It is time for Modi to talk to India Inc, even though it makes for poor election optics.

India Inc has been surprised by the huge gap between what they expected Modi to deliver, and what they actually got.

Narendra Modi’s stock with India Inc has probably never been lower. On record, most chief executive officers (CEOs) will be all praise for the government and its reforms; off the record, they mutter darkly about how the government is yet to fix the big problems of the economy. That they are disappointed with Modi would be an understatement.

Last month, Business Standard did a poll of 28 CEOs who said the government should stop announcing new schemes and focus on delivering on its promises in its last year. While they did back the goods and services tax (GST) and efforts to digitise India, they had a poor opinion of many of the government’s other schemes. (Read the story here, but it is paywalled.)

A senior Mint editor, Anil Padmanabhan, wrote in a recent column that CEOs were miffed with Modi, and that the “negative buzz among select CEOs is growing.”

In a sense, this is not surprising. Modi as prime minister is a different person from Modi as Gujarat chief minister, who gave full access to every passing businessperson. As the prime minister, Modi no longer courts them, and, in fact, seems to avoid too much interaction with them. One can only surmise that this could be for two reasons: he is positioning his party to the centre-left rather than centre-right as earlier; and two, he is trying to disprove the opposition’s efforts to paint him as someone who does favours only to the rich and big business, not the poor. In reality, the Rahul Gandhi jibe of “suit-boot ki sarkar” was never true of the National Democratic Alliance government under Modi, but given his Gujarat persona, this is harder to live down. In politics, perception matters more than reality.

While Modi can hardly be called anti-business, given his consistent efforts to make ease of doing business his theme song, and willingness to invest political capital to push through difficult reforms like the GST, promoters and CEOs know that he has essentially banished them from his court. Many of the changes he has made have resulted in their ejection from the companies they built.

The tax regime has also gotten tighter and less forgiving, and banks are wary of lending more to dicey infrastructure projects. The attack on shell companies and closer scrutiny of the colour of the money coming into business means that laundering money from abroad to save even their own companies is more difficult now. The black money that could easily have been round-tripped to India is now harder to bring in. Demonetisation pulled the rug from under small and informal businesses, which were already tottering towards the fag end of the United Progressive Alliance government’s slowdown.

Modi wants India Inc to follow the law and not expect favours from the government even when things go wrong. He is willing to help through policy changes, but not individual businesspersons.

The Insolvency and Bankruptcy Code – that unforgiving auction house for defaulting businesses – has seen more promoters lose their companies than ever before: the list runs from the Ruias to GVK, GMR, Lanco and Jaypee and even the Tatas and Ambanis. The last two lost their telecom businesses due to excessive dependence on bank debt and strategy failures.

Despite high government investments in infrastructure, both in terms of roads and railways, the lifelines of the industries that can directly benefit from this opportunity – construction and real estate, apart from commercial vehicles – have been crimped by the crunch on cash. All these businesses depend on cash and cash is what Modi wants India to use less of.

Put simply, Modi’s changes are good for India in the long run, where businesses get formalised and jobs get social security, but in the long run, governments can lose elections and not benefit from the changes they ushered in. As things stand, Modi could face the same fate as Vajpayee, whose reforms got him only a pink slip from the voter in 2004.

For Indian Inc, which is hurting now, the long run promises no particular nirvana. They have been surprised by the huge gap between what they expected Modi to deliver, and what they actually got.

The mistakes Modi made are the following:

One, it is one thing to not favour cronies, quite another to stop listening to businesspersons altogether. The suit-boot ki sarkar jibe will stick to him no matter what he does. So, he might as well do the right thing. Distancing himself from India Inc does no good anyway.

Two, launching too many schemes and spreading himself too thin. No scheme announced by Modi is bad in intent or content, but he made an error in believing all will deliver before 2019. Most will not.

Three, the assault on black money cuts both ways. While it may force companies and individuals to behave better and pay their taxes more diligently, in the short run it freezes credit and commerce. It also squeezes profits that are vital for restarting the investment cycle. Banks are now more unwilling to lend than ever before, steeped as they are in losses that will take time to recoup. India Inc has been squeezed like never before.

The Indian voter cares less about corruption and more about what he can get from it. It is a mistake to make anti-corruption your only calling card. Saaf niyat does not always deliver sahi vikas – at least in electorally significant time frames.

It is time for Modi to talk to India Inc, even though it makes for poor election optics, where talking to businesspersons is seen as selling out the poor.