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T N Ninan: Challenges for Nehru & Gandhi Pvt Ltd

It is said that only 30 per cent of businesses survive long enough to be handed down to the next generation of family owners. At that rate of attrition, the chance of a business surviving to the third generation is nine per cent, and to the fifth generation less than one per cent. That explains why there are said to be no more than 10 companies which were functioning when Motilal Nehru began practising as a young lawyer in Allahabad, in 1886, and which survive till today.

The House of Tata was founded in 1887, and is into its fifth generation leadership. An equally extraordinary firm could be called Nehru & Gandhi (Sons, Daughter & Daughter-in-Law) Pvt Ltd. This is not quite as old, though it too is into its fifth generation. The firm’s operational birth (ie, when it began to acquire some control of the Congress) should perhaps be dated to 1919, when Motilal first became the Congress president. A decade later, his son Jawaharlal was party president – not chosen by Congress committees, but nominated as candidate by the Mahatma (after Motilal’s prompting). So while the House of Tata is past its quasquicentennial (125th year), the firm of Nehru & Gandhi is yet to celebrate its centenary. And, unlike with Tata, large question marks hover over its future.

Rahul Gandhi, the fifth generation inheritor who told a business audience in 2013 that he wasn’t where he was out of choice, is without question the biggest loser of 2014. He and his mother control the Congress, but the party faces an existential crisis. To be in business, it has to offer its leaders and workers the hope of enjoying power and opportunity to misuse office, within a foreseeable future. But in crucial states, the party is neither No. 1 nor No. 2, but an also-ran. Any prospect of power is distant in Uttar Pradesh, Bihar, West Bengal, Tamil Nadu, Seemandhra, Jharkhand, Jammu and Kashmir, Delhi – and perhaps even Maharashtra. In Telangana and Gujarat, it is still No. 2, but no more than a rump. These states account for nearly 65 per cent of the seats in the Lok Sabha. In some states, the Congress has not tasted office for two decades and more. Inevitably, the party has withered at the grass-root as party workers have gone elsewhere in the hope of better pickings.

What can Nehru & Gandhi Pvt Ltd learn from Tata? One is the old rule for family businesses: you should not persist with family leadership if that leadership is neither competent nor interested in the family firm. On past performance and his own admission, Rahul Gandhi should be ruled out on both counts. He could therefore follow the Ratan Tata model – retain some kind of titular role for the family firm as a prominent shareholder, but leave the party’s operations in the hands of competent professionals. Instead, Mr Gandhi is doing the exact opposite.

Mr Gandhi talks of grassroots democracy, but will not leave state legislators to pick their leaders. Critics who raised their voice after the Lok Sabha elections have been shown the door or told to shut up. In too many cases, Mr Gandhi has put weak satraps in charge of states; they are incapable of rebuilding a popular base. Perhaps he distrusts strong state leaders, since they or their offspring tend to break away and form their own family firms – Sharad Pawar, Mamata Banerjee, Jagan Reddy, Karuppiah Moopanar, etc. But that is because Nehru & Gandhi Pvt Ltd conducts a royal court, and the ultimate prize that the firm offers is the role of a courtier. Why would that prospect attract any young, ambitious politician? If Mr Gandhi does not find a way to cede operational control, the family firm will either lose its hold over the Congress, or they will go down together.

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