New Delhi: It is distressing to see the prime minister exhort big business to invest and take risks. Taking risks is at the core of wealth-creation. Risk-taking and true blue capitalism are two sides of the same coin.

But don’t tell that to Indian industry. Apart from a few years commencing from the 1991 reforms, big business has shown little appetite for risk.

At independence, capital was scarce. Jawaharlal Nehru was compelled to a mixed economy with public sector bias. His daughter subordinated political economy to politics with the license-permit-quota raj. Its ruinous impact persists to the day.

There were those who profited from this raj. They made no complaints against rising corruption as long as they prospered and more scrupulous competitors suffered.

The 1991 reforms jolted them. Industrialists like Rahul Bajaj complained against an “absent level playing field”. What they really wanted was the old regime.

That demand has taken new forms now. One of those is the shrill cry to cut interest rates. The Reserve Bank governor, Raghuram Rajan, is entirely objective about the situation. His objectivity cuts no ice with risk-averse industrialists.

Rajan has explained this countless times. Between growth and inflation control, the Reserve Bank is biased towards the second. This bias would stand for any poor country with an emerging economy.

Growth has only meaning when inflation is contained. The data on inflation is mixed, according to the Reserve Bank. When it is reasonably convinced of a future of range-bound inflation, interest rates will lower.

Rajan does not rule out cuts whenever data is even minimally supportive. He has kept his word.

No Reserve Bank governor can be as forthright, honest and reasonable as Raghuram Rajan in the present circumstances. For bad and good reasons, banks are not transmitting the cuts he has already made. Short of putting a gun to their collective heads, Rajan is doing everything to make banks compliant.

The trouble is this. Bank assets are a mess across the public and private sectors. Loans made to industry and specific sectors have gone bad. New payment banks are adding to the stress by way of unavoidable competition.

All this is well-known. It cannot have escaped industry notice. So why does it continue to clamour for large rate cuts which are presently impossible? Is it making excuses for non-performance?

Perhaps.

This will be hard to take. But it is closer to the truth than any. Exceptions aside, Indian big business has lost its mojo, or such of it as it had. Mukesh Ambani was one of those who met Narendra Modi at the government-industry conference where the prime minister urged to risk-taking and investment. Look at Ambani again.

Mukesh Ambani is making investments, but the investments that really count for him are glamorous and vacuous things like IPL, the news media, etc. His shareholders are unhappy. Between the two brothers, he seemed serious. But he started going down as a visionary businessman the day he built that 27-storey monstrosity called Antilia in Bombay. The ancients knew that a towering structure was an expression of hubris before fall.

Yogi Deveshwar of ITC was another who attended the PM’s meeting. ITC has been hammered on the stock market. Its mainstay tobacco business is stressed because of rising punitive taxes and it is struggling to shore its bottom-line.

Deveshwar quietly sold his ITC shares to finance a posh home in Delhi. His putative successor in ITC also sold shares. Deveshwar’s retirement plans are in place. Home acquisition is usually one of the last milestones in an Indian man’s life. Nothing wrong. But will such a man have an appetite for risk?

Like Deveshwar but several notches higher, Kumar Mangalam Birla has just bought a sea-facing bungalow in Bombay for Rs 425 crores. God bless him in his new house. But this is also a man showing all the signs of hanging up his boots. Should Modi expect risk-taking from him?

If you add Vijay Mallya to this putrid stew of big business, you are almost reminded of Vivant Denon’s reflections on Caesar, Cleopatra and Anthony during Napoleon’s campaign in Egypt: “It is there that the empire of glory yielded to the empire of voluptuousness.”

The point is this. Big business will not get Indian growing. There are exceptions like the Tatas. Azim Premji is one in a million. In manufacturing, among others, Mahindra and Mahindra, Eicher and TVS Motor have become valuable brands.

But if India has to grow by leaps and bounds, it is the SMEs that must be strenuously encouraged. They operate in appalling conditions. The real growth is there. Ask any trader. Monies are made in mid- and small-caps with all the attendant risks.

Why should it be different for the country?

If Prime Minister Narendra Modi were to spend a tenth of his efforts wooing big business on SMEs, India would be transformed. To answer those like Jyotsna Suri complaining of high cost of capital and hence its artificial scarcity, read Michael Dell’s interview published today.

“The worst thing you can do to a company is over-capitalize it,” he said. “Scarcity of capital drives innovation, new thinking and abundance of ideas, while abundance of capital does not.”

The world is rapidly and inexorably moving to a disruptive economy. Artificial intelligence, machine learning, deep learning and so forth are key stops on the way. Prime Minister Modi would need a whole new set of young and passionate risk-takers backed by science and technology to power India ahead.