indian business : past, present and future address delivered by shri shaktikanta das, governor, reserve bank of india on the occasion of iconic week of azadi ka amrit mahotsav celebrations organised by the central board of indirect taxes and customs in mumbai on june 9, 2022 it is a great pleasure to address such an august gathering in this event organised by the central board of indirect taxes and customs ( cbic ), department of revenue, government of india as part of the iconic week of azadi ka amrit mahotsav celebrations. the topic i have chosen for my address today, namely, “ indian businesses : past, present and future ” will resonate with the audience here. businesses form the bedrock of an economy and on an occasion like this, it would be worthwhile to look at how indian businesses have evolved over the years. the current context of transformative changes that are altering the business landscape in india and across the world is yet another reason for choosing this theme. 2. i have structured my talk in the following order. i shall start by recounting the historical evolution of indian businesses to draw lessons for the future. i will then turn to the current scenario where i propose to highlight the tremendous opportunities that are available today for indian businesses and the challenges that they would have to contend with. i also propose to highlight aspects of corporate governance and related issues that are indispensable for a sustained performance by any entity or business. 3. historically, businesses have been the creators of wealth by bringing innovation in production and trading activities which facilitated higher productivity and better standard of living of the people. apart from creating growth and employment opportunities, thriving businesses generate vital resources through tax payments for the government to undertake welfare measures. thus, both from growth and welfare standpoints, businesses play a crucial role in overall economic development. in the words of nobel laureate in literature t. s. eliot, “ only those who will risk going too far can possibly find out how far one can go. ” 1 the underlying theme of business is to explore opportunities and capitalise on them. 4. in india, business and entrepreneurship have always had a special place in our society. the history of indian business is a fascinating story and one that is closely intertwined with the political and economic history of our country. traditionally, indian businesses were rooted in local knowledge and resources that were greatly admired all over the world. during the colonial period, however, many of our businesses were faced with

conduct 19. former associate justice of the u. s. supreme court potter stewart once stated : “ ethics is knowing the difference between what you have the right to do and what is right to do ”. ethics denotes the conduct of responsible professional behaviour within the mission of a business by managing risks professionally and pursuing profits legitimately. it is essential that the board and senior management of a business instil a strong sense of ethics in their organisation by setting up a comprehensive internal code of conduct which is easily and clearly observed, continuously communicated and disseminated across the organisation. the strength and viability of a business entity directly draws from its organisational culture and ethics. transparency in accounting 20. a robust corporate governance frame + work would require that businesses follow prudent accounting practices and provide transparent disclosures. sufficient information should be made available to the market participants to enable them to make informed judgments about the health and viability of a business entity. creative and aggressive accounting techniques and policies tend to overstate financial strength and would be detrimental to the long term sustainability of a business. the board of directors and the audit committee should ensure that integrity of the financial statements is not compromised in any manner. entities with robust corporate governance and high transparency get rewarded by the investors with higher valuation metrics and are also able to raise capital at a much cheaper cost. 21. the reserve bank has mandated a host of disclosures for its regulated entities to ensure that they make full and fair disclosure of all material information in their financial statements. this would make them relevant, reliable, comparable and transparent. business models 22. business models and business strategies of individual entities should be conscious choices, that are adopted following a robust strategic discussion in the board, after considering all relevant aspects. businesses should avoid aggressive short - term reward seeking culture, without regard for the build - up of excessive risks in the balance sheet. the common characteristics of some inappropriate business models or strategies that are observed include : inappropriate funding structure ; building asset liability mismatches which are highly risky and not sustainable ; unrealistic strategic assumptions, particularly excessive optimism about capabilities, growth opportunities and market trends which may lead to poor strategic decisions that imperil business model viability ; and over - focus on business considerations with neglect of risk, control and compliance systems. 23. as i said earlier, risk taking is the essence of doing business. what i am now emphasizing is the need to carefully weigh the upsides and downsides of every risk before embarking upon it