son; and Sunil Bharti Mittal, who controls India’s biggest mobile-phone operator, and whose son recently joined the firm after a stint as an investment banker in London. True, not all Indian firms are dynastic: Y.C. Deveshwar, a veteran business leader, attended in his capacity as chairman of ITC, a firm controlled by institutional investors, rather than a family. But ITC has become the kind of conglomerate that Western textbooks advise against, spanning everything from stationery, cigarettes and spice-grinding to noodles and hotels.