Chairman’s Speeches

chairman speech

February 8, 2014
Chairman's Speech - Rotary District Conference, Pune

Rotary District Conference, Pune : February 8, 2014
The Way Forward for India
D.G., Dr. Deepak Shikarpur, Shri Mukesh Arneja, Dr. Mashelkar, Ladies & Gentlemen,I am grateful to Rotary International for bestowing this exceptional honor on me. I accept it in all humility on behalf of all my colleagues in the Bajaj group. They are the true architects of our success.Rotary represents a good blend of individual development and civic mindedness which I believe is essential for the way forward for any country.

I have chosen to speak about The Way Forward for India. The economy, business and politics are the three areas I know a little about.

I am happy to note the presence of a significant number of ladies in the audience. They are the real life economists, sociologists and psychologists who run our homes on tight budgets and keep the family together. As I have said often, Indian fathers are ok, but Indian mothers are very, very special. Mere Namaskar.

To arrive at the way forward one has to understand where one is, develop a vision for the future and then draw a road map for achieving it.

So my talk is structured around 3 questions

1. Where are we and why are we here?
2. Where should we go from here? And
3. What should we do to get there?

I. Where are we?

Let me enumerate our key strengths and weaknesses.
Our strengths are that:

– We are the world’s second largest country in terms of population and the fourth largest in terms of size of the economy
– We have a very young population in a world which is ageing
– We are the world’s largest democracy
– Our people are enterprising and hard working. I hardly need to say this to this audience, who represent these qualities in ample measure. We have the largest number of foreign CEOs of large global companies. Be it Anshu Jain of Deutsche Bank, Indra Nooyi of Pepsi, Ajay Banga of Mastercard and now Satya Nadella of Microsoft. The depth of Indian talent, be it as entrepreneurs or as professionals, is strong and deep.

However, our weaknesses are:

– Our per capita income is low. It is 1/20th that of developed countries.
– On a wide variety of measures, be it in Ease of Doing Business or social parameters like corruption, human development indicators, we are in the bottom half of the world.
– We have some major economic reasons to worry about. Our growth rate is falling, our inflation is high, our imports are larger than our exports and therefore our currency is losing value. And, our governments continue to spend more than the taxes they collect. & The quality of our political system and public institutions (law & order, judiciary, education, health system) is declining.

So, the glass is half full and perhaps leaking.

Why are we here?

This is a controversial subject but we can conclude that for the last 50 years we have been badly governed.

As Kanwal Rekhi, a venture capitalist from Silicon Valley, who has mentored a large number of Indian entrepreneurs in the IT sector, put it , “we are a first rate people in a third rate system”. But the system is not God given. It is a system that we created and continue to support, even if by default.

At the root of our non-performance is the primacy we accorded to the government rather than individual enterprise. Nani Palkhivala once described the period 1947-91 as a period of “collective madness”. Of course, there were positive elements in the period, but that should not deter us from calling a spade a spade.

We have disregarded if not disincentivised the productive private sector of the economy, and incentivised the relatively “unproductive” sectors. Creation of surplus has to precede its distribution. This central fact has been disregarded, bankrupting our governments.

China too had its cultural revolution but they did not become prisoners of an unwise past. Each day one must be willing to look at the world with new eyes. This is not to be confused with inconsistency. Gandhiji wrote in “Young India”, ” my aim is not to be consistent with my previous statement on a given question, but to be consistent with truth as it may present itself to me at a given moment.”

Over a period of time some maybe well-intentioned but incorrect principles, have come to be the corner stones of our public discourse. Essentially, they represent a belief that political expediency is more important than economic logic. Key amongst these are:

  • Merit is not important in deciding about people
  • There are free lunches available
  • Dogmas are more important than outcomes, e.g. Nationalisation &
  • You can have rights without responsibilities

One can see that these will lead to disaster because they are contrary to common sense. But they are the prevailing principles of our governance.

They have created the entitlement state and are responsible for a negative work culture.

The task of overturning these incorrect principles is not easy. Large groups now have vested interest in keeping them going. But, to continue an unsatisfactory arrangement is courting disaster.

A nation progresses when its people and government are pro- growth and reform oriented. This is the lesson of human history, be it Rome or Egypt or China. Whenever a nation opts for status quo and its elite seek refuge in rent seeking, it declines. The greatest threat to a nation is not external but self-inflicted economic and/or social imbalances.

Our country is a place where contradictions often co-exist. We have a growth oriented people but a rent seeking political, bureaucratic and at times business class. This is why our progress has been poor. But this is also the reason why we have reason to hope.

II. Where should we go?

It is obvious that we have to grow and grow fast, to provide employment and a decent living to all our people. Growth is sustainable only if it is inclusive, only if it is environmentally friendly.

Our first priority should be to banish poverty. Not through doles but through creating opportunities for gainful employment.

We also need to articulate and realise the Idea of India, which combines the best of our past and the best of human values. Where parental income is not a barrier to good health and education, where talent is encouraged, achievement celebrated and the less strong can also live with dignity. A country retaining its age-old humanism and tolerance of differences. A country that retains its soft power in offering an alternative, attractive way of life that celebrates life, to the world.

Is this possible?

The banishing of poverty is an economic question and the idea of India a societal one. I for one believe that both are possible.

The global scenario is marked by economic power resting with developed countries in Europe, North America and Japan. The history of the last 200-300 years is a story of catch up. UK forging ahead, then being chased by Germany, then US and then Japan. In the last 50 years South Korea has made the grade. China has progressed fast in the last 30 years.

First, a country competes on cost, then on quality, then on innovation. This means that countries can play catch up. Miracle economies should be the norm. It is Non development that is the puzzle.

The world is now relatively open. The barriers are of technology, which too can be surmounted by determined effort.

Also, there is a global value chain and one can both source globally and be a supplier.
The idea of India is something that is innate to our civilisation. We have merely to remain steadfast to it. We have to know our roots and pass them on to succeeding generations.

III. How do we get there ?

We have to reform our political and economic systems. I say political first, because it is our politics that has distorted our economic system. Without political change there cannot be economic change.

Political System

How do we make the political system more productive; and accountable and responsive to our society’s needs ?

The individual is the center of all change. As Gandhiji said it, “be the change you want to see”. All of us have to hold fast to values that we believe are good for us and the society.

This, at the political level, means that each one of us should vote. And we must vote for the right candidate. Middle class apathy to the political process has to end. Also, law should prevent criminals from contesting elections.

We need to have government funding of elections to go to the root of the rot in the political system, which lies in election funding. We also need to hold elections only once every five years, simultaneously for the states and the centre. This was so for four elections till 1967. Electoral political expediency will then be a once in five year phenomenon rather than the current eternal theme song.

Economic System

China’s development has been facilitated by it becoming a factory for the world. With wages now rising in China, revaluation of the Yuan & the desire of foreign countries/ companies to diversify their risk, a huge opportunity exists for India to attract investment in manufacturing. We have already seen investment move to Bangladesh, Cambodia and Vietnam for manufacture of clothing. If we modify our labor policy, provide the required infrastructure and a hassle free environment, a very large number of jobs, at least a Million, can be created in India in the organised sector, within the next 3 years. Present policy is only leading to low paying contractual jobs in the unorganised sector and increased imports from China.

Also, large industry should be dispersed and kept away from existing large cities by the State Governments providing the needed facilities in areas where they want to attract industries.

We need a change in government attitude from being a controller to a facilitator. At the very least, governments should stop being a hindrance to business. In other words we need to provide good governance and effective delivery of public services.

We also need a serious review of government spending. Subsidies need to be reviewed and resources moved from unproductive to merit based subsidies targeted at those who need it. Money should be spent on productive investment in sorely needed infrastructure, be it electricity or roads or ports or irrigation.

And, we require a business climate that is conducive to investment needs, to be created by streamlining procedures to fast-track infrastructure projects. Reforms to address skill shortages, and to ease labor regulations also need to be implemented. These structural reforms will not only boost growth but will pave the way for sustained growth.

We have to strengthen the provision of public goods like education, health and infrastructure so that the poor have an opportunity to participate in growth. If governments fail then the private sector should assist in augmenting supply of public goods.

Of course, it is companies that compete, not countries. But macroeconomic factors and the social dynamics of a country, play a significant role in determining company competitiveness.

We in the private sector have to significantly improve the quality of our corporate governance and speed up the economy’s rate of growth by enhancing our competitiveness. There is a need for business to earn societal legitimacy.

There are two kinds of capitalism. Market based and cronyism based. Cronyism based benefits only a few individuals, implies corruption and gives capitalism a bad name. What we need is market based capitalism. Unless we make this distinction we risk the rejection of capitalism by people at large. Today in the public mind, Indian business is largely of the crony kind. Events like Coalgate, 2G spectrum sale, illegal mining of iron ore, give credence to such a belief. Business requires public legitimacy to function. This legitimacy is not strong anyway in our country and has to be built assiduously.

Before I conclude, ladies and gentlemen, let me say a few words about our current political situation.

The results of the four state elections in November/December 2013 point to a change of regime. We are also seeing a new national leadership emerge in the Congress and the BJP. Also, regional parties and a third front cannot be wished away. AAP is an interesting development. AAP, in my view, reflects the re-engagement of the middle classes with the political process, which is a good development. The middle class may or may not stay with AAP depending on its performance. Corruption going on back foot is a positive sign as long as anti-corruption drive does not become a witch-hunt and lead to policy paralysis.

In conclusion

I am a realist but a forward looking realist. As someone said “Vision without action is merely a dream. Action without vision just passes time. But vision with action can change the world.”

We must articulate and commend whatever is in our national interest. We must rise above narrow considerations that we have become accustomed to. The purpose of my comments today is to stir a dialogue so that we can start to break this logjam.

A leader is one who takes us where we would not have gone on our own. We need such leadership at all levels, in all fields. Nation building is the solemn duty of every citizen. We citizens have to reclaim our republic. I expect Rotarians to lead in this endeavour.

Taking India Forward is a challenging task. It will be a long and difficult journey. But achievers seek tasks that challenge their will. When beset with difficulties, we would do well to remember Churchill’s dictum: “Never flinch, never weary, never despair.”Or, as Vivekananda said, “Rest not till your work is done.” Into that heaven of freedom let my country awake.

Jai Hind.

February 5, 2013
Chairman's speech - NEW DELHI

International Customs Day : New Delhi
FEBRUARY 5, 2013
That today you have chosen me to be a guest of honor is a sign of changing times.The relationship of the tax collector with the assessee is never easy.

Unfortunately, there is an adversarial relationship. This seems to have been a colonial legacy, fortified by our labyrinthian laws which are amenable to many interpretations.

The fact is that our tax ratio is low, and also that tax evasion is rampant, sometimes in connivance with the tax collector. It is thus the honest tax payer who bears the brunt of the tax collection efforts. We have a situation wherein a very small % of the population pays large taxes and at least an equivalent number, who should be paying more taxes, evade taxes.

We have a difficult fiscal situation. But this bad fiscal situation is more due to reckless government spending than just tax evasion. What does an honest tax payer get in return for his tax money? Very little. So, some people wonder why they should pay high taxes?

Ultimately, a system survives on its moral authority. Not on its punitive power.

We need to get back to common sense in our tax laws and their administration. We have it all written down in the “Arthashastra”. Tax. But lightly. Chanakya’s concept of light was 1/6th which is higher than our current tax to GDP ration of 12% but lower than the rate of 30% Corporate Tax.

Chankaya also said that Tax in such a way that the payer does not feel the pinch. Tax with consideration of his ability to pay. Punish very severely the officers who embezzle taxes. And provide an enabling environment for the producer.

There is a special mention in it of encouraging imports. Of the need to see that the tax payer makes a decent profit. All this is obvious. But unfortunately not a part of our philosophy and administration of taxes.

The World Economic Forum of Switzerland does a world competitiveness study each year. We were ranked 56th out of 142 countries in 2011-12. During the early part of 21st century we were improving. From 2010-11 we have started declining. The top 4 impediments to doing business in our country, as per this study, were inadequate infrastructure, corruption, inefficient bureaucracy and tax regulations. These are essentially in the government’s domain. There is a special item in the WEF study which should interest us here today. The burden of Customs procedures. In it we were ranked 89th in the world. And here too we were improving from 2007 to 2011, but have declined in 2011-12

In the last two decades, the world and the Indian economy have changed significantly. To give you a sense of the change let me just speak of Bajaj Auto. Over the last 20 years or so our volumes have frown from 1mn to 4mn vehicles per year and our exports have grown 12 times from being 5% of sales to now over 30% of sales. Import duties have come down from over 100% to 10%. Inventories of imported materials has come down from 3 months to 3 weeks. Now, business is global.

In this integrated world, the efficiency of customs is very important. My colleagues at Bajaj Auto tell me that there has been significant improvement in custom clearances for both exports and imports in our country. From days we are now doing it in hours, with the introduction of electronic handling of documents. Kudos to the Indian customs.

I wait for a day when the customs of the importing and exporting country are connected in such a way that my Export Declaration (Shipping Bill) can travel online and becomes the Import Declaration (Bill of Entry) of the buyer of my goods at the importing country end. Since the goods transport would take a longer time, the import formalities could be over, even before the goods arrive. This would not only reduce the cost to the trade, but by cutting down the time at the ports can decongest the ports, which is a critical infrastructure constraint we have.

It will also reduce customs frauds substantially, as both ends will be transparent, and thus boost revenue. Since the import and export declaration and allied documentation would be online, it would render customs almost paperless and be a good green initiative. I am told that the “Globally Networked Customs” initiative of the World Customs Organisation is designed to do precisely this. I hope our country will take a lead in implementing it.

There is always room for improvement in a system’s effectiveness and efficiency. And the key to this is encouraging innovation. With the digital and telecom revolution that we are experiencing, the pace of innovation has increased. In my view each organization has to suitably equip its people and create an environment in which they strive to do their best.

I believe that if the government makes appropriate changes we will see a drastic change in employment and growth in our country. I see GST and Trade Facilitation as two important initiatives which, if administered well by CBEC, could facilitate growth.

Last, but not the least, Customs control the last leg and the first leg of every international trade movement. In an economic sense, you guard the economic frontier of the nation, and upon the prudence of your administration depends the economic well-being of the nation.

On behalf of Indian industry I would like to assure you that most of us are straining every nerve to expand our businesses. This will result in greater employment and greater tax revenue; and therefore greater and more equitable national development. I hope that Government & Business become partners in this endeavour.

Jai Hind.

December 8, 2012
Chairman's speech - Rotary Club Nagpur

Indian Economy In A Changing World : Rotary Club Nagpur
DECEMBER 8, 2012
Change has been the only constant for the last 100 years. But the changes that we are witnessing today boggle the mind. Smartphones that put the world in our hands French sovereign rating downgraded, The Jasmine revolution in Arab countries, Rioting on London, Occupy Wall Street in the US, fasting against corruption in India. Almost no economic growth and zero % interest rates in the US, Europe and Japan, contrasted with 6-8% growth in China & India amidst high inflation.In my view there are three big drivers of our times:

    1. The shifting of economic growth from the developed to developing countries. Between 1990 to 2010 the share of the US in global GDP declined from 25% to 20%, while that of China increased from 4% to 13%.
    2. Depletion of non-renewable resources and
    3. The increasing pace of innovation.

These are large, slow processes and would take time to unfold. The winners would be those that read these changes correctly and devise appropriate ways to deal with them.

To my mind some of the other major features of the world economy today are:

  1. The shift in growth from the developed to the developing world is because wage inequality between the developed and developing world is not sustainable on the basis of productivity differentials. This is resulting in high unemployment in the developed world and consequent social tensions. Also, despite reduction in absolute poverty, inequalities within and among nations have risen.
  2. Prices of non-renewable resources like oil & minerals has risen and are likely to continue to rise.
  3. Innovation and quality are required constants for competitiveness and even the masters of the game can slip, like Toyota did three years ago.
  4. The world is open for business. It may not be totally flat, but it is essentially flat. So, the whole world is our play field.
  5. It is connected. And growing even more so by the day.
  6. The world is ageing in the developed world & even in China. This raises issues of pension & health costs and the resulting strain on public finances. The young are in India and Africa and in developing countries.
  7. Environmental issues like climate change, water availability are coming to the fore.

Changes do not stem only from economics but also from Politics and changes in Society. Some of the major developments in these in my view are:

  1. There is no country which is an undisputed global leader today. The multi-polar world is on us but without the necessary mechanisms of decision making. As Kishore Mahbubani of Singapore describes it, we are in a ship without a captain or a crew.
  2. Democracy is becoming a universal norm & is spreading. But global quality of governance is proving to be highly inadequate.
  3. From the state as the arbiter of our fate we lurched to the private sector but both have now been shown as false Gods. A new balance is required but is largely not there in most countries.
  4. Terrorism has become a fact of life, especially in South Asia. Its roots may be economic, social and/or religious.

Though the global economic situation is fragile, yet, overall I remain optimistic. Because-

  1. Developing countries are continuing to grow, especially China & India. Also, Africa & South America. This is over 80% of the world population.
  2. This growth in the developing world also offers important new opportunities for the developed world.
  3. The process of globalization and technological development has lowered barriers for trade, investment and technology flows for every one.
  4. The Jasmine revolution in Middle East and North Africa, while disruptive in the short run, has triggered a revulsion for dictatorships and corruption, which is resonating globally. This has even reached our shores.

In this changing world what is happening to India?

  1. Growth potential of India is strong due to the strength of our entrepreneurs and society. With loosening of government controls since 1991 this entrepreneurial base is exploding across the country. Aspirations of people are high and they are willing to work hard & smart to achieve them. This provides tremendous human energy.
  2. Indian society is both pro-growth and invests in education, though not enough. Essentially, it is no longer reliant on the government for fashioning its future.
  3. India is more a federation than a country. State governments have significant leeway and determine both growth and social stability more than the Central government does. In many states, governments have become pro-growth. Notably in Gujarat, Tamilnadu & even Bihar. Last state level elections reconfirm the electorate’s desire for growth. Communist govt. in Bengal routed after 30 years of their rule. Voters voted against corruption in Tamil Nadu and rewarded performance in Bihar. Therefore, growth impulse in India is likely to persist despite various constraints.
  4. We must also remember that 6 of the 7 Billion people on earth live in developing countries with needs close to ours. We can cater to such needs. Indian companies are striking it good in Asia, Africa and Latin America. MNCs are emerging out of India. Indian companies are taking over companies in both developed and developing countries, and
  5. At last some hope that the cancer of corruption may be successfully tackled.

Even as the global economic climate is weak and uncertain, in my view India’s macroeconomic performance leaves much to be desired. Our growth was over 8% during 2004-10. Sincer then it has slid to around 6%. The stubborn inflation of around 8% and weakening growth that we have experienced for the last two years were not inevitable.

I am of the firm belief that we can grow much faster and deliver much better economic outcomes to our people. These are desperately needed in a land blighted by low incomes, poor quality of public services of health and education, poor infrastructure of roads and electricity, poor quality of employment and sharp regional & social inequalities.

Our political and bureaucratic apparatus has been ineffective, inefficient and indulged in wholesale mismanagement of the public purse. Winning elections seems to have become a be all and end all of governance. Elections seem to have become a money game and government revenues are frittered away to chase vote banks. Corruption is endemic.

On the other hand we have skilled and motivated human resources raring to go. The 1991 reforms have paid off. The trouble is not too much reform but too little reform and often of the wrong kind.

The world today is open for business and is open to talent. Opportunities and threats to all businesses are now global. Broadly this is good news for India. With our plentiful human resources and their lower cost we can win markets if we manage right. The rise of the IT industry in India is a testimony to this great opportunity.

It is important to increase industrial employment in the organized sector. This has been declining due to our illogical labor policy. I believe significant opportunities exist for growth in industrial employment due to the increasing wages in China and the need for multinationals to spread their manufacturing bases in India, especially the Japanese, NMZs and SEZs by themselves are not the answer. The whole ecosystem should be sensible. This is what was done to foreign trade and industrial licensing in 1991 and the results are for all to see.

Bajaj Auto’s volumes have grown four fold in 20 years and exports fifteen fold. And our employee strength has been halved. Due to better productivity and because we have outsourced to smaller companies better equipped to handle rigidities of our labor laws. When companies have more contractual employees at one half the wages as compared to their permanent employees, then what can we expect?

We should also take care to disperse manufacturing. By providing power & connectivity. This is important not only to manage urbanization, land prices, migration and attendant social issues, but also to give a fillip to our crisis ridden agriculture. Regular industrial employees offer a safe and growing market for farm product. Why is it that we do not hear of farmer suicides in industrialized Western Maharashtra but in industrially backward, even as it produces much electricity, Vidarbha?

If we do this single mindedly then concomitant reforms become obvious, GST and electricity sector readily come to mind.

In reforming one should focus on the real sector and the priorities of our nation. For the last decade reform has become a by-word for facilitating the foreigner. That is not our priority, not should it be. If it makes sense for us we should do it. Not because we have dug ourselves into a hole with a current account deficit and fiscal deficit and we need foreign money to bail us out. We should and can fix these deficits if we have the sagacity and the tenacity to do so. We may be the only country in the world which thinks that the foreigner is better for us than the local! For a country that has experienced colonial rule this is bizarre.

I have no clear view on whether FDI in retail would be good or bad for our economy. It could be either way depending on many factors. But in my view it is not important an issue for the economy as labor law reform. Much time and energy is going in dealing with relatively non-issues and real issues remain neglected.

Given the global and domestic economy and politics I, unfortunately, do not see the haze clearing up quickly. Though I still believe that with clear sighted policies and firm handling, the situation can be improved. By and large, the recent reshuffle of the cabinet is a positive signal. Recent initiatives like increase in price of diesel, cap on subsidized LPG cylinders are encouraging and commendable though not popular. But are they adequate?

Indian business has an important role to play in improving the Indian economy.

There are two kinds of capitalism. Market based and cronyism based. Cronyism based benefits only a few individuals, implies corruption and gives capitalism a bad name. What we need is market based capitalism. Unless we make this distinction we risk the rejection of capitalism by people at large. Today in the public mind Indian business is largely of the crony kind. Events like coalgate, 2G spectrum sale, illegal mining of iron ore, give credence to such a belief. Business requires public legitimacy to function. This legitimacy is not strong anyway in our country and has to be built assiduously.

A key change required is in the mindset of the Indian private sector. We have to be committed to meeting the needs of our customers, be it in India or abroad. We have been lucky that in the past the Indian consumer was not so demanding. This is changing and now the domestic and global customers are demanding. If we do not lift our game, we risk missing a great opportunity.

Today, uncertainty is the only certainty. Management is about keeping one’s head in the face of this uncertainty. To steer a clear course, but remain open to course correction.

Another major change we need is of the political system.

It has become dysfunctional and unconcerned about its responsibilities to the nation. I do not share the penchant for the theatrics of the Aam Aadmi Party, but I do share the revulsion against corruption and brazenness of the political class. Quick and harsh punishment for corruption is needed.

Government funding of political parties, compulsory audit of their finances and wide publicity to their accounts are easily doable. Elections to state assemblies and the parliament should be held simultaneously and only every five years.

I am not unduly perturbed by the rise of the regional parties. They are more likely to respond to ground realities than ossified national parties, who seem to be specialists in self goals. Regional parties may have a harsh edge like the new rich but if they want to survive in the long haul they will have to mature. From current trends, it appears that in 2014 national elections, regional parties may emerge stronger.

It is not that we do not have issues that hold us back. However, we have in the last two decades demonstrated that they will not tie us down. We have a half full glass that needs to be filled. We should focus on filling it. The important thing is for the nation to travel with hope in its heart. In this it is important for every section of society to have a sense of inclusion and access to decent education and health services. Access to education and health services is becoming a soft under belly of our nation and we need to deal with it efficiently and without any further delay. If the government does not do this well, then business has to also pitch in.

I believe that those with open minds, committed to a better future and not unduly weighed in by the past will prosper.

One does not grow younger, but a businessman is an eternal realistic optimist. The energy and drive of the young in India is infectious. Their need for achievement is high, irrespective of their social class. Each wants to better his/her life and is hopeful of doing so. It is obvious they are trying. In the ultimate analysis this is the real wealth of nations and in terms of social capital also, we have been, and are rich. I am confident that our young would create a new India once we old fogies get out of the way! It is time we freed our nation from want and the time is now.

Friends, I believe in the idea of India. It’s a beautiful idea of justice and celebration of diversity. I believe in the people of India. They are innately fair and not self-centered. I believe in the youth of India. They are smart, hard working and avid learners. So, I believe India would ride the change in the changing world. To that thought, I raise a toast. To India!

September 25, 2011
Chairman's speech - at Banasthali University

Address at Banasthali University : Annual Function
SEPTEMBER 25, 2011
It is a pleasure to be here at Banasthali University. For two reasons. First, because this institution has done stupendous work in the field of women’s education, in the face of all odds. Second, because the connection between this institution and the Bajaj family is very old.When Shri Hiralalji Shastri and Smt. Ratanji decided to start work in the 1930s they went to Gandhiji in my home town Wardha to seek his blessings. There they met Jamnalalji, my grandfather. They called him Kakaji, which was the name by which he was referred to by everyone. Jamnalalji was well aware of Hiralalji’s work at Banasthali and in Rajasthan and was involved in raising funds for Banasthali.

In 1990 Smt. Ratanji Shastri was awarded the Jamnalal Bajaj Award for her work in the field of Women & Child Development and in her acceptance speech she referred to this connection between the Shastri & Bajaj families.

What I have witnessed in the course of the day, is a wonderful conception of education and of women emancipation. Banasthali produces confident, well rounded, accomplished women. Our country needs them, especially the northern parts of our country where khap panchayats can even now dare to sanctify honour killings and where female foeticide is rampant.

Female emancipation is the root of social development. Be it Maharshi Karve in Maharashtra or Ram Mohun Roy in Bengal. For over a century this effort has been on in our country. Shastriji was a pioneer in this respect in socially conservative Rajasthan. The sapling he planted and irrigated with his sweat has become a forest. My pranams to him & Ratanji, and all who have made this possible.

Today, I would like to share with you my thoughts on what I believe is needed to succeed in life & the role of education in enabling this.

It seems to me the roots of achievement are almost unchanging. Curiosity, playfulness, camaraderie, a penchant for taking risks, a tenacity to carry on in the face of failure, a willingness to swim against the tide & many lucky breaks. Whether one is thinking of Gandhiji or Alexander the Great or Einstein or Michelangelo, these themes recur.

Real education should cultivate such patterns of thought and behavior. Does it? Almost worldwide, educational institutions seem to be driving in reverse gear. We see rote learning, impatience with the questions of the student, pressure of marks leading to reproduction of right answers which kills creativity, a declining attraction of teaching as a vocation, etc.

At an educational institution, one gets knowledge and values. Knowledge, while important, can be got from many sources. But it is values that are more important in one’s life. We imbibe them early and they are difficult to change. Any educational institution should be, in my view, more concerned about the values it imparts. Especially when the external world is hostile to the values that need to be instilled in every decent human being. The values that need to be nurtured include integrity, simplicity, unselfishness, hard work, teamwork, among others. Are our institutions nurturing them? What values are they nurturing? This is something we need to be conscious of.

It is the extra-curricular activities that one engages in school & college that prepare and benefit us in our professional lives, as much as our academic result. Real life is about taking initiative, about being able to build relationships, and about being able to think on one’s feet, about courage, about communication skills. All this is learnt more outside than in the class room. This is why there is the famous saying, “the battle of Waterloo was won on the playgrounds of Eton”.

Our education system generally has too much of theory and too little of practice, while in better institutions across the world this balance is tilted in favor of “doing”. Learning is more complete and stronger in doing something practically than in merely bookish knowledge. We need doing thinkers rather than mere thinkers.

If one asks a successful person about the turning points in his life, very often a teacher is involved with it. To this tribe of teachers, my salutations.

At the root of the global competitiveness of the Indian people as individuals is the strength of the institution of the ‘family’ in our society. The resilience of our personalities is rooted in the unconditional love that we receive at home, especially from our mothers. Indian fathers are okay but Indian mothers are something very special.

To the parents, who may be here today, I say encourage your children, but do not burden them with unrealistic expectations. You are doing a wonderful job and are willing to sacrifice to help your child do well. Education has been & will be a way to create & recreate the basis of our prosperity. But, I think it is more important for the child to discover what he or she truly enjoys doing and make that his or her career. This engineer/doctor/MBA syndrome has run its course. There are so many new avenues opening up. In today’s & tomorrow’s competitive world one has to be very good at what one does. And that requires a passion for that area. Forcing our children to do what seems the latest field with scope may do them more harm than good.

My young friends, when you graduate from Banasthali you would move from a reasonably logical and predictable world to a world in which nothing moves in a straight line. The future has rarely been an extrapolation of the past. Discontinuity and uncertainty are the order of the day. It is in the very nature of an open economy that the forces of change will accelerate. You are better geared for this environment than most people are, as you have been trained to be pro-change and pro-continuous learning in your outlook.

In the world of industry certainly, but increasingly in most fields, there is only so much that an individual, however gifted, can do. But there is nothing that a team can not achieve. You will have to work productively in teams; on whose membership you may have little choice. Besides technical talent and ability to function productively in teams, tenacity, hard work and a positive attitude are needed to deliver results.

When you step out in to the world there are three things in my view whose importance you will realize soon enough. These are to have a positive attitude, of listening rather than speaking, and of continual learning.

A positive attitude is a big help. Critical but positive. There are many things that are wrong. But negativism does not correct them. It may highlight them. But to solve them, positive energy is required. And this I do not mean in an uncritical, all is hunky dory manner. But, in correctly and quickly identifying what needs to be done and then getting on and doing it.

On Listening: The key source of value lies outside ourselves. For a company it lies with the customer. In science one first listens to nature to understand its order, before one uses that order. So, the beginning of everything is listening. But, most of us, especially the more intelligent and articulate we are, tend to be eager to speak, not caring to listen. Our social and education system, crowded by voices as it is, tends to reward those who speak. This happens even in our work life. But now competition has increased and put listeners at a premium. For the listener knows what is really required to be done.

Continual Learning: Life is a learning experience. Whether we do or don’t learn is largely a measure of our choice and ability. In the learning economy of today, I somehow find the word learning more apt than knowledge; it has become a necessity. The world as it now exists, runs on a process of continual value addition. Your learning will accelerate as you step out of these hallowed portals.

I would like to share with you five common traits which I have seen in outstanding employees in Bajaj auto where I have worked for the past 46 years.

  1. Passion. They are completely dedicated to what they do, it is all that seems to matter in their world.
  2. Focus. They always see the big picture, and are not distracted by the small ones.
  3. Excellence. They set the highest standards of professional integrity and performance.
  4. Commitment. They lead from the front, 24 hours a day, 7 days a week, come hell or high water And
  5. Determination. They may lose a battle or two, but they never lose their spirit.

An organization, any kind of organization, which has employees with these traits is the darling of its customers and a terror to its competitors. The globalizing world outside is about ‘survival of the fittest in a materialistic world’. When looking to recruit people for his company, EDS, Ross Perrot explained his criteria for selection, ‘I want people who love to win. And if I can’t have them, then I want the ones who hate to lose’.

My young friends, India is rising. We are the 3rd largest economy in the world and our growth rate is higher than of the developed world and likely to remain so in the foreseeable future. We also have one of the largest youngest populations in an ageing world – our demographic dividend. This is creating and will create a huge opportunity for our country to improve its lot. The growth & change of the last two decades, and during the last few months, in our country reflects this opportunity and the efforts of countless Indians.

However, with a low per capita income, widespread poverty and poor governance we have a mountain to climb. But we will climb it with hope in our hearts and a song on our lips. I am sure all of you will contribute to the development of our country. I hope, coming from an institution with a great tradition & legacy, you will be conscious of your obligations and responsibilities towards society. You represent some of the best talent in the country. You will be the standard bearers of your alma mater. It has a very good name. Work to make that shine brighter.

These are challenging times. Exciting times. The rewards for those who get it right will be enormous. But let us remember, when we go out and compete with the best, we not only bat for ourselves, we bat for our country. We redefine what an Indian is, what India is.

I believe in the idea of India. It’s a beautiful idea of justice and celebration of diversity. I believe in the people of India. They are innately fair and not self-centered. I believe in the youth of India. They are smart, hard working and avid learners. To be an Indian is our privilege. This is also our responsibility. I am sure that all of you understand this and will do yourselves, your parents, your alma mater and your country proud.

Thank you.

September 7, 2011
Chairman's speech - Siam Annual Convention,New Delhi

Siam Annual Convention: Changing India In A Changing World
SEPTEMBER 7, 2011 : NEW DELHI
For a decade now my concerns have become broader than the auto industry. So, when Pawan asked me to speak I was in a bit of a quandary. He wanted me to crystal gaze the industry, a task for which I am no longer the best person in this room. Pawan is not a person who takes a no for an answer, and I guess this attitude is also responsible for the success of Mahindra & Mahindra. So, he gave me the choice of the subject.I was sure I would see many victorious, battle scarred faces in this room, so I thought that maybe we can discuss the woods and not the trees. The woods are lovely, dark & deep and I have the luxury, at my stage of life, of having no promises to keep!

Consequently, I chose “Changing India in a changing world”. For I believe if we read the tea leaves right and place our bets accordingly, and there is some evidence that we are doing so, we would write a new chapter in our nation’s history. To be able to do so would be our privilege.

Change has been the only constant for the last 150 years. But the changes that we are witnessing today boggle the mind. The US sovereign rating downgraded. The Jasmine revolution, Rioting in London, fasting against corruption in India. Almost no economic growth and zero % interest rates in the US, Europe and Japan, contrasted with 8% growth in China & India amidst high inflation.

Are we on the same planet?

In my view there are two big drivers of our times:

  • The shifting of economic growth from the developed to developing countries. Between 1990 to 2010 the share of the US in global GDP declined from 25% to 20%, while that of China increased from 4% to 13% and
  • Depletion of non-renewable resources.

These are both large, slow processes and would take time to unfold. The winners would be those that read these changes well and devise appropriate ways to deal with them. There are of course many other issues of poverty alleviation, inequality, terrorism, etc., but we shall leave these for another day.

There are also sub-themes that I would like to broadly enumerate. They are largely about the economy and a few about polity and society. After all, man is not just an economic animal:

Economy:

  • The world is open for business. It may not be totally flat, but it is essentially flat. So, the whole world is our play field.
  • It is connected. And growing even more so by the day.
  • Innovation and quality are required constants for competitiveness and even the masters of the game can slip, like Toyota did two years ago.
  • Growth in the developed world has slowed and has shifted to the developing world. This is because wage inequality between the developed and developing world is not sustainable on the basis of productivity differentials. This is resulting in high unemployment in the developed world and resulting social tensions. Also, despite reduction in absolute poverty, inequalities within and among nations have risen.
  • The world is aging in the developed world & even in China. This raises issues of pension & health costs and the resulting strain on public finances. The young are in India & Africa and in the developing countries.
  • Environmental issues like climate change, water availability are coming to the fore.
  • Prices of Non-renewable resources like oil & minerals have risen and are likely to continue to rise.

Polity and Society:

  • There is no country which is an undisputed global leader today. The multi-polar world is on us but without the necessary mechanisms of decision making. As Kishore Mahbubani of Singapore describes it, we are in a ship without a captain or a crew.
  • Democracy is becoming a universal norm & is spreading. But global quality of governance is proving to be highly inadequate.
  • From the state as the arbiter of our fate we lurched to the private sector but both have now been shown as false Gods. A new balance is required but is largely not there in most countries.
  • Terrorism has become a fact of life, especially in Central & South Asia. Its roots may be economic, social or religious.

The Global Economic Outlook in 2011 continues to be fragile. We are now in a period of turbulent, long term structural change. Not the usual recession that one can climb out of. It has left the major economies of the US and Europe in an unsatisfactory situation and with difficult choices, which they are finding difficult to make. These in turn can compound their problems. How the US deals with its fiscal and trade deficits and unemployment and how Europe resolves the crisis in Greece, Portugal, Ireland, Spain and maybe even Italy, are important questions. Will the Euro survive? And if it does not, can the EU? As of now, the nettles do not seem to have been grasped. A spectre of slow growth and high unemployment compounded by high commodity prices hangs upon us. Hopefully not a double dip recession. At the IBC meeting of WEF in Geneva on August 25 & 26, there was a strong view that before the end of this calendar year, Europe will be in greater difficulties.

Yet, overall I remain optimistic. Because –

  • Developing countries are continuing to grow, especially China & India. Also, Africa & South America. This is over 80% of the world population.
  • This growth in the developing world also offers important new opportunities for the developed world.
  • The process of globalization and technological development has lowered barriers for trade, investment and technology flows for every one.
  • The Jasmine revolution in Middle East and North Africa, while disruptive in the short run, will broaden and deepen markets and expectations. It has triggered a revulsion for dictatorships and corruption, which is resonating globally. This has even reached our shores.

I believe that those with open minds, committed to a better future and not unduly weighed in by the past will prosper, irrespective of where they come from.

In this changing world what is happening to India?

  • Growth potential of India is strong due to current low incomes and the strength of our entrepreneurs and society.
  • Indian society is both pro-growth and investing in education, through not enough. Essentially, no longer reliant on the government for fashioning its future.
  • India is more a federation than a country. Federal governments have significant leeway and determine both growth and social stability more than the Central government does. In many states, governments have become pro-growth. Notably in Gujarat, Tamilnadu & now even Bihar. Recent state level elections reconfirm the electorate’s desire for growth. Communist govt. in Bengal routed after 30 years of their rule. Voters have voted against corruption in Tamil Nadu and have rewarded performance in Bihar. Therefore, growth impulse in India is likely to persist despite various constraints.
  • India has a strong tradition of entrepreneurship. With loosening of government controls since 1991 this entrepreneurial base is exploding across the country. Aspirations of people are high and they are willing to work hard & smart to achieve them. This provides tremendous human energy. Even if distorted at times, the genie is out of the bottle and will not go back in.
  • 6 of the 7 Bn people in the world live in developing countries. Products developed for them in India have relevance across all developing countries. Indian companies are striking it good in Asia, Africa and Latin America.
  • MNCs are emerging out of India. Export growth robust. From 3% in 1990 Bajaj Auto’s exports have grown 30% of sales. In 3-wheelers, now over 60% of sales. Indian companies taking over companies in both developed and developing countries. Outward FDI was close to inward FDI in 2009
  • At last some hope that the cancer of corruption will be successfully tackled.

This may be in the medium term. What about the short term?

  • Broad story is good but marginally lower growth of 8% during 2011-12 (7.8 & 8.2% in previous two years) in a situation of persistent 9% p.a. inflation. Even with slower growth in the developed world, oil and commodity prices likely to remain firm.
  • China, Argentina and Turkey have higher growth rates than us.
  • Reserve Bank has been hiking interest rates and recently increased the repo rate by 50 basis points to 8%. Hopefully, we may be coming to the end of this cycle.
  • Inflation largely due to supply issues in food items and global commodity price increases. Inflation not really being controlled directly, but may decline due to lower demand growth resulting from high interest rates.
  • Exports have bounced back. Rupee has largely remained stable, in fact appreciated, against USD and Euro, even though high trade deficit persists, due to capital inflows.
  • Fiscal deficit high at around 5%. Tax revenues continue to be buoyant. Government spending is very high on social programs (inefficiently implemented), government employees’ salary increases and on infrastructure. Unfortunately, a good deal of inefficiency and corruption exist in government spending.
  • Government responded well to the global crisis of 2008 by loosening fiscal policy. Therefore, growth remained high, in a global context, at almost 7%.
  • Turbulence on the political scene due to some high profile corruption cases and, of course, Anna Hazare’s crusade against corruption.
  • Broadly, with the liberalization that has happened in the last 20 years, the fate of our country is in private hands, not of the government. The government does not significantly hinder enterprise now.
  • Change is needed in labor policy & privatization of ports and electricity. DTC and GST must come w.e.f. 1.4.2012
  • The key change required is in the mindset of the Indian private sector. We have to be committed to meeting the needs of our customers, be it in India or abroad. We have been lucky that the Indian consumer was not so demanding. This is changing and the global customer is demanding. If we do not lift our game, we risk missing the great opportunity and being washed out like the Indian cricket team in England.

It is not that we do not have issues that hold us back. However, we have in the last two decades demonstrated that they will not tie us down. We have a half full glass that needs to be filled. We should focus on filling it. The important thing is for the nation to travel with hope in its heart. In this it is important for every section of society to have a sense of inclusion and access to decent education and health services. Access to education and health services is becoming a soft under belly of our nation and we need to deal with it efficiently and without any further delay. If the government does not do this, then business has to pitch in.

There is therefore a lot of responsibility on Indian companies to realize their and the country’s potential and deliver more employment and better incomes to as many people as possible. The real question is not whether we will make our place in the sun. But why, with low employee cost and a large domestic market, we have still not conquered global markets.

Today, uncertainty is the only certainty. Management is about keeping one’s head in the face of this uncertainty. To steer a clear course, but remain open to course correction.

I believe in the idea of India. It’s a beautiful idea of justice and celebration of diversity. I believe in the people of India. They are innately fair and not self-centered. I believe in the youth of India. They are smart, hard working and avid learners. So, I believe India would ride the change in a changing world. To that thought, I raise a toast.

To India!

June 27, 2011
Chairman's speech - Naples

Naples : India and World Economic Outlook in 2011
JUNE 27, 2011
I am indebted to Dr. Frank Richter for inviting me to co-chair the Global India Business Meeting in this wonderful and one of the oldest cities in the world.I do not know whether the choice of Naples as the location for this meeting is symbolic, as I can not but remark on the similarity between living in the shadow of a dormant volcano and the current global situation, as also the global seismic shifts being measured on the Richter scale. Of course Mount Vesuvius has not erupted since 1944, thank God for that, but it’s a volcano.

Comments on World Economy
World real GDP growth forecasts to be about 4.5% in 2011-12, slightly below 5% of 2010

Real GDP in advanced economies and emerging economies expected to grow by 2.5% and 6.5% respectively.

Since 2008, 60% of global growth has come from developing countries and this scenario is likely to continue for some time.

In a way this was inevitable – with 6 Bn. Of the 7 Bn. People and their economy growing faster than developed world for the last 20 years.

Some developing countries will benefit due to rising prices of commodities.

Real incomes likely to rise in developing countries and remain flat or go down in developed countries – current differential not justified by productivity and innovation levels.

There are contentious issues – availability of resources – oil, food, commodities. Climate change. Increase in competition from developing countries, etc. However, it will be in the self-interest of the developed countries to deal with this situation in a win-win way. They will be getting broader markets for their products. Unfortunately, their approach so far, during discussions at WTO and over climate change, indicates some sense of resentment at these developments.

The Global Economic Outlook in 2011 is fragile. In my view, we are now in a period of turbulent, long term structural change. Not the usual recession that one can climb out of. It has left the major economies of the US and Europe in an unsatisfactory situation and with difficult choices, which they are understandably finding difficult to make, which in turn can compound their problems. How the US deals with its fiscal and trade deficits and very high debt and unemployment and how Europe resolves the crisis in Greece, Ireland & Portugal are important questions. Clear and acceptable solutions have not emerged. A spectre of slow growth and high unemployment compounded by high oil & commodity prices hangs over us.

There is a broad agreement on the contours of the policy responses required. However, with the big crisis receding, the imperative for actions and willingness to cooperate among policy makers is diminishing.

Reform of the global financial system remains very much a work in progress.

The challenge for many emerging and some developing economies is to ensure that present boom-like condition does not develop into overheating.

Comments on Developing Economies

Developing countries emerging as the new engine of global growth.

Four sources of growth – capital accumulation, technological catch up, growing consumer consumption and natural resource availability – are pushing developing economies forward.

Although developing Asia is leading this dynamic, other developing regions are also seeing their shares of global GDP rise.

Rising shares of global GDP may allow developing countries not only to escape from a negative re-coupling with developed economies but to partially rescue these economies as well.

Facilitating and strengthening the creation of new assets is a very important task for policy makers in developing countries.

Many emerging and developing economies need to provide well targeted support for poor households struggling with high food prices. Required for inclusive growth.

Comments on the India economy

High growth rates around 8% but inflation of 8-9% and high fiscal and current account deficit. High commodity and oil prices a problem

Central bank has been following a tight monetary policy and increasing interest rates – 11 times – in the last 15 months.

In spite of a high trade deficit, rupee has remained stable against US$ and Euro(even appreciated) due to large capital inflows.

Have had some high profile corruption cases during the last few months.

An aggressive judiciary, alert media and the force of public opinion forcing the government to act against the corrupt.

Strong tradition of entrepreneurship in India.

Indian companies doing well in Asia, Africa and Latin America and acquiring companies even in the developed countries.

Conclusion

Overall I remain optimistic.

Because

  1. Emerging markets are continuing to grow, especially China & India. Also, many countries in Africa & South America. This is over 80% of the world population.
  2. This growth in the developing world offers important new opportunities for the developed world.
  3. The process of globalization has lowered barriers for trade, investment and technology flows for everyone.
  4. The Jasmine revolution in West Asia and North Africa, while disruptive in the short run, will broaden and deepen markets and expectations. It has triggered a revulsion for dictatorships and corruption, which is resonating globally.

I believe that those with open minds, committed to a better future and not unduly weighted in by the past, will prosper, irrespective from where they come. I believe that it is necessary to send out such a message from platforms like this one.

Thank You.

March 30, 2011
Chairman's speech - National Defence College, New Delhi

India’s changing Industrial Landscape : Rahul Bajaj
MARCH 30, 2011
Air, Marshal Roy, Rear Admiral Iyer and members of the 51st Course on National Security and Strategic Studies,Good morning gentlemen. I have heard a great deal about this institution. It’s my privilege to be here today. I thank Air Marshal Roy and Rear Admiral Iyer for inviting me.

I would focus on providing you an overview of Indian Industry’s past, present and its likely opportunities and challenges for the future. The more important part would be the interaction we would have after the talk. This talk is more in the nature of an appetizer.

Indian industry has seen very significant and rapid changes since our independence. Pre-independence industry was miniscule, dominated by British companies, which were largely in the Jute and Plantation sectors. Post independence, the foundations of our industrial development were laid. Between 1950-69 a broad based industrial base was created. But, due to a shortage of foreign exchange and the government’s left leaning world view and industry-politics nexus; a high tariffs and tight controls on technology and material import regime, was established. This throttled change and innovation. This gave rise to an economy of shortages, further slowing innovation and productivity and quality improvements.

Nevertheless, the emphasis on developing a manufacturing sector at that time was the right one. If we compare ourselves with Pakistan and some other countries today we should tank our founding fathers for nurturing Indian industry, whatever the critics might now say. In the early years of industrialization, every country, be it the US, Germany, Japan, Korea or China have followed similar policies of facilitating development of local industry. However, this policy should have changed from, say, 1970 but, unfortunately, continued till 1985. For Indian industry, the ‘70s was a lost decade. China started liberalizing from 1979.

Let me add that my definition of local is whoever manufactures, provides employment and adds value in the country, not the color of someone’s skin. This leads to skill development and revenue generation, for individuals and through taxes for the government.

The other major factor in assisting our industrial development was the setting up of good institutions of higher learning like the IITs, IIMs and Regional Engineering Colleges. We did have a few institutions even from the 1850s but their capacity was limited, and their focus was not industry. Ultimately, development of a nation rests on talented, well trained individuals. The National Defence Academy too was set up in the 1950s.

From the mid-1980s we started to liberalise. New technology was allowed, as were new entrants, though largely as joint ventures between Indian and foreign companies. But, major and more significant liberalisation started from 1991, when industrial and import licensing essentially ended, foreigners were allowed 100% equity in most sectors, and imports tariffs were brought down steeply. The exchange rate was also corrected substantially.

What has been the outcome of these policies and their implementation?

During 1950-1980 we were moving at what came to be known as the Hindu rate of GDP growth of about 3% p.a. This barely moved the per capita income growth as population was increasing at around 2% p.a. In the 1980s we grew at around 5% p.a. This moved marginally to 5.5% between 1991-2003. However, from 2004 the economy has grown by 8-9% p.a.. In 2008-09, when the world economy almost shrank, our growth was 6.7%. Industrial growth has always been higher than that of the economy, but the two move in tandem.

Thus, we are now in a qualitatively different situation.

Global Overview:
Before we discuss the national scene, we need to place ourselves in a global context. With import tariffs generally below 10%, we are subject to forces of the global economy. The share of trade in GDP in our economy is now 46%, which is much higher than the 27% of the US. In most sectors, foreigners are permitted 100% owned companies and thus in may sectors Indian companies are competing head on with the global majors.

How does global industry operate?

First and foremost, it exists in a competitive market and is therefore geared towards change. Essentially, competition is based on technological innovation and continuous improvement. Also, cost competitiveness, based on productivity and employee cost, is important. Furthermore, major companies operate globally for both production and sales. They source goods, technology and even employees from where it is most advantageous to do so and sell their products and services all over the world.

This industrial world has come into being, driven by the ambitions of large global firms. It has been aided by the lowering of shipping costs due to containerisation, development of cheap and reliable communication through phones and computers, and the lowering of tariffs and other barriers to trade under the Uruguay round of 1994. It is now an open and connected world that we live in. Tom Friedman called it flat.

Under these conditions, manufacturing is gradually moving from high cost developed countries to emerging markets ever since the 1960s. First it was South Korea, Taiwan, Hong Kong and Singapore; then, Malaysia and Thailand and, since 1979, China.

According to the Harvard Historian, Niall Ferguson, there is a virtuous positive correlation between economic freedom and political freedom. In his recent book, “Civilization: The West and the Rest”, he has said that “For 500 years the West patented six killer applications that set it apart. The first to down-load them was Japan. Over the last century, one Asian country after another has down-loaded these killer apps – competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.”.

Size of populations matter. Of the 7 Billion people in the world, only 1.5 Billion are in the developed countries. So, ultimately, markets will also move to emerging markets. It was because developing countries were mismanaging, largely due to undue reliance on the government and stifling of the private sector, that their growth and share of the global economy was low. Since the 1980s this has changed almost everywhere. In 1989 in Eastern Europe and we are now seeing a massive change in WANA countries. Thus, growth is now in emerging markets of Asia, Africa and Latin America. In 2010 almost half (46%) of global growth was in these regions. This is likely to continue to be the pattern.

Also, the developed world faces challenges in maintaining its current high incomes, especially for its ordinary citizens. Till recently there was supposedly a division of labor, wherein high-tech goods were made in the west to support higher incomes. However, now the situation has become more complex. Technology flows are unstoppable and ultimately technology resides in people. The productivity and capability of people in the developed world is not 40 times better, which is the income differential, than in India. It may be 2-5 times better, and in some areas like IT even this is debatable. So, a period of readjustment, wherein incomes increase in the east and stagnation, if not decline, in the west, seems inevitable for a new equilibrium to be established. Its implications remain to be seen.

The world faces issues of sustainability, of climate change, but the history of man tells us that new solutions emerge given human ingenuity and proper incentives. I remain hopeful that the end is not near. In 1972 the Club of Rome, of which for some time I was a member, issued dire warnings of the end of resources. The world has largely dealt with these.

However, the “Triumph of the Market” or the “Washington Consensus” phase that lasted broadly between 1980 and 2008 is over. The financial crisis in the US and Europe since 2008 has exposed the risks and limits of free markets and, in the final analysis, highlighted the responsibility and power of the nation state. Nation states matter. To decide on the rules which govern markets and within which companies and nations operate.

This is the globalised world we operate in. We have to understand how it operates and impacts us. Grab the opportunities it throws up and be mindful of its threats. On the balance it has offered us opportunities.

Let me come back to our situation.

We can see what has happened in our country since 1991 as a process of adapting to this globalised world.

Three major things happened in Indian industry in the 1990s which have propelled our country on to a different trajectory.

  1. Many existing companies successfully transformed themselves.
  2. Many new companies came in to being.
  3. Off-shore outsourcing industry developed to create a large number of well paid jobs in the country. Though this began with IT and BPO companies, it has now broadened itself in to IT Enabled Services and KPOs.

Many large Indian companies went through gut wrenching change in the 1990s and the last decade and have come out stronger. Some fell by the way side. Of the private companies in the top 20 in 1991, 16 were still in the top 50 in 2010. This indicates that the issue till 1991 was essentially of government policy and not company capabilities. It is also a sign of vitality of our entrepreneurs that new business groups and new industries like IT, Pharma are now in the top 20.

The World Economic Forum of Geneva produces a very respected global competitiveness ranking. For decades, on issues within the control of companies we scored a significantly higher ranking in the world, under 30, compared to our overall ranking of around 50.

Let me illustrate this process of change with the experience at Bajaj Auto. In 1997-98, a little over a decade ago, we sold 1.33 Million vehicles of which barely 3.5% were exported. In the year ending tomorrow we would have sold 3.9 Million vehicles of which 30% were exported. We have become much bigger and more competitive, locally and globally. We have competed in India and abroad with the best in the world, since 2000.

By whatever parameter one can assess performance, ours has shown a quantum improvement. We used to make about 1 Million vehicles per year with 18,000 people. Now we do 4 times the volume with less than half the people, a 800% improvement in productivity. Our R&D manpower has increased from 195 in 1990 to over 800 now. Our profitability or operating margin is the best in the automotive industry – not only in India but world-wide.

One would find a similar process in almost all companies that have prospered in the new environment, be it Tata Motors or Mahindra & Mahindra or the Aditya Birla group. Not that there were no casualties. Premier Automobiles, LML, Kinetic, DCM Motors and many others either folded up or were taken over.

At the same time, there has been a flowering of Indian entrepreneurship. At 7,000 we have the largest number of listed companies in the world.

Many new companies and sectors have bloomed, most notably in IT, Telecommunications and Pharma. Private sector Banks and Insurance companies have given both PSUs and foreign companies a run for their money. IT and ITES companies have become the largest employers of educated people in the country.

While serious difficulties remain in starting and running a business, notably the lack of venture capital, poor infrastructure, inflexible labor laws, a plethora of regulations and rampant corruption, it is easier than before. (Of course, inflation, fiscal deficit and to some extend CAD continue to be concerns). In ‘Ease of doing Business’, which is an annual survey done by the World Bank, we rank a poor 134th out of 183 countries. But, due to the entrepreneurial depth in our country, despite the constraints, new businesses are multiplying. I believe that the 9% growth rate that we are achieving is because of the efforts of our entrepreneurs in every nook and corner of our country. And these include our farmers. This growth is not because of but almost despite the government.

Another big change is that Indian companies are internationalizing themselves, not only by selling abroad, but by acquiring companies there. A decade ago no one spoke of outward FDI. Now it is a significant figure. It was USD 27 Billion in 2009. We have Tatas taking over Jaguar and Land Rover and Corus, Mahindra taking over Ssangyong, Birla’s taking over Novelis, Bharti Airtel acquiring Zain in Africa. Bajaj Auto owns 38% of the Austrian motorcycle maker KTM.

This takes our companies to the next level. A whole new mindset, new skills, new culture, is required to run such an operation. I believe more and more companies, even medium sized ones, will move in this direction. And this provides the basis for continued optimism about our country’s growth.

The steady growth of our economy, in a world where growth in developed markets was lower anyway, and badly hit after 2008, has meant heightened interest of foreign companies in our markets. Inward FDI has gone up from USD 4 Billion in 2000 to over USD 34 Billion in 2010. IBM has over 100,000 employees in India. Many companies including Mercedes Benz have opened up their R&D centres in India, even in non-IT sectors. GE employs 600 Ph.Ds in India.

Decisions are taken by companies, not countries, and they will do what they think is in their own long term interest.

Industry is the engine of a nation’s development. Not just in terms of taxes and employment, to which it contributes handsomely, but because it is the activity that drives an economy. It, along with agriculture, is the only activity that creates a surplus. The industrial mentality, which is based on an effort to create something, then conserving and further developing it, is central to the functioning of the modern world. It is interesting that we find this concept in the writings of Manu, in Arthshastra and in Panchtantra.

So is everything hunky dory in our country? Far from it.

Even 63 years after independence our per capita income is very low. About USD 1,000 per annum. (Developed world US$ 35,000/-). The level of poverty in our country is unacceptable. (40% live on $1 per day). We need to move many of our people out of agriculture, so that agricultural holdings increase to a viable size and yield per acre increases. (Industry and services to absorb such persons). Our industrial and social development is uneven leading to large pockets of our country being ripe for disaffection. The extent of spread of Naxalism/Maoism reflects this. Our quality of governance is abysmal. We have an electoral democracy which is increasingly being captured by goons and money bags.

The tragedy is that we have so much potential. If we get our government right, we can fly. On the balance, I continue to remain optimistic. We are seeing that better governance at the state level in Gujarat and Bihar is delivering both on the economic side as well as on the social and political. Our people are good. It is our leadership in politics, bureaucracy and industry, which has let us down. Unfortunately, Indian industry, especially large companies, have been timid politically. In the UK I have heard a PM being called “stupid” by an industry person and recently the head of 3M, a US multinational, upbraided President Obama for his wrong headed policies towards business. Indian business has unfortunately still not earned a stature and credibility to frankly speak its mind. Also, the Indian state can still be vindictive and unlawful if it so chooses. But, as the streets of Tunisia, Egypt and Libya show, ideas and raw courage can still move mountains.

The core reform we need is in the government seeing itself as an enabler rather than as a controller. When dealing with developed countries, one is struck by the unison with which industry and government speak, especially when dealing with other countries and multilateral organizations. In our case we still suffer from a colonial mentality, with the government keeping industry at an arms length. Despite improvement, it is still not a satisfactory situation.

The recent Bihar assembly elections, exposures by the electronic and print media and the assertiveness of the judiciary under the new Chief Justice of the Supreme Court, provide hope that fairly soon, correct policies in the national interest will be followed by our central and state governments to promote growth, development and ensure law and order. Also, attractiveness of corruption would gradually reduce.

The governance agenda is constantly evolving and there is high awareness of the need for a more responsive, effective and transparent process. India’s growth process under a democratic government is a sustainable, humane and just path to development.

We should recognize the importance of India being strong, based on two pillars. Economic strength and military strength. This strength is crucial for global respect and credibility. A weak India is not good either for India or the world. But a strong India, a balanced, mature India, a non-threatening India, is critical.

Some of the key reforms we need are:

  1. Availability of key physical infrastructure. Power, roads, airports. And, also social infrastructure including education and health.
  2. Improved governance – A significant reduction of wasteful or misdirected expenditure by the government, specially on non-merit subsidies.
  3. Improving delivery of services by reducing inefficiency and corruption.
  4. Bringing down inflation and fiscal deficit.
  5. A flexible labor policy with adequate safeguards for labor
  6. Dispersal of industry.
  7. Electoral reforms: a) State funding of elections b) Concurrent elections to Parliament and State assemblies and once every five years, c) Political parties not giving tickets to anti-social elements to stand for elections.

The challenge for Indian industry is to develop size and technological capability. For this it needs management capability. Most private sector Indian companies are family managed and in the second, third or fourth generation. The probability of family firms being managed well can decline across generations. But in our country there is still a strong desire within children of business families to work for their companies. So, in Bajaj Auto the fourth generation is managing and each generation has been trained better than the previous one. And, such companies, are essentially run by owners with commitment and continuity who are also competent professionals.

While technology is changing fast, I believe that in most businesses it is possible to judiciously buy technology and have internal capability to develop it further and convert it into products. This is how Bajaj Auto, Mahindra, Tata Motors have evolved. Even in newer sectors, companies like Suzlon in Windmills have taken the route.

Business schools tell us that the key requirement is the front end which deals with the customers. This is the issue of distribution, of brands, of skilled assessment of customer desires. The back end of productivity, technology are easier to handle in all but the very high technology areas.

In the corporate sector, doing a quality job and meeting commitments is a necessary way of life. Or the enterprise will not survive. Achieving this requires certain habits of thought and behavior. Some of these are a commitment to the idea of merit and creating an atmosphere conductive for it to flower, a focus on constant improvement and a desire to learn continuously. The corporate sector spreads these habits to those it associates with. This itself, in our ‘chalta hai’ country is a very important contribution to nation building. It is our IT sector which reshaped the world’s and our own view of ourselves, from being second raters to first raters.

Indian industry now has the track record of competing with the best in the World. We have the intelligence, the commitment and the drive and, most importantly, the entrepreneurial depth.

Of course, businessmen are motivated by profit. But the desire to satisfactorily meet the needs of customers and to compete with the best and come out a winner, is a deeper and a more enduring source of motivation for most industrialists.

Over a century ago, Swami Vivekananda said something that still resonates remarkably. He said, “Let us all work hard, my brethren. On our work depends the coming of India of the future. She is there ready, waiting. Arise and awake and see her rejuvenated, more glorious than she ever was-this motherland of ours.” If there can be a thought that drives us in India it is this. And, if such a thought drives a country, what can stop it from realizing its dreams?

Jai Hind.

February 11, 2011
Chairman's speech - Rotary Club Kolkata

Rotary Club Kolkata : Role of Corporate Sector in Nation Building
FEBRUARY 11, 2011
Ladies and gentlemen,

Nation building is neither easy nor can be taken for granted. In most developing countries there has been a tendency for either the country to break up like in Yugoslavia or for the nation to crumble, as we have seen in Afghanistan, and may be witnessing in some of our neighbouring countries. In our own country when we experience the conflict on Assam-Meghalaya border or Naxalism or the sharp decline in legitimacy of politicians due to scams, it is a sign of our inadequacy in nation building.

The nation state is very important in terms of both social and economic aspects. Great things can only be done when energies of many people go into them. We would not have gained independence had it not been a national movement. If even large and powerful countries like Germany, France & UK feel the need to come together as Europe, then it is obvious and important that the Indian nation should be held together and strengthened.

This begs the question, what is nation building? To put it simply, it is a combination of ideas, institutions and the economy.

The idea of India is very old. The four dhams have existed for over a 1,000 years. The idea of India was resurrected by our founding fathers of the independence movement. Many of those ideas, of peaceful co-existence for example, are civilisational. So are role models from our epics.

The idea of India is unfortunately under attack. However, I believe it lives and will grow stronger. Narrower ideas of religion, caste, class, region are neither viable nor inspiring and only lead to dead ends. But all of us who are committed to the idea of India, have to work hard for it.

The executive, which includes the bureaucracy, the legislatures, the judiciary, the media and the amorphous civil society, which is what most of us present here today represent, are institutions required for nation building.

The media in our country has played an important role in furthering public accountability. The Right to Information Act has also injected a measure of transparency in the system. In the end only a vigilant citizenry can ensure that freedom survives and accountability is enforced.

Our society and all wealth creators in our society are the muscle and energy that build the nation. This is the key element of any nation. Governments do not create wealth. They at best facilitate it.

The main role of the Corporate Sector is to satisfactorily meet the needs of its customers and to keep improving its competitiveness. From this flows wealth creation, employment & taxes, its key contribution to nation building. However, the Corporate sector in our country also has an important responsibility for being a role model of better governance. Be it being ethical, being fair to all stakeholders and being sensitive to the inequalities of access to basic needs in our country.

Like every plant harnesses the sun’s energies and provides life supporting oxygen and removes carbon dioxide, business by its very existence adds value to the nation.

Unfortunately, our colonial past and the centralisation of power in the hands of the government that it entailed, blurred our vision and distorted our perspective. Even we thought till the 1980’s that it is the government which is the “sarve sarva”. This thought still persists, especially in rural India and the less developed parts of our country. Sarkar – Mai Bap!

Since 1991, when companies were provided the essential freedom of taking their own key decisions, things have changed significantly. Indian companies have grown, nationally & internationally. Many new companies have come into being and some have grown very large, like RIL. More importantly, older companies have re-engineered themselves and have grown both quantitatively and qualitatively. The Tata group is a fine example of this process, as is I believe Bajaj Auto.

If our nation has to progress then it most be economically strong. This means that it most produce goods and services which India and the world wants. This is possible only when industry has the technology, productivity and scale. These generate employment. All this happens largely in the private sector. Business also generates taxes which enable governments to provide “public goods” including health, education, infrastructure like power & roads, and law & order etc.

As an eg., Bajaj Auto alone would account for about Rs.2,500 cr. in taxes to the government during 2010-11.

Our corporate sector is the strongest votary of a strong nation and I believe it reinforces the idea every day in its operations. Each company has associates including dealers and distributors who distribute its products. They are in the far corners of the country. Bajaj Auto has over 600 vehicle dealers and 2,000 service dealers. They are all bound together in a common mission. They interact and make the idea of one nation real. Multiply this by the 7,000 large companies and innumerable small companies. They weave strong economic and personal relationships.

In the corporate sector, doing a quality job and meeting commitments is a necessary way of life. Or the enterprise will not survive. Achieving this requires certain habits of thought and behavior. Some of these are a commitment to the idea of merit and creating an atmosphere conducive for it to flower, a focus on constant improvement and a desire to learn continuously. The corporate sector spreads these habits to those it associates with. This itself, in our’chalta hai’ attitude country, is a very important contribution to nation building. It is our IT sector which reshaped the world’s and our own view of ourselves, from being second raters to first raters.

Usually, the role of Corporates in nation building, refers to their CSR activities. As I have just mentioned, their role in nation building is much bigger & more integral to their operations.

But in a poor country like ours it is also important that the Corporate sector fulfill its social responsibilities. Some of these are integral to being a good corporate citizen like being a good employer and being environmentally responsible. Others require a broader idea of their role. I believe it is very important that every citizen has a sense of stake in the system and a sense of hope. Companies have a role in this. Be it in encouraging development or making sure essential social services like education and health are available to larger sections of the society. We have a long tradition of philanthropy in our country. In Gurudev Tagore’s view we survived as a civilization for so long because some core needs of the citizens were met by the society without dependence on the government.

But it distresses me when the government does not do its job properly and then expects the Corporate sector to pitch in. What are taxes for? For salaries of some non-performing, corrupt bureaucrats and politicians and throwing away public money to buy votes?

As I said at the outset, there are clear roles for various constituents of the country. It is not a case of this versus that. It is simply a question of putting the horse of enterprise & citizen interests before the cart of government and not the other way around.

But there are serious obstacles to our nation building efforts.

Key amongst these relate to the quality of our governance. Telecom/2G, Adarsh Society and CWG are but symptoms. We most, of course, remember that in corruption the taker and the giver are equally guilty.

In my view, central to this is the use of black money in elections. Hence state funding of elections is a critical initiative we need to have in place. I also believe that simultaneous elections to the Lok Sabha and State assemblies, every five years, would not only reduce expenses of the government and political parties but also reduce the pressure on parties to be populist. Also, parties should not give tickets to criminals.

As we survey the world and our own experience, we are forced to conclude that it is in the nature of power to corrupt. This is as true of autocracies as democracies. Theoretically, it should be lower in democracies but practically there does not seem to be much difference in levels of corruption between the two systems. Therefore, those outside the government have a responsibility to resist. It is their resistance which brings accountability and change. Tunisia is a recent example & something similar is happening in Egypt.

We won our freedom and defeated the Emergency in 1975-77 by resisting an unfair government. Businesses are both strong enough to resist, as well as dependent on government patronage and hence vulnerable to government arm twisting. Because of the License-permit raj, Indian business has by and large been timid. Maybe, time has come to shed this timidity. The recent letter of 14 persons to the PM, most of whom were from business, augurs well. But business would have to work very hard to build a reputation for probity and contributing to the common good, before other sections of society accept its leadership.

Quality of leadership is crucial in determining outcomes. Leadership is not just a matter of charisma or showmanship or public relations. It is of understanding today, it is of envisioning a better tomorrow and having the confidence in oneself, and of one’s team, to make our future happen. Leaders are those that deliver better outcomes. Occupying a chair does not make one a leader.

We should recognize the importance of India being strong, based on two pillars. Economic strength and military strength. This strength is crucial for global respect and credibility. A weak India is not good either for India or the world. But a strong India, a balanced, mature India, a non-threatening India, is critical.

Hence, my dream for India, say twenty years from now, is a country where poverty has been banished. Where parental income is not a barrier to good health and education, where talent is encouraged, achievement celebrated and even the less strong can live with dignity. A country retaining its age-old tolerance of differences and a world view that is a cross between that of a yogi and an entrepreneur.

Over a century ago, Swami Vivekanand said something that still resonates remarkably. He said, “Let us all work hard, my brethren. On our work depends the coming of India of the future. She is there ready waiting. Arise and awake and see her rejuvenated, more glorious than she ever was – this motherland of ours.”

If there can be a thought that drives us in India it is this. If such a thought drives a country, no one can stop it from realizing its dreams.

Jai Hind

January 24, 2011
Chairman's Article - Times Of India

TOI

December 15, 2010
Chairman's speech - SPU, Vallabh Vidyanagar

Convocation Address: SPU, Vallabh Vidyanagar
DECEMBER 15, 2010
It is a pleasure to be here at the convocation of Sardar Patel University. Especially, for the name it bears, its location and its achievements.

Sardar Patel has long been an idol for me. His contributions to the nation and his quiet competence & stoicism are well known. We were privileged to have him as our guest at my home town Wardha when the AICC, in the 1930’s, would meet at Bajajwadi. A photo of his still hangs at Bajajwadi where he is sitting with Rajendra Prasadji, my grandfather Jamnalalji Bajaj, then the Treasurer of the Congress, and my father Kamalnayanji. The Sardar also inaugurated one of the institutions of of Shiksha Mandal, an education trust of which I am currently the President.

The integration of the Princely States into the Indian Union will remain the Sardar’s abiding contribution to the nation. One shudders to think what would have happened if the issue was allowed to linger. The one issue he could not deal with was Kashmir and it lingers to this day.

These environs, the Charotar area, not only gave us the Sardar but also Amul, an iconic achievement of this area which has inspired the nation.

I congratulate all those receiving their degrees today. You represent some of the best talent in the country. You will now on be the standard bearers of your alma mater. It has a very good name. Work to make that shine brighter.

I also congratulate your parents. At the root of the global competitiveness of the Indian people as individuals is the strength of the institution of the ‘family’ in our society. The resilience of our personalities is rooted in the unconditional love that we receive at home. I especially congratulate your mothers. Indian fathers are okay but Indian mothers are something very special.

I also congratulate your teachers. If one asks a successful person about the turning points in his life, very often a teacher is involved with it. To this tribe of teachers, my salutations.

It seems to me that the roots of achievement are almost unchanging. Curiosity, playfulness, camaraderie, a penchant for taking risks, a tenacity to carry on in the face of failure, a willingness to swim against the tide & many lucky breaks. Whether one is thinking of Alexander the Great or Einstein or Michelangelo or Gandhiji, these themes recur.

Real education should cultivate such patterns of thought and behavior. Does it? Almost worldwide educational institutions seem to be driving in reverse gear. We see rote learning, impatience with the questions of the student, pressure of marks leading to reproduction of right answers which kills creativity, a declining attraction of teaching as a vocation, etc.

At an educational institution, one gets knowledge and values. Knowledge can be got from many sources. But it is values that are more important in one’s life. We imbibe them early and they are difficult to change. Any educational institution should be in my view more concerned about the values it imparts. Especially, when the external world is hostile to the values that need to be instilled in every decent human being. The values that need to be nurtured include integrity, simplicity, unselfishness, hard work, teamwork, etc. Are our institutions nurturing them? What values are they nurturing? This is something we need to be alive to.

It is the extra-curricular activities that one engages in school & college that prepare and benefit us in our professional lives, as much as our academic result. Real life is about initiative, about being able to build relationships, about being able to think on one’s feet, about courage, about communication skills. All this is learnt more outside than in the class room. This is why there is the famous saying, “the battle of Waterloo was won on the playgrounds of Eton”.

Our education system generally has too much of theory and too little of practice, while in better institutions across the world this balance is tilted in favor of “doing”. In my view, learning is more complete and deeper in doing something practically than in merely bookish knowledge. We need doing thinkers rather than mere thinkers.

To the parents, who are here today, I say encourage your children, but do not burden them with unrealistic expectations. You are doing a wonderful job and are willing to sacrifice to help your child do well. Education has been & will be a way to create & recreate the basis of our prosperity. But, I think it is more important for the child to discover what he or she truly enjoys doing and make that his or her career. This engineer/doctor/MBA syndrome has run its course. There are so many new avenues opening up. In today & tomorrow’s competitive world one has to be very good at what one does. And that requires a passion for that area. Forcing our children to do what seems the latest area with scope, may do them more harm than good.

You are now moving from a reasonably logical and predictable world to a world in which nothing moves in a straight line. The future has rarely been an extrapolation of the past. Discontinuity and uncertainty are the order of the day. It is in the very nature of an open economy that the forces of change will accelerate. You are better geared for this environment than most people are, as you have been trained to be pro-change and pro-continuous learning in your outlook.

In the world of industry certainly, but increasingly in most fields, there is only so much that an individual, however gifted, can do. But there is nothing that a team can not achieve. You will have to work productively in teams: on whose membership you may have little choice. Besides technical talent and ability to function productively in teams, tenacity, hard work and a positive attitude are needed to deliver results.

As you step out in to the world there are three things in my view whose importance you will realize soon enough. These are of a positive attitude, of listening rather than speaking, and of continual learning.

A positive attitude is a big help. Critical but positive. There are many things that are wrong. But negativism does not correct them. It may highlight them. But to solve them, positive energy is required. And this I do not mean in an uncritical, all is hunky dory manner. But, in correctly and quickly identifying what needs to be done and then getting on and doing it.

The key source of value lies outside ourselves. For a company it lies with the customer. In science one first listens to nature to understand its order, before one uses that order. So, the beginning of everything is listening. But, most of us, especially the more intelligent and articulate we are, tend to be eager to speak, not caring to listen. Our social and education system, crowded by voices as it is, tends to reward those who speak. This happens even in our work life. But now competition has increased and put listeners at a premium. For the listener knows what is really required to be done.

Life is a learning experience. Whether we do or don’t learn is largely a measure of our choice and ability. In the learning economy of today, I somehow find the world ‘learning’ more apt than knowledge; it has become a necessity. The world as it now exists, runs on a process of continual value addition. Your learning will accelerate as you step out of these hallowed portals.

I would like to share with you some common traits which I have seen in outstanding engineers in Bajaj Auto where I have worked for the past 46 years.

  1. Passion. They are completely dedicated to what they do, it is all that seems to matter in their world.
  2. Focus. They always see the big picture, are not distracted by the small ones.
  3. Excellence. They set the highest standards of professional integrity and performance.
  4. Commitment. They lead from the front, 24 hours a day, 7 days a week, come hell or high water and
  5. Determination. They may lose a battle or two, but they never lose their spirit.

An organization which has employees with these traits is the darling of its customers and a terror to its competitors. The globalizing world outside is about ‘survival of the fittest in a materialistic world’. When looking for people for his company, EDS, Ross Perrot explained his criteria for selection, ‘I want people who love to win. And if I can’t have them, then I want the ones who hate to lose’.

India is rising. We are the 4th largest economy in the world and our growth rate is faster than that of the developed world and likely to remain so in the foreseeable future. We also have one of the largest, youngest populations in an ageing world. This is creating and will create a huge opportunity for our country to improve its lot. The growth & change of the last two decades in our country reflect this opportunity and the efforts of countless Indians. However, with a low capita income, widespread poverty, poor governance, we have a mountain to climb. But, we will climb it with hope in our hearts and a song on our lips. Gujarat has long been synonymous with enterprise. I am sure all of you will contribute to the development of Gujarat and India. I hope, coming from an institution with a great tradition & legacy, you will be conscious of your obligations and responsibilities towards society.

These are challenging times. Exciting times. The rewards for those who get it right will be enormous. But let us remember, when we got out and compete with the best, we not only bat for ourselves, we bat for our country. We redefine what an Indian is, what India is. We set in motion a ripple of prosperity that travels far. We light a lamp, whose light and warmth lights other lamps, starting an endless chain of joy. This is our privilege. This is our responsibility. I am sure that all of you understand this and will do yourselves, your parents, your alma mater and your country proud.

Thank you.

January 6, 2009
Chairman's speech JAI HIND HIGH SCHOOL & M.U. COLLEGE OF COMMERCE

Speech delivered by Rahul Bajaj – JAI HIND HIGH SCHOOL & M.U. COLLEGE
JANUARY 6, 2009 : 1700 HRS.


At the outset I take this opportunity to congratulate the management and teachers of the school and the college for building and maintaining their reputation. 75 and 25 years are a long time and an achievement by any standards.

More important is keeping the vitality of the institution alive. And this depends on the leadership and staff of the school and in their success in imbuing the students with a sense of excellence.

When we look around ourselves we see many things to be happy about, proud about and some dark clouds. How do we make sense of these and decide what we should do ?

I believe that we, especially the educated classes, need to re-engage with the nation. For the last 50 years we have seen a withdrawal of educated people from the public space. It is good that we chose one man-one vote concept and created a broad based democracy. But, one of its bad affects has been to settle for the lowest common denominator rather than the highest common factor.

By withdrawing into our limited worlds, we have not offered a better alternative to our society. It is the responsibility of people like us to live to high standards and set a good example. This is what teachers are supposed to do in a class. When we do this and celebrate it we provide a better model for all in our society.

If we reflect on our freedom struggle, something like this was happening. When we celebrate the new achieving icons of our New India like Narayanmurthy or Dr Kalam we are expressing this deep seated urge.

Right is right and wrong is wrong. Muscle power, money power and power of governments do not make a wrong right.

As we have withdrawn the public space has been taken over by self serving people. The attack on Mumbai on Nov 26 made this clear in a terrifying way. The signals have been coming for very long, at least since the 1992 riots in Mumbai, but we chose to ignore them. Now we shall ignore them only at our peril.

Nothing is inevitable. By the sweat of our brows, the strength of our backs and the courage of our hearts, we can do anything. This excellent formulation is not mine. It is a dialogue from the Pirates of the Caribbean “The World’s End” film.

We are inheritors of a very old and wise civilization. This civilization has largely vanished from our cities. But it does thrive outside our big cities. One has only to go to any village to discover it. It is premised on acceptance of our own smallness and in the joyful celebration of the vastness of God, howsoever named, and mankind.

One can say this in many ways.

Vinobaji said it in another way. He said that whether one had strength, knowledge or money, it was worthless if one had not earned the genuine affection of others.

We should not worry about what others do. We should only worry about what we do.

Besides being good values, these are values which are also in tune with tomorrow. During the ‘70s and ‘80s we followed certain economic policies. These created stagnation, poverty, poor quality, corruption. Since 1991 we have changed many of these and much greater economic freedom is now available. Using this freedom many new companies like Infosys, Airtel, Pune’s Suzlon have come into being and even older companies that have changed themselves are thriving. I am ignoring the last few months. To thrive in this new environment requires knowledge, skill, capability and character.

These attributes have much to do with the kind of upbringing and education one receives. And this is crucially dependent on our homes and our schools. I appeal to all parents and teachers present here today to be conscious of the tremendous responsibility they have in shaping children. Especially mothers, as fathers today are passe!

Again, as an end in itself and as something of value in tomorrow’s world, please let the children discover what they like doing and encourage them to pursue their inclination, rather than conform to our dreams for them. The world does not only need Doctors and Engineers but a mind boggling variety of talents. And it needs and values those who excel in their fields.

Learning is fun and we now live in a world where an attitude of life long learning is essential. Please invent ways of making the children wanting to learn. At the same time I am not for totally unstructured learning. We must evaluate and reward the deserving.

Institutions are very important. Be it a school or a company, it should stand for some values. Then it attracts people to work for it. Institutions need careful tending. Above all, they need a leadership committed to the welfare of the institution. Not just in words but in deeds. We are all but human, and do err, but our stakeholders, in your case the staff, parents and students, should have respect for and belief in the leadership. This is an institution’s greatest asset.

That your school and college have survived for so long and created such a fine name for themselves attests that institution building has been going on here. My best wishes for its continuing development.

I am thankful to Nalini Gera for giving me this opportunity to be amongst students. They have a freshness in their eyes that is rejuvenating.

My best wishes to the school and the college and all of you here today, not only for this New Year, but for the future that is ours to make happen.

Thank You.

January 6, 2009
Chairman's speech at Prof Ramlal Parikh Memorial Lecture 2008, Ahmedabad

Speech delivered by Rahul Bajaj
Prof Ramlal Parikh Memorial Lecture 2008
Government, Business & Society, Ahmedabad November 22, 2008

It is a privilege to be delivering the Ramlal Parikh Memorial lecture.

Shri Parikh was a Gandhian & an educationist. I can not lay claim to either of these fields other than as a legacy of my forefathers, which I cherish & in my own way try to take forward.

Ramlalbhai was a very close friend of my uncle late Shri Ramakrishnaji and was like a family member to us.

I am happy that the Indian Society for Community Education, founded by him, is continuing to pursue the task of true education, as the liberator of minds and enabler of greater human capacity for everyone, at all stages of their lives.

I am pleased to be in Gujarat because it always reminds me of the two great architects of independent India , Gandhiji and Sardar Patel. And of innumerable other men like Prof. Ramlal Parikh and Tribhuvandas Patel of Amul, who were moulded by Gandhiji & the Sardar to build new kinds of institutions.

I am a businessman but was brought up to view business not merely as a wealth generation activity, important as that is, but as an activity that takes a nation forward and as a social activity. JRD Tata once remarked that his companies needed to make profits to fund the group’s philanthropic activities. I understand such a remark & I believe he meant it in all seriousness.

This concern with broader issues has been a family legacy for me. From the time of my Dadaji Shri Jamnalalji. What I enjoyed, and remember most vividly, were the after dinner conversations with my father, the late Kamalnayanji on all kinds of issues that he dabbled in as a Parliamentarian & businessman. Unfortunately, he died in the prime of his life in 1972 and my learning from him was interrupted.

However, soon after his passing away, I entered public life via my involvement with business associations, especially the Confederation of Indian Industry, i.e. CII. For almost the last thirty years I have engaged with larger issues of the economy & business. By a quirk of chance, I found myself in the Rajya Sabha in 2006 and have since then had many occasions to listen to and think about, speak about, various issues facing the nation.

This is the reason I chose the subject of Government, Business and Society for my talk here today.

It is self evident that the interplay of these three broad categories decides the development of any society. The question arises what should be the balance between these entities in any society? For example, if we compare the US , Europe and India , then we find a very different balance being struck. This is but natural. Each society is a product of its history and the imagination of its people. No two societies are or can be the same.

This is a very old question. Plato was thinking of it when he wrote “The Republic”. Then the question was of the relationship between the society and the governing structures and how to ensure that the governing structure was good. Even in “Arthshastra” the role of trade and production in ensuring the viability of the State is understood. The “Panchtantra” says that “No King shines with inner light”, alluding to the role of taxes in making a State possible. But, since the last 500 years, the growth of capitalism has increased the power of Business and it has had an increasing role in Society and in the Governments.

Before we get submerged in the realities of these relationships, let us step back and envisage what our republic should look like? What relationship would we want to have? Then, we can compare what we want with what we have, and chart a path in the direction we wish to move in.

Let me begin with what kind of a society we want to be. I believe our Constitutional fathers have said it very well. But for uncontrolled reservations and wrongly implemented socialism, in the past, I would be very happy to live in a society our Constitution envisages. Freedom of speech, freedom to pursue one’s vocation, a secular country celebrating its diversity, a society mindful of the poverty of a large no. of its people, and trying to support their development, and ensuring that minimum education and health are available to all. Yes, this is the kind of country I would love to live in.

Where I would differ is that I would want our society to encourage and reward enterprise. We move forward largely by the efforts of the excellent. This excellence should not be exclusive or a privilege of any segment. But we must believe in nourishing excellence. Mediocrity can be tolerated, even supported, but should not be venerated. The strong in our country have been, in our tradition, given the responsibility to protect the weak. Right is stronger than might. This is what Gandhiji proved to us and the whole world.

Society should articulate its position on major issues confidently. There should be civic sense and laws should be upheld by all in their daily existence.

Let me come to business.

Business has to be ethical, in letter and spirit. It has to be innovative. It has to compete globally. It should pay its taxes. It should refrain from abusing its economic power, refrain from encouraging corruption, and refrain from cutting cozy deals with the government at the expense of the citizens. It should provide good quality goods and services to its customers, take responsibility for the long term impact of its products on the environment, ensure good corporate governance and carry out philanthropic activities.

I now come to the nature and role of government.

Good Governance is essential. Business and society need provision of public goods like law & order, roads, infrastructure, currency, defence, foreign affairs, to prosper. Also, rules need to be made and enforced. Contracts have to be enforceable. A modicum of legislation and regulation is necessary to define the rules of the game and protection of all the participants in it. The government should be answerable to people and hence democracy is essential. Especially in a developing country, state provision of essentials like health and education is necessary. But, the basic stance has to be enabling and not tying up people’s spirit and enterprise in knots. Services should be provided effectively, efficiently, courteously and without the citizen’s need to grease palms. Also, the resources required for such provisions should be low. In my view the State should absorb a much lower percentage of the GDP than it does currently.

Utopic ? Certainly. A society that is cynical and is stuck in a dog eat dog worldview has little future. As the poet William Blake put it, “Great things happen, when men and mountain meet. Not by jostling in the street.”

In the current uncertain times when Yeats’s poem “Second Coming” resonates where “Things fall apart; the centre cannot hold” and “The best lack all conviction, while the worst are full of passionate intensity”; it is the duty of those who can, to conjure a different future.

The election of Mr Obama is proof that idealism still matters and is more important than race or experience. Our own independence movement was proof enough. In the business sphere, the opening up of our economy since 1991, has given scope for all desirous and capable of achieving, to achieve. Names like Airtel or your very own Reliance, Adani & Nirma, which did not exist till recently, are today powerful enterprises.

In elucidating the desirable, we can find the gaps between what exists and what should.

In the US , Business is the strongest entity, and the government largely does its bidding or, to put it more politically correctly, responds to its needs. Regulation of business is limited and light, in letter and in spirit. The American dream and the belief in the power and responsibility of the individual are central to the American psyche. Religion too is a powerful force.

In Europe , while Business is strong, the welfare state is very much in place and trade unions are stronger. Regulatory oversight of business is much stronger than in the US .

In our country, due to both the legacy of colonial rule and the leading role played by the Congress Party in the freedom movement, the State has overarching powers. Corruption and arbitrariness are unfortunately rampant. There are too many laws and too little justice. Business has gained economic strength but lacks credibility with society as a social force. Social mobilization is around caste and the civic spirit is unfortunately weak.

We have not yet as a society come to a clear view on the relationship between these three forces that shape our economy and society. It is important that we do. The broad theme is that, for a set of reasons, we chose to put the Government at the centre of things and considered Business as a necessary evil. This in my view is more in line with a colonial mindset than of a free country. It has also been responsible in a great measure in constraining our development. I would submit further that it is precisely in parts of the country in which this yoke has been discarded by society, that development has occurred. In parts of Gujarat, Maharashtra , Tamil Nadu for example. To progress we have to rebalance this equation.

Human civilization has largely been a process of making cooperation possible between larger and larger groups. Society is an amorphous entity. All of us have multiple identities. In our large and diverse country we are an amalgam of societies and not one monolithic society. However, in the ultimate analysis, it is the society that determines what happens. Neither the government nor business nor any other organized group.

The market is necessary for a society to perform the essential function of exchange possible. Societies permit markets to grow, and regulate them. In that sense markets are embedded in societal choices. If we recollect history, the British royalty permitted the East India Company to trade, as did the Mughal Emperors. We know that between Europe and America there are fundamental differences in the socially acceptable roles of business and government. These as we know can change, as the recent virtual nationalization of the financial sector in America shows. We, I believe, have to arrive at an Indian conception, given our situation, our history and our cultural ethos.

To rebalance the equation, both civil society and business have to take the lead. Being a businessman, I would focus in my talk today on the things the business community needs to do to improve its credibility in our society.

Business exists to fulfill the needs of the customer. In the process it creates wealth and employment, pays taxes, rewards its shareholders. If business is to continue to exist, it has to continually reinvent itself & grow.

India has a very long tradition of business. We were trading over 2,000 years ago. We were manufacturing cloth & many other things and trading with East Asia, Eurasia and Africa . The hundi was invented by us long ago to settle long distance accounts. In our society, governments were advised to tax lightly, generally around 25%. In our country the strong are expected to protect the weak. The fortunate to aid the unfortunate. Schools & places of higher learning & dharamshalas & even health care, were built by the rich. In our temple at my home town Wardha, which celebrated its centenary this year, at the gateway sat an Ayurveda practitioner hired by the temple to provide free medical care. The same temple was also the first temple in the country to be opened to Dalits in 1927.

Gurudev Tagore, writing a century ago in his essays on “Greater India ”, put forth the idea that we have survived so long as a civilization precisely because the government’s role in our country was restricted traditionally. It was the Community which created and managed basic requirements like irrigation, education and so on.

Unfortunately, after Independence , with the emphasis on the Public Sector and the establishment of a license-permit raj, the Indian private sector was again at the periphery. The mood of the establishment was anti-business. Also, because of distortions introduced by the government, a large section of Indian business became unsavory in its dealings and did not endear itself to the public at large. Shortages bred short changing on quality, black markets, etc.

It is a trifle ironic that at a meeting in Wardha in March 1948, after Gandhiji’s assassination, Nehruji expressed himself clearly that whatever the government got involved in withered. And yet, he pursued the idea of big government and the public sector.

At independence, stock markets were under developed and the Indian entrepreneurial ability to raise large funds was limited. Hence, the Public Sector and some degree of government controls on industry, especially given the real constraint of foreign exchange availability, were necessary. However, this was persisted with for far too long and created major distortions in our markets and our thinking. Even 17 years after major economic reforms were undertaken in 1991, vestiges of this thinking are still evident in our government.

There has been a sea change in public perceptions in the last two decades. Making money has become a global obsession. When even Deng Tsiao Peng says that to be rich is glorious then it can not be that bad! However, how one makes one’s money is important. Money should not confer legitimacy to crooks. Also, there are values much more important than money. To me the soldier, the teacher, the doctor, for example, have a higher calling than businessmen. At the same time, the Political class and perhaps the bureaucracy, have lost their sheen. Many of them are considered corrupt and ineffective by default. Therefore, businessmen are becoming the new role models.

Even so, the credibility of business the world over is not too high. Enron, Worldcom in the US shook public confidence. The recent sub-prime crisis in the US too has reflected both incompetence and irresponsibility of very reputed companies and the Government. CEOs of banks have bailed out in golden parachutes. The uproar of CEO pay continues to rise. We have enough cases of investors being duped in IPOs.

Business has to understand that it can operate only if it has public legitimacy. The economy is embedded in a society. We realize this clearly when things we take for granted do not exist. Some states in our country do not attract major investments because of business perception of their law & order. This is the reason for their remaining backward. What business can be done in Zimbabwe today?

I believe it is our responsibility to make the process of reform and liberalization develop a large and growing constituency in the country. This is neither the job of the government alone, nor in its capacity to do so.

With rising inequalities in our country and rising cost of housing, education and health, there is a real danger of liberalization getting a bad name and our sliding back into tokenism. Corporate India also has a huge stake in this process. We have to proactively create situations wherein more and more people have a stake in the system and in the economic system being fair, sensible and sustainable.

For achieving this I believe the corporate sector needs to ensure four things:

1. Provision of good quality products and services

• Good Corporate Governance

• Corporate Social Responsibility and

• Philanthropy

The first 3 are necessary ,in fact, essential. The last named is optional, though much of the positive public perception is quite often based on philanthropy. The Tatas have been institution builders and philanthropists par excellence.

I am mentioning the first because all others are futile if this basic contract between business and the customer is not kept.

Good Corporate Governance is a matter of observing, in letter and spirit, a regime of disclosure, transparency and accountability. It is a mandatory responsibility one accepts when one manages a publicly held company.

Corporate Social Responsibility, CSR, is what one does upstream and downstream to be socially responsible and also to enhance one’s business interests. For Bajaj Auto to manufacture environment friendly vehicles, in an environmentally responsible manner would be CSR. To train people to drive safely would be CSR. To assist educational institutions in our area would be CSR. CSR in my view is done in enlightened self-interest and also helps the society.

Philanthropy is the simple giving back to society in which we function and from which we get so much. I believe ploughing back at least 1% of our net profit into philanthropy is the least we can do. Even if this much is done a lot would change. Anything done with private initiative, delivers many fold the value that would be generated by governmental spending.

There can be a discussion of this four point categorisation, its refinement, but I believe it is important to keep things simple.

In our country, we have a tendency to make structural changes, unmindful whether processes support or undermine that structure. We have democracy and poor governance, a bureaucracy and rampant corruption. In such a system scoundrels can get away scot free and the straight forward can find themselves tied up in red tape or worse.

Therefore, I believe we should minimize regulation, important as it is, and have it largely for laying out the broad principles of the rules of the game and for cases when gross travesty of justice occurs. For the rest, the market is more likely to achieve the desired objectives than regulation.

I come to the question of how do we run organizations such that the four things I have just outlined; good product, corporate governance, CSR and philanthropy, happen in them, in this greed centered world?

I believe it is the culture of the organization that can ensure it.

Again & again it comes back to what is one’s conception of people. What drives them, what motivates them, what gives them satisfaction.

I continue to believe that beyond a minimum, people prefer meaning to meaninglessness, prefer contributing to build something, prefer camaraderie to hostility. I believe that the lovely Greek word “oikodomein” or to “build up a house”, is a basic human urge. People leading organizations, have to create an environment conducive for their colleagues to have this sense of contribution. This comes from having an ethical organization and by being governed by good values, where integrity, quality, dignity and a sense of fair play exists. From such an environment comes pride and satisfaction in one’s work.

I have found that if one keeps the nation, the organization and the individual hierarchy, in this order, in decision making in a company, then things become relatively simple. This means that a national priority should take precedence over a company priority, which should take precedence over an individual priority. If this is done consistently, it moulds our behavior. I should add that the top management of a company has to be specially disciplined, because it is there where individual priority has the latitude to over ride organizational or national priorities.

Business is knowledge based. This today requires much greater engagement and involvement of our employees. To survive, let alone prosper, in today’s competitive environment, a company needs outstanding people. In this race to attract and retain talent, the reputation of an organization matters. Its results, culture and its CSR image. This is another factor which drives us to be good corporate citizens.

We are not and do not need to be saints. In this world very few, who are in a position of authority, are. We have only to understand our enlightened self-interest and pursue it. We have to be also aware of our essential mortality and humanity.

Reforming the government is a much more difficult task. I have come to believe that a key piece of the puzzle is to undertake electoral reform. Our electoral process seems to reinforce bad tendencies. If we have state funding of elections, simultaneous elections to the assemblies and the Parliament and only every five years; and elimination of criminal candidates, there will be a significant improvement in our governance and economic decision making. With 20-25% votes often ensuring a person or a party coming to power, I believe with these steps, the educated and enlightened citizens would have a greater say in electing governments. Today, many honest and capable people do not want to enter politics. In the new environment, they may not only vote in greater numbers but may also find joining politics an attractive vocation.

All businessmen are congenital optimists. We have to be. Therefore, I hope and believe that we would have a much saner relationship between Government, business and society in our country in the future. Maybe, not in my lifetime but hopefully in my son’s. I believe I am making a very small contribution to this process. This I shall continue to do, supported by the affection I have received from people from all walks of life. This affection is my real poonji, my real wealth. All else is maya.

Thank you.

November 22, 2008
Chairman's speech in All India Management Association

ALL INDIA MANAGEMENT ASSOCIATION
VALEDICTORY ADDRESS : 1545 – 1715 : 1 OCTOBER 2008 : MUMBAI

Ladies and Gentlemen,

When Rekha Sethi invited me for this event, I asked her why was she inviting an old war horse to an event rightly about & for young colts. She mumbled something about wine getting better with age and all that. Not at 4 in the afternoon , said I.

Anyway, here I am.

At the outset I congratulate AIMA on its outstanding contribution to the field of professional management in the country. That in the process, its annual surplus exceeds that of major industry bodies, excluding CII, is very laudable. Professionalism has come to mean one of two things in our country. Competence and values on the one hand and a mercenary “everyone has a price” philosophy on the other. We must labor hard for the ascendance of the former, i.e. competence and values, and set a personal example to negate the corrosive latter. Competence without moral and human values is trash.

In earlier sessions of this convention, issues like the importance of a global mindset, of innovation and of entrepreneurial managers have been discussed. I will not belabor these issues. Instead, I will try to flesh out some macro issues that I believe every manager, old or new, has to get to grips with in this world.

If any one had told us even two years ago that the US financial system would undergo a huge crisis, it is unlikely we would have paid heed to him. Some of the biggest names in the system, from Bear Sterns to Lehman Brothers, to Freddie Mac and Fannie Mae to AIG to Merrill Lynch, to Washington Mutual and now Wachovia, have gone through gut wrenching change, with some of these names likely to fade into oblivion. Even the two remaining & the largest Investment Banks, viz. Morgan Stanley and Goldman Sachs, had to bow to the inevitable and have had to become Commercial Banks under the supervisory control of the Fed.

If anyone had said that FDI from India would almost equal FDI into India would we have given that credence? This and much more is happening. Welcome to the brave new world, which is both flat and round.

Now almost any business, anywhere in the world, is affected by competitors, by events anywhere in the world. One can call this globalization. This throws up both opportunities and threats, not just one of them. I find it disconcerting when people pretend that only one of these exists. The drum beaters of the left only see the threats, the buglers of the right only see opportunities. We, as businessmen, unlike some politicians, have to be credible.

Big business, which is what many of those assembled here today, represent, is even more influenced by significant geo-political and geo-economic developments.

In the last two decades, global growth has been good, despite hiccups like the 1997 Asian Crisis, in an environment of low inflation and easy availability of low cost capital. Whosoever has made efforts to grasp the opportunities has benefited, be it China , SE Asia, India or Latin America . It has been a period of great hope and great improvement in the lives of billions of people. Of course, it could have been better, more equitable etc. , but it has laid to rest the ghost of government led growth and raised the sphinx of private sector led growth.

In 2008 however we are seeing the end of this era of high growth and low inflation, at least for a while. Growth is likely to be sustained, especially in developing countries, but under less benign conditions. We would have to work harder and more intelligently for it. Oil & perhaps commodity prices could continue to rise, protectionism in developed countries could increase, climate change will become much more of a real issue and ,above all, there could be much greater volatility in all of these. We have to also deal with the impact of terrorism and Sovereign Wealth funds.

The second major development is that geo-political centres of power are being realigned. Till 1990 we had a bi-polar world. With the disintegration of the Soviet Union, we had two decades of a virtually unipolar world dominated by the US . Now, with a resurgent China , Russia and India and an economically weakened and inward looking US, and an indecisive Europe, we will be in a multi-polar or no polar world, of shifting alliances between these powers, and countries like Saudi Arabia , Iran and Brazil . The rise of oil prices and Europe’s dependence on Russia for gas supply, has introduced a new dimension in the global power game.

I have long maintained that this flux provides significant political and economic opportunities for India and that a policy of equidistance with EU, Russia and China , and a slight tilt towards the US , is in our interests.

The last two decades have also made it amply clear that the issue is not market or state ; this has turned out to be a false choice. The answer is market and state. I like to say, I am a free market socialist. Sounds like a contradiction. But virtually every country is veering around to this view, including the US .

In our country we still have too much of the state and not enough of the market. So, we need to move in the direction of greater role for the markets. Currently, we are over regulated and under governed. Ultimately we should be better governed, well regulated with essentially free markets.

Which brings me to the issue of the state of governance in our country, which does deeply affect business operations & interests.

The current situation is unsatisfactory. Coalition governments are here to stay at the centre and growing even in the states. The nexus between politics and criminals can continue to be ignored only at our peril. The quality of the political system & leadership, barring some notable exceptions, leaves much to be desired.

What is important for business is that it put its weight behind the right political forces and seek to influence them in a transparent manner. Either we can try and cut deals with the political system for our selfish ends and harm the economy and polity, or we can try to improve the system for all businesses. Business has by and large not covered itself with glory and our credibility with the public is low. The resistance to land acquisition for industrial development is a pointer to this perception.

Recently, I came across a book written a century ago by Gurudev Tagore called “Greater India”. It makes the important point that our civilization survived all the turmoil over centuries because in our society, the community provided for itself and did not depend on the government. Our dharamshalas, schools, water bodies were built and maintained by the society. Gurudev called for the reinvigoration of this Swadeshi, swavalambi Samaj concept. These essays predate Gandhiji’s freedom struggle, but almost predict the program that Gandhiji brought to fruition.

The biggest contribution business makes in society is by running its business well. This is our core purpose and core contribution.

But as organizations grow large and influence the economic environment as much as they are influenced by it, we need to engage with the environment. This engagement can be said to be at three levels.

The first level is to be trusted as a company by society. To have legitimacy. We do not fully realize the importance of this. It is when things start to go wrong that the importance of public perceptions becomes evident. The quality of talent that we can attract & retain is also partially linked to such perceptions and realities. This is earned by the quality of our products and services, our corporate governance practices and by our CSR activities.

The second level has to do with influencing rule and policy making. This is very important in the long run. Rules and policies are not God given. It is in the interests of businesses to see that they are sensible. These can be from Octroi to labour legislation to the WTO negotiations. Businesses need to engage with policy making at all levels.

The third level is philanthropy.

I take this opportunity to exhort all of us to allocate 1% of our net profit to support social provision of services. This will include CSR activities and philanthropy. I am confident it would make a greater impact than the 30% of our profits that we pay to the government! At CII’s national session in January this year, a CII initiative on health showed that it was able to reduce diseases by over half in selected villages merely by spending around Rs 20 lakhs in a drainage system for the village. Ideally, our associations like CII and AIMA should organize such efforts and identify good ideas and NGOs through whom this money can be canalised.

It is within this broad sweep that we must chart the course of our companies. I would in conclusion stress two points which I consider important.

First, we need to review our strategies. Do they adequately reflect the opportunities and threats faced by us? And the answer in many cases would be “not enough”. We still have miles to go before we improve our offerings and our geographical reach. We are at the dawn of a new era. Ten years ago, Indian MNCs was just a wild thought. Now, it looks doable but we still have mountains to climb. This is a challenge every competent manager cherishes.

Second, let us take a close and frank look at our organizational culture. Is it conducive for attracting and retaining talent, ethical behavior, honest feedback from all, disagreement with the boss? Does it reward the straight and punish the crooked?

Being able to disagree with the boss is to my mind a key requirement for sustained results. Some attribute the outcome of the IInd world war to the freedom to disagree within the British forces and the absolute obedience within the Germans.

It is when both these, strategy and organization culture, are robust that we can place big bets even on relatively weak market signals. The success of Microsoft, Google, Airtel can be attributed to the ability to do this. If we look at our own company’s successes and failures we would realize the centrality of this feature. When the demand for a product is obvious, competition intensifies and margins weaken. It is when it is not obvious that we have the latitude to dig in to a market and realize the first mover advantage.

Quality of management is the key resource any organization has and therefore the core attribute which should be cultivated in it. I believe that it comes from the organisation’s values and performance orientation. If these are in place, the rest can be put together. As leaders in organizations, all present here today have a make or break role to play in this process in their organizations.

The world is ours for the making. Ours for the taking. Let us make it and take it.

Thank you.

Words : 1847

October 1, 2008
Chairman's speech in Shri Ram College of Commerce, Delhi

Speech delivered by Rahul Bajaj in the Shri Ram College of Commerce, Delhi on December 19, 2006
Indian Economy: The Way Ahead


It’s a pleasure to be with all of you here this morning. It is always good to be amongst the young. The future of this country is really in the hands young people in their thirties and forties. We, who are older, can only encourage the young and step aside when they race ahead.

I am glad to share the dais with the not so old, Arun Jaitley. He has been kind enough to teach me a few tricks of the political trade. One may become too old to teach, but one is never too old to learn.

I am also happy to be at a Sri Ram College function because I have known Ajay Sriram & his family for decades. Business must plough back into societal development. Education is the key to this. The Sri Ram family has understood and practiced this for very long.

In my talk today I will try and present my qualitative assessment of where we are, broad contours of the way ahead and what are some of the issues that we need to address.

Indian economy is on a roll. And it is likely to remain on the roll for a long time, because the basis of its growth is both wide and deep. Width in terms of sectors that are competitive. Services have been so for a while. It was IT first, then BPOs, now KPOs in every conceivable field. Manufacturing is coming on stronger in sector after sector. Gems, Clothing were traditionally strong, but now Pharma, Auto Components, Steel and, yes, 2 &3-wheelers have gained strength. Depth in terms of the number of competitive companies in each sector. Both these are streams fed by India’s entrepreneurial culture.

Fundamentally, the Indian economy now seems to be on a higher growth trajectory. Good politics & policy can accelerate it. Bad politics can slow it down a bit. But the trajectory is unlikely to change. Sustained 7% plus GDP growth appears to be there for the asking, and 10% growth is well within the realm of possibility. There are many individual and economic forces working in favour of growth; be it globalisation and growth of the global economy, FDI, strength of Indian corporates and a societal urge to lift our standard of living and the willingness to work for it. Markets for many products and services are growing in double digits and will explode as the current per capita GDP of USD 600 per annum crosses USD 1200 per annum.

The most telling evidence comes from Indian companies increasingly acquiring companies abroad. This year so far 112 foreign acquisitions have occurred valued at USD 7.2 Bn. Not counting the mega Corus-Tata Steel deal. Last year deals totalled USD 4.5 Bn up from USD 1.5 Bn in 2004. This year outward FDI would for the first time exceed growing inward FDI!

Whichever way we look, the numbers and the progress are impressive. The 4th largest economy in the world on purchasing power parity basis, 5% plus GDP growth since 1980s and 8% plus since 2003-04, Inflation around 5%, Foreign exchange reserves of USD 165 Bn, a young demographic profile, etc.

The latest World Economic Forum’s “The Global Competitiveness Report” shows an improvement, though marginal, in the global ranking of India’s growth competitiveness from 45th to 43rd. China slipped to 54th from being the 48th so India is now ahead of China on competitiveness. More importantly, in terms of Business Competitiveness, which is concerned with firm level competitiveness rather than the largely macroeconomic parameters of growth competitiveness, India is ranked 26th to China’s 57th.

There is a buzz about India. Its short term and long term performance. To a point wherein IMF in its World Economic Outlook wondered “Is India becoming an engine for global growth?”. Rightly I believe it concludes that though not quite so, but very likely to.

I believe that we stand at a propitious moment in the history of our nation. While we acknowledge the challenges, and there are many– a world of opportunity also awaits us. Globally India is not just a flavour of the week or the month or the year. We are the flavour of the times.

Both in the services and the manufacturing sectors, we are poised to gain from the developments in the world economy. While India’s share in the global production and trade in goods and services is small, it is increasing rapidly. We are now in the evoked set of both major markets and major suppliers for a variety of goods and services. We are becoming internationally competitive despite the serious handicaps of lack of infrastructure, right from social infrastructure; that is health, education, drinking water, and sanitation, to, of course, physical infrastructure. The key reason, however, for my optimism, is the quality and entrepreneurship of our people. We have the world’ largest pool of intelligent, hardworking manpower, be it in IT, manufacturing or finance. Also, and this is very important, that demographically, we shall remain a country of the young even in 2025. We have to however ensure that we encash this demographic dividend by investing in their education and their skills.

Any society that wants to move forward needs an environment that fosters enterprise, ambitiousness, competition, openness to change, hard work and a willingness to take and reward risks. We have these in ample measure in our people and our capital markets, even if not yet in our governmental and political party mindsets.

If any proof was needed that it is the quality of human capital that determines the economic performance of a country, then it is India.

And yet we should not lose our sense of proportion in thinking about the rise of India. While adjusting its economy to the new reality and utilizing the new opportunities, we should not overlook the enormity of the economic gap that exists between India and the developed countries. There are many roadblocks that India has to overcome, before it can become a significant player in the international economic scene on a sustained basis. Though we have largely climbed out of the ditch that we had dug ourselves into during the controlled economy mindset between 1960-90, we are still at the base of the mountain that is to be climbed.

It is clear that we have to focus on growth, look for areas where we can grow and facilitate it by removing impediments to growth in them; but we need to make our growth inclusive, else we will not develop in a sustainable manner. Inclusive in a positive and pragmatic manner, not in a populist, politically expedient manner.

The fact remains that we still have unspeakable pockets of poverty in rural and urban India. The growth of the economy is skewed geographically, within income groups and among sectors. We have farmers committing suicide in droves in some areas because agriculture is no longer viable. We have some parameters like malnutrition amongst children that places us in the league of least developed countries. Therefore, there is a need for a sense of proportion and a set of sensible priorities.

Growth has made a dent on poverty. From 36% people being below the poverty line in 1993, we now have 22% below it. This is progress. However, this masks wide differences between states. In some states still over 40% of the people are below the poverty line. We can’t have such a situation and expect social stability. We must remember that a fourth of our districts have been declared “naxalite affected”.

We must ensure that the pattern of growth is such that whoever is striving should have a sense of progress, a sense of a stake in the system. Enclaves of prosperity can not thrive in a sea of despair. Those that succeed should be creators of a community of hope.

The world is multi dimensional. Economy is one axis, Society & Family are another, Politics yet another. Developments in any of these axes influences other axes. It is their balance that will determine outcomes.

Let me briefly run through these dimensions. I am an industrialist not an academician. My perspective is one wherein one has a reasonably accurate picture of a phenomenon. One may have one’s preferences but one must be aware of the lay of the land on which one walks. Broad brush perspectives are adequate for my purposes.

Economy: To a group of students of commerce and economics, I have nothing very new to say, but the very nature of the globalised economy that we are now a part of, is that change is the only given; and hence one needs to constantly update one’s assessments of opportunities and challenges. We can only appraise a company on a global basis. Till 1991, this was not necessary. We were part of a closed economy. Now the opportunities and challenges are global. No Indian company can prosper for long if it does not compete in global markets. There are no longer isolated wells in which we can live. There is only one giant ocean that we inhabit. Being very clear about this is important. An earthquake in Indonesia can become a tsunami in Chennai very quickly.

We have the advantage of good quality people and significantly lower cost. But the game now is increasingly lost or won in the product arena and not just the cost arena. Mopeds cost Rs. 20,000 but have 5% of the Indian market. Motorcycles that cost almost twice this amount account for 85% of the market. It is essential to invest in R&D and in networking with global sources of technology.

In this scenario what should business do? I believe it should continue to push the envelope as it has been recently doing. The Indian growth story is largely the result of our entrepreneurial spirit and an achievement oriented society. We have to adopt a global viewpoint on both threats and opportunities and plan and act accordingly.

During the last fifteen years, Indian industry has gone from exuberance at the opening up of the Indian economy, to being shell shocked by the fierceness of competition, to finding its feet. In the last 3-4 years we have witnessed the turn around of Indian industry. This is why, despite everything, industry is growing, exporting more, investing more. I am very optimistic about our future. The best is yet to come.

Indian business has its work cut out for itself. Develop and strengthen in the domestic market and move into overseas markets. Also, look around the corner for newer products and technologies.

We have to leverage our already good and improving position in services. We have to move up the value addition ladder and are already on this path.

For improved competitiveness in services and also for manufacturing we have to strengthen our education system. Since most of the expansion of higher education institutions is occurring in the non-government sector I am sure the focus would shift from quantity to quality. Entry of foreign institutions should be encouraged. Right now there is a bit of a policy vacuum about it, which needs to be corrected.

We can not afford to neglect agriculture. Just too many people are engaged in it. With widespread subsistence farming I do not think market oriented farming is a practical proposition. The risks in rain fed agriculture are too high to make an input intensive strategy viable. Contract farming is in its infancy but eliciting much interest from corporates and farmers. However, I believe it will work only in pockets with irrigation, infrastructure and entrepreneurial farming communities. The likely shift to mass retailing may give a fillip to contract farming. But I believe that the existing Indian agricultural trading system, though not without its rough edges, is an efficient, low overhead operation and competing with it will not be easy. I believe dispersed industrialisation can provide the basis for a prosperous agriculture. The dormant government machinery has an important role to play in providing services to Indian agriculture.

Urbanisation is a reality, but when a city grows beyond 20-30 lakh people it creates more problems than it solves. In a fundamental sense it becomes unmanageable. We have to therefore create more poles of urbanisation. Even better, we should improve the incomes in agriculture and provide good schooling, health and transportation infrastructure in rural India so that people are happy not to move to towns. It is because of the complete breakdown of this infrastructure that there is a scramble to the city. In the whole of Northern India there are possibly fewer liveable cities today than was the case even 30 years ago.

In 1991 we moved from a closed market to a progressively open one. But there are pervasive remnants of the closed mentality in the nooks and crannies of government. Hence, there are a number of pending issues, most importantly in electricity and labour policy, that are not conducive for business development. There are all kinds of economic distortions in the economy that skew decisions – from non-merit subsidies, artificial prices, politically expedient investment incentives etc. Corruption continues to be a serious concern.

We in industry have to keep seeking reform and at the same time continue to do our best under conditions of no or partial reform. The momentum generated by economic growth will slowly loosen the boulders in our way.

One of the unfortunate developments in the last 15 years in India has been that internal liberalisation has not kept pace with external liberalisation. Import duties and FDI have been correctly handled, but the constraints on domestic producers have not been dealt with adequately. Inadequate infrastructure and rigid labour laws are major handicaps industry in India suffers from. These require difficult political choices to be made. The rationale for external liberalisation can always be laid at the altar of the WTO!

India today is one of the most open and transparent markets to operate in, in the developing world. After the Dubai Port episode in the US and the Arcelor saga in France, leave alone the protection to agriculture in the developed countries, we need not be diffident about our policies and practices regarding external liberalisation. There can be further external liberalisation. But this is not the what is holding back domestic or foreign investment. The slow pace of internal liberalisation is.

Globalisation ,on the balance, is both inevitable and a force for good. Yet, it has to be understood and managed by countries keeping in mind their enlightened self-interest. Untrammelled globalisation can not and should not be an end in itself. India has the size and the quality of manpower to at least attempt to deal with the rough edges of globalisation. We have to ensure that inequity among nations reduces rather than increases, as has been the case till now. For that we need fair global trading and investment rules.

From the economy let me move to the social realm.

Our family system is by and large helping our economy grow and ensuring that our society remains healthy. The support for education in our families, the selflessness of parents, the stability of our marriages, matched by the efforts of our children, are exemplary. I realise this is changing in large cities in upper income groups, but India lives in its villages and small towns and we have a large, striving middle class where these values are by and large still valid.

Building a sense of shared future in any society is difficult. And, in India, we are too diverse a nation to believe in jingoistic nationalism. However, our country has evolved a deeply ingrained sense of “Sahishnuta”. Live and let live. We can argue about the origins, the causes of this concept, but it is a living tradition in our country. We can live with diversity. We do not want to impose a single idea on everybody. We can’t because each group in our society is a minority in its own way. What we have, our culture of tolerance, is something the world is trying very hard to metamorphose into, but without success. We should cherish this. But as happens often enough, what we have, we don’t value, because we don’t understand its value. What none of us should forget is that first and foremost we are Indians-proud Indians.

Let me now come to politics, my new found area of interest.

The key drag on the economy is our political and bureaucratic system. They have no requirement of being globally competitive! Also, we have a huge negative legacy.

As of now, a majority of Indians are outside the virtuous circle. Till they are outside, political parties are going to pander to them. In a recent paper, Robert Bates of Harvard, studied the link between political and economic reform in Africa. He came to the uncomfortable but credible conclusion that the pressure to be re-elected makes politicians both fiscally imprudent and encourages them to focus on redistribution rather than growing the cake. Until the electorate consists of people who are out of poverty or who realize that what appears politically pro-poor is in economic terms often not so, we can unfortunately expect left of centre economic policies to hold centre stage in India. In Bihar, it took 15 years of lack of development before the electorate revolted.

Also, the composition of the parliament, wherein coalition governments seem inevitable, is not conducive to big ticket reform. Governments would be hesitant in pursuing big ticket reform, but would go along with sectoral policies and decisions that are reform oriented. Reform by stealth if you please. Some state governments, like Haryana, Tamil Nadu, Gujarat, Maharashtra and even communist ruled West Bengal, have been investor friendly. It helps that at the state level they have clearer legislative majorities.

We need good governance to achieve our goal of sustained, high rate of inclusive economic growth. This will come from changes at the top and pressures from below. The pressures from below will increase, as economic and social development makes our people more self-assured and more articulate.

Competitive politics is unfortunately accentuating identities, because that is where vote banks can be built. But we now seem to be reaching a point of diminishing returns from such politics. At least I hope so. The winners are, and most likely will increasingly be, those who can successfully build inclusive identities.

To ensure that we are able to take hard decisions, the Lok Sabha and all the State Assemblies should go to elections simultaneously; co-terminously, and only once in five years. From 1952-62 this was very much the case. To make this possible we shall have to legally ensure that a vote of no-confidence in the Leader of the House, the Chief Minister or the Prime Minister, is like in Germany, accompanied by a positive vote-of-confidence in an alternate party and person.

Quality of leadership is crucial in determining outcomes. Leadership is not just a matter of charisma or showmanship or public relations. It is of understanding today, it is of envisioning a better tomorrow and having the confidence in oneself and of one’s team to make our future happen. Leaders are those that deliver better outcomes. Occupying a chair does not make one a leader.

Gandhiji occupied no chair but led the country from subjugation to freedom, striding like a colossus. . We will do well to remember Gandhiji’s teachings of the seven social sins – wealth without work, pleasure without conscience, education without character, commerce without morality, science without humanity, worship without sacrifice and politics without principles. In my view we have under-achieved precisely because we have ignored these teachings.

India is a land of thousands of Gods, many peoples. Of many ideas and dreams which have coexisted for a long time. This will continue to be the pattern of Indian culture and the Indian economy. I believe the Indian ethos of tolerance, of assimilation, is a great asset. We may be influenced by the world but will not be swept off our feet by it. India appears a country with a lot of turmoil on the surface, but with innate stability, as behoves an open, democratic society with a free judiciary and press.

So, my dream for India, in say 20 years from today, is a country where poverty has been banished. Where parental income is not a barrier to good health and education, where talent is encouraged, achievement celebrated and the less strong can live with dignity. A country retaining its age-old humanism, tolerance of differences and a world view that is a cross between that of a yogi and an entrepreneur. A country that retains its soft power in offering an alternative, attractive way of life that celebrates life, to the world. Where the past and the future complement each other in the present. It is not that important to me whether or not we are a so-called economic superpower tomorrow, though a sustained, high rate of inclusive growth will in all probability make us one.

Over a century ago, Swami Vivekanand , a great cultural nationalist, who believed in India, its people and their destiny, said something that still resonates remarkably. I can do no better to summarise my thoughts than to quote him. He said, “Let us all work hard, my brethren. On our work depends the coming of India of the future. She is there ready waiting. Arise and awake and see her rejuvenated, more glorious than she ever was-this motherland of ours.” If there can be a thought that drives us in India it is this. If such a thought drives a country, nothing and no one can stop it from realising its dreams!

You, my young friends, are the future of our country, a country poised for a great transformation, that will give it its rightful place in the comity of nations. This is your privilege. This is also your responsibility. Do what will make you proud of yourself, your family proud of you and your nation proud of you. Material achievements are necessary, but it is the non-material that endure. My best wishes to all of you for this journey, called life. God speed and God bless.

Thank You

November 23, 2006
Chairman's speech on Realising the Indian Dream WIEF

Speech delivered by Rahul Bajaj – Realising the Indian Dream WIEF November 11 2006.


It’s a pleasure to be with all of you here today. I am a Harvard man but my commitment to India is naturally higher and wherever there are friends of India I am happy to be there.

Dreaming is a fundamental human right and the starting point of all change. Realising a dream is the more difficult but an equally if not more important part of the dreaming. This is when the dream confronts reality and must either change reality or perish. Luckily when the dream is as broad as a national one, it never perishes.

Today I will try and present my qualitative assessment of where we are on realisation of this dream and what are some of the issues that we need to address.

India is on a roll. And it is likely to remain on the roll for a long time, because the basis of its growth is both wide and deep.

Width in terms of sectors that are competitive. Services have been so for a while. It was IT first, then BPOs, now KPOs in every conceivable field. Manufacturing is coming on stronger in sector after sector. Gems, Clothing were traditionally strong, but now Pharma, Auto Components, Steel and, yes, 2 & 3-wheelers have gained strength.

Depth in terms of the number of competitive companies in each sector. Both these are streams fed by India’s entrepreneurial culture.

The most telling evidence comes from Indian companies increasingly acquiring companies abroad. This year so far 112 foreign acquisitions have occurred valued at USD 7.2 Bn. Not counting the mega Corus-Tata Steel deal. Last year deals totaled USD 4.5 Bn up from USD 1.5 Bn in 2004. This year outward FDI would for the first time exceed growing inward FDI!

Whichever way we look, the numbers and the progress are impressive. The 4th largest economy in the world on purchasing power parity basis, 5% plus GDP growth since 1980s and 8% plus since 2003-04, Inflation around 5%, Foreign exchange reserves of USD 165 Bn, a young demographic profile, etc.

The latest World Economic Forum’s “The Global Competitiveness Report” shows a marginal improvement in the global ranking of India’s growth competitiveness from 45th to 43rd. China slipped to 54th from being the 48th. So, India is now ahead of China on competitiveness. More importantly, in terms of Business Competitiveness, which is concerned with firm level competitiveness rather than the largely macroeconomic parameters of growth competitiveness, India is ranked 26th to China’s 57th.

There is a buzz about India. Its short term and long term performance. To a point wherein IMF in its World Economic Outlook wondered “Is India becoming an engine for global growth?”. Rightly I believe it concludes that though not yet, but very likely to.

We stand at a propitious moment in the history of our nation. While we acknowledge the challenges, — and there are many – a world of opportunity also awaits us. Globally, India is not just a flavour of the week or the month or even the year. We are the flavour of the times. Previously, it was only China. Now it is China and India.

Both in the services and the manufacturing sector, we are poised to gain from the developments in the world economy. We are becoming internationally competitive despite the serious handicaps of lack of infrastructure, right from social infrastructure including health, education, drinking water and sanitation and, of course, physical infrastructure, power, roads, ports, etc. The key reason, however, for my optimism, is the quality and entrepreneurship of our people. We have the world’ largest pool of smart, hardworking manpower, be it in IT, manufacturing or finance. Also, and this is very important, that demographically, we will remain a country of the young even in 2025. We have to however ensure that we encash this demographic dividend by investing in their education and their skills.

If any proof was needed that it is the quality of human capital that determines the economic performance of a country, then it is India.

Though we have largely climbed out of the ditch that we had dug ourselves into during the controlled economy mindset between 1960-90, we are still at the base of the mountain that is to be climbed. But what is this mountain? Which dream will we chase?

It is clear that we have to focus on growth, but we need to make it inclusive, else we will not develop in a sustainable manner.

The fact remains that we still have unspeakable pockets of poverty in rural and urban India. The growth of the economy is skewed geographically, within income groups and among sectors. We have farmers committing suicide in droves in some areas because agriculture is no longer viable. We have some parameters like malnutrition amongst children that place us in the league of sub-saharan countries. Therefore, there is a need for a sense of proportion and a set of sensible priorities. The last government ran an “India shining” theme in its bid for re-election in 2004 but it did not strike a chord. The outcome was the result of many factors, but this slogan certainly did not work.

Growth has made a dent on poverty. From 36% people being below the poverty line in 1993, we now have 22% below it. This is progress. However, this masks wide differences between states. In some states over 40% of the people are still below the poverty line.

We have to aim for broad based, balanced growth for the sake of its social and environmental sustainability. More than that, at least to me, a dream of unbridled materialism is not very appealing. It’s a hollow dream that does not challenge the soul. Tagore’s dream of India in his poem “Where the mind is without fear” is a much more worthwhile dream.

The world is multi dimensional. Economy is one axis, Society & Family are another, Politics yet another. Environment is turning out to be something one can’t disregard. All of us are influenced, by all these forces. It is their balance that will determine outcomes.

Developments in any of these axes influences other axes.

Therefore, if we are to realise the Indian dream, we must be eclectic in our thinking and doing. The world does not move in a straight line. If any proof was needed, the situation in Iraq is proof that linear thinking does not always work. So, though I like Goldman Sachs projections for 2050 for India I don’t take them too seriously.

Indian business has its work cut out. Develop and strengthen in the fast growing domestic market and move into overseas markets. Also, look around the corner for newer products and technologies.

We have to leverage our already good and improving position in services. We have to move up the value addition ladder and are already on this path.

For improved competitiveness in services and also for manufacturing, we have to strengthen our education system. Since most of the expansion of higher education institutions is occurring in the non-government sector, I am sure the focus would shift from quantity to quality. Entry of foreign educational institutions should in my view be encouraged. Currently there is a bit of a policy vacuum about it, which needs to be corrected.

We can not afford to neglect agriculture. Just too many people are engaged in it. With widespread subsistence farming I am not sure if market oriented farming is a practical proposition. The risks in rain fed agriculture are too high to make an input intensive strategy viable. Contract farming is in its infancy but eliciting much interest from corporates and farmers. However, I believe it will work only in pockets with irrigation, infrastructure and entrepreneurial farming communities. The likely shift to mass retailing may give a fillip to contract farming. But I believe that the existing Indian agricultural trading system, though not without its rough edges, is an efficient, low overhead operation and competing with it may not be easy. In my view dispersed industrialisation can provide the basis for a prosperous agriculture. The dormant government machinery has an important role to play in providing services to agriculture. Some private sector agro-business initiatives like e-choupal of ITC have contributed positively to rural incomes.

In 1991 we moved from a closed market to a progressively open one. But there are pervasive remnants of the closed mentality in the nooks and crannies of our government. Hence, there are a number of pending issues, most importantly in electricity and labor policy, that are not conducive for business development. There are many government policies that distort decision making – from non-merit subsidies, artificial prices, politically expedient investment incentives etc. Corruption continues to be a concern.

We in industry have to keep seeking reform and at the same time continue to do our best under conditions of no or partial reform. The momentum generated by economic growth will gradually loosen the boulders in our way.

The politician’s need for re-election in a democracy sometimes makes him wary of sensible economic decision making. In India it makes him an unashamed populist. India cries for good governance and political and administrative reform; of mindsets, policies and processes.

Yet, at the same time in Bihar, one of the worst governed states, there has been a change of government a year ago on precisely this plank of development versus populism, when populism finally lost.

So, In India, for every example there is a counter example. What is clear is that the well developed or, more correctly, developed regions, for even within a state wide disparities exist, are moving ahead strongly and are having a domino effect on other states. However, non-coastal states and regions, other than around Delhi, are having difficulty in attracting investment.

There are incongruencies between words and deeds of politicians in India. Also, the composition of the parliament, wherein the ruling coalition is dependent on left parties support from the outside for its survival, is not conducive to big ticket reform. However, this government will be unable to pursue big ticket reform, but would go along with sectoral policies and decisions that are reform oriented. Reform by stealth if you please. Even this is possible because the left does not want this government to fall.

We need good governance to achieve our goal of inclusive and rapid economic growth. This will come from changes at the top and pressures from below. The pressures from below will increase, as economic and social development makes our people more ambitious, self-assured and more articulate.

To ensure that we can take hard decisions, the Lok Sabha and all the State Assemblies should go to elections simultaneously, co-terminously, and only once in five years. From 1952-62 this was very much the case. To make this possible we should ensure that a vote of no-confidence in the Leader of the House, the Prime Minister or the Chief Minister, should be, like in Germany, accompanied by a positive vote-of-confidence in an alternate party and person.

Quality of leadership is crucial in determining outcomes. Leadership is not just a matter of charisma or showmanship or public relations. It is of understanding today, it is of envisioning a better tomorrow and having the confidence in oneself and of one’s team to make our future happen. Leaders are those that deliver better outcomes. Occupying a chair does not make one a leader.

Gandhiji occupied no chair but led the country from subjugation to freedom, striding like a colossus. . We will do well to remember Gandhiji’s teachings of the seven social sins – wealth without work, pleasure without conscience, education without character, commerce without morality, science without humanity, worship without sacrifice and politics without principles. It is precisely because we have ignored these teachings that we have under-achieved.

India is a land of thousands of gods, many peoples. Of many ideas and dreams coexisting for a long time. I believe this will continue to be the pattern of Indian culture and the Indian economy. The Indian ethos of tolerance, of assimilation, is a great asset. We may be influenced by the world but will not be swept off our feet by it. India is a country with some turmoil on the surface, but it has innate stability, as behoves an open, democratic society with a free judiciary and press.

It is not important for me whether or not India is a so-called superpower, say, 20 years from now. My dream for India, 20 years from today, is a country where poverty has been banished. Where parental income is not a barrier to good health and education, where talent is encouraged, achievement celebrated and the weak can also live with dignity. A country retaining its age-old humanism, tolerant of differences and with a world view that is a cross between that of a yogi and an entrepreneur. A country that retains its soft power in offering an alternative, attractive way of life, that celebrates life, to the world. Where the past and the future complement each other in the present.

Over a century ago, Swami Vivekanand, a great cultural nationalist, who believed in India, its people and their destiny, said something that still resonates remarkably. I can do no better to summarise my thoughts than to quote him. He said. “Let us all work hard, my brethren. On our work depends the coming of India of the future. Arise and awake and see her rejuvenated, more glorious than she ever was-this motherland of ours.” If there can be a thought that drives us in India it is this. If such a thought drives a country, what can stop it from realising its dreams?

Thank you, Sir.

November 17, 2006
Chairman's speech at Mumbai University, Industry Academia

Speech delivered by Rahul Bajaj – Mumbai University November17, 2006 Industry Academia.
An anniversary is a celebration of the past and a time to think about the future.

Coming from industry, the issue of industry-academia interaction is of abiding interest to me. As an alumnus of this University, as someone who is involved with running of educational institutions, I have looked at the issue from the other side of the table too.

The issue of industry-academia relationship has gained a sense of immediacy because we now live in a global economy. There are no assured markets for any one in the world. There is a constant struggle to compete, which means that anyone running a business has to constantly upgrade his offerings and productivity. This is done largely by the employees of the company. So, their quality is central to a company’s competitiveness.

In turn, the competitiveness of companies determines the prosperity of not only their employees and shareholders, but of the society as a whole. Today no one in the private sector can assure any one of a job. It has to be earned all the time and the key thing to ensure employment is employability, the continuous upgradation of one’s skills, capabilities and output.

Learning, an important value in its own right, has now become an economic necessity. Life long for that matter. It is a development that all of us should welcome.

Thus, a country’s educational system is central to its competitiveness. Of the 9 parameters used by the World Economic Forum, Geneva to judge an economy’s competitiveness, 5 are connected to the quality and quantity of its education system.

This means not only the skill sets that students possess on graduating but also the attitude sets that are inculcated in the process of their learning. Also, capabilities that arise from the interaction of skills and attitudes in performing tasks successfully, are important.

On the whole, higher education in India has done extremely well in training people. That we are the 11th largest exporter of services in the world, when we are the 29th largest exporter of goods, says it starkly enough. I believe it also has to do with the tremendous support that Indian parents provide their wards for their education. That there are concerns in the West about the threat from Indian service exports or being Bangalored, speaks of the strength of our human resources. The IITs especially, have become a global brand. If any proof was needed that it is the quality of human capital that determines the economic performance of a country, then it is India. We have to leverage our young demographic profile to sustain and enhance this advantage. How our education system performs is critical to this process.

In my talk this evening, I shall refer to two aspects of Academia-Industry interaction. One, the ability of academia to meet the requirement of industry for trained manpower. Second, the co-operation between academia and industry in finding solutions, even ideas that may lead to solutions, to issues facing industry. Generally, it is the latter that is considered academia-industry interaction. I believe, however, that, at the present stage of development of our education system and our industry, it is the former, more basic question of education, including continuing education, that is an equally important aspect of academia-industry interaction. Only when we successfully tackle it will we be in a position to move to the more complex area of cooperation in idea generation and problem solving, which is generally termed R&D.

I belong to the positive realist school. I believe that accurate self-critics are secure in times of strain.

First, let me outline my opinion, a layman’s opinion, of the state of our higher education system and its adequacy in meeting the manpower requirements of our industry. Second, the state of Indian industry. Third, the link between academia and industry in the developed world. Based on these one can try and develop a concept of industry-academia interaction suited to our needs and circumstances.

In my view, there are five critical weaknesses in our education system. First, is the declining quality of our teachers. Second, we are allowing far too many disinterested students into higher education. We should only admit students with, say, at least a second class to colleges and universities. Third, our education system lacks vocational focus and opportunities. Fourth, we have too little of practical work to internalise the overdose of theory and fifth, very little teamwork. All study and its evaluation is based on individual effort and performance.

In an annual ranking of the top 200 universities in the world by the respected “The Times Higher Education” we have only 3 institutions, IITs, IIMs and JNU. Of these only JNU is a university. Tiny Israel has 3 universities in this list and China 5. This should make us sit up and do some soul searching. Perhaps, the governance of our universities and the disconnect between research and teaching, especially in the sciences, are key reasons for this sorry situation.

If we compare MIT in the US to an IIT in our country one is surprised that, even without committed government funding, only 20% of MIT’s income comes from fees, compared to 10% for the IITs. The IITs get over 80-85% of their resources from the government and earn around 5-10%. In the case of MIT, 40% comes from income from research projects and technology licensing and 40% from endowments & investment income from alumni & industry. The pattern of data for other institutions, e.g. Stanford, is similar.

This means a tremendous responsibility on the faculty and therefore my concern about their quality. Is the faculty of an Indian University capable of taking on such a responsibility? Are Indian alumni willing to share the responsibility of providing for their alma mater?

I believe that a government controlled system has distorted our perspectives. The responsibility for education is ultimately that of our society. We possibly realised and discharged this responsibility better in pre-Independence times than after that.

We have also seen a phenomenal proliferation of institutions of higher learning, in numbers, geographical spread, variety. This has been spurred by entry of private institutions in education.

I believe we have adequate quantity but not enough quality. Various estimates suggest that even in professional courses like engineering, less than 25% of the graduates are really employable.

In industry today quality is a non-negotiable requirement. There is no market for poor quality, except as scrap.

If anything worries industry, it is this systemic devaluation of quality in the education system. If a large group of teachers are not there on the basis of quality, nor a large group of students, then how can we get quality output?

I believe that some of the measures needed to improve the quality of education in our country are:

  1. Greater freedom to set up and manage educational institutions, including to reputed foreign educational institutions.
  2. Regular updation of curricula in consultation with industry.
  3. Improved remuneration to faculty based on performance. For example, as in the US, faculty compensation should partly be linked to research funding obtained by a faculty, so that there is an incentive and reward for doing research.
  4. Reservation, whether for admissions or jobs, should not be absolute but relative, with grace marks of a maximum of say 20% being accorded.
  5. Governance structures in the Universities must be altered to give them academic freedom and rid them of the current mediocracy based on false notions of democracy.and
  6. Corporates and individual tax payers should be allowed to pay a portion of their income tax, say 10%, directly to government run educational institutions of their choice, in lieu of paying it to the government. A portion of these funds should be treated as additional funding and existing government funding should not be reduced. This would provide a tremendous boost to well run institutions as well as an incentive to them to do better.

I also believe that the model of industrial research followed by us has not yielded the desired results. We decided that specialized labs would do industrial research. The budget of CSIR of over Rs. 1000 Crs annually exceeds the research spending of all the Universities put together. But even after 40 years and even under the able leadership of an outstanding scientist and manager like Dr Mashelkar, only 25% of the earnings of CSIR labs come from outside, 75% comes from government grants. Also, they have largely become bureaucratic places. The world over, the Universities provide a much more lively environment for research because of their academic environment and the stimulating presence of young people. We should slowly close down government labs that do not earn their keep and divert that funding to the Universities. But, only after changes in governance structures of Universities have been made. Otherwise we will continue to throw hard earned tax payers money down the drain.

I have spoken enough about our education system, let me now turn to our industry.

Indian industry in 2006 is fundamentally different from what it was till 1991. Today, it competes successfully with global players because most major world players are present in our markets. Its exports are beginning to be significant and have been increasing faster than domestic sales. It is now investing more in taking over companies abroad than is spent by foreign companies in taking over companies in India. During 9 months of this year Indian companies have spent Rs. 20,000 Crores in overseas acquisitions.

Spending on R&D by Indian companies in some sectors , though still low, is now becoming comparable to their competitors abroad. The encouraging thing in the manufacturing sector is that its not just the newer companies, but many of the older companies too have done well. This is because companies have restructured in response to the altered operating environment which has become highly competitive.

To survive, let alone prosper, Indian companies need globally competitive manpower. The gap between products and technologies of Global and Indian companies has narrowed considerably. Constant innovation, upgradation, productivity and quality improvement are now the life-blood of Indian industry.

A great deal of the still existing gap is being bridged through judicious purchase of foreign technology, but internal R&D capabilities have matured rapidly. Between 1990-91 and 2004-05 R&D spending by Indian industry grew eight fold.

Now I will look at the situation in the developed world, compare it with ours and then, depending on our priorities, evolve a viewpoint.

If we take R&D activity as an indicator of industry-academia interaction then let us see what the numbers say about the difference in the situation of the US and India. The US spends 2.5% of its GDP on R&D. We spend 1%. But industry accounts for 71% of R&D spending in the US compared to 25% in India. This is a huge difference and accounts for much of the difference in what kind of R&D gets done and with what end results.

In the US, 19% of the R&D spending is on basic research, 21% on Applied research and 60% on development. In our case 18% is on basic research, 40% on applied and 33% on development. This is natural. When R&D is done in industry its link to the market is clear and therefore it is development oriented. When its done in the Govt system the link to the market is weaker.

In the US, 60% of the basic research is done in the Universities , only 17% in industry , 14% in Non-profit research institutions and 8% in the government. This basic research in Universities is funded primarily by the government. Only 3% of it is funded by industry.

In the US, 64% of applied research and 90% of development is done by industry.

Also, in our case a great deal of R&D spend of the government, over 80%, is on defence, atomic energy and space.

The takeaway from this brief review is that the fertile ground for Industry-Academia interaction may be the middle ground of applied research, and even development, with a longer time horizon that suits the temperament and time constraints of professors, but where industry can see some clear tangible results in the foreseeable future.

Knowledge and business are intimately linked. Have always been. The closed economy that we gave ourselves till 1991 obscured this relationship. However, if one examines the winners from even the old economy companies in the country, one will find that these companies never quite forgot this relationship. In their own way, even if inadequately, they pursued it.

The way academia looks at knowledge and the way industry looks at it differ. Industry looks for knowledge to make and sell things. Make new things, make them better, make them more efficiently. It however recognises that behind technology lies science. And science works in a different rhythm from technology.

I believe both industry and academia need to learn and change to make the interaction productive for both sides. Doing always improves our learning. It is the best way to start the virtuous spiral of improvement.

It is obviously in the enlightened self-interest of educational institutions to partner industry. Interaction not only brings in money, but, I believe more importantly, keeps the faculty updated and thereby improves the quality of their teaching. Whatever the subject area, faculty who engage in research, by and large, teach better. But, a substantial change is required in the mindsets of our academia.

Educational institutions in the developed world see themselves as surviving and thriving when they attract the best teaching and student talent and when they can make themselves useful to industry. Next week a large no. of European Universities are in Delhi for A Higher Education Fair. Universities in even a small country like Austria have “a global plan of international cooperation with the Austrian industry”. I know because they have sought an appointment with me. Are our Universities in that mould ?

Let me give you an example of the kind of attitude and capability that is required of academic institutions to have a productive relationship with industry. There is an Indian wind mill company which did not go in for a joint venture with a foreign company but has developed very good links with two European universities, one for blades and another for gear boxes. The company is confident that the universities can deliver better concepts and in time, because of the quality of their people and the specialisation that exists in the universities in these areas. In dealing with our institutions one often finds this kind of institutional specialisation and commitment to delivery wanting.

It is also in the enlightened self-interest of business to support educational institutions. Because, the people that will produce the intellectual capital for industry are created in these institutions. Also, new ideas and concepts, and the freedom to pursue them, happen more in an academic environment.

Also, as sources of technology purchase reduce, IPR regimes get restrictive and the variety of intellectual inputs needed increase, Indian industry will need to engage with academia to strengthen the institutions in the first place and then involve them in industry’s R&D activities.

There are a large no. of Indians manning the US universities. Sometimes, one feels that they are running their higher education system. We must create conditions for them to engage with our higher education system. They have the capability and, more importantly, the mindset to make academia useful to industry. When I was Chairman of the Board of Governors of IIT Bombay, we persuaded the govt. to change rules such that even if the faculty abroad had taken up US citizenship they could be appointed on our faculty on a full time basis.

I believe a start can be made by allowing our faculty to take one year sabbaticals in R&D units of companies. They will understand the logic of industrial R&D, and industry would have the opportunity to assess the value of the better power of conceptualization and idea generation that academicians have.

Consultancy & licensing fees for ideas have to be institutionally facilitated with structures like Technology Parks and Incubation centres like IIT, Bombay’s SINE, Society for Innovation and Entrepreneurship. But they are less important and no substitute for the quality of faculty and the quality of their output. It is the practice of a meritocracy and cultures of excellence, as measured by delivery of output, that are more important than obeisance to fashions of the day.

I believe, at least hope, that in the years to come this relationship will strengthen and deepen. I hope Mumbai University will be a path breaker in this field. Mumbai University’s Institute of Chemical Technology has long been known for its outstanding contribution to industry.

The future, as an eminent American philosopher, John Schaar, put so well, and I quote “is not the result of choices among alternative paths offered by the present, but a place that is created- created first in mind and will, created next in activity. The future is not some place we are going to, but one we are creating. The paths to it are not found but made, and the activity of making them, changes both the maker and the destination”. We, who are in a position to influence & fashion choices, have a responsibility for better outcomes. We have to envisage and create the future.

In today’s knowledge driven economic environment, national educational strength is the basis for a nation’s economic and social prosperity. We must continually strengthen our educational institutions. Industry-academia interaction can play an important role in this process. On behalf of Indian industry I can assure you that we will not be found wanting.

Thank you, Sir.

August 23, 2006
Chairman's speech in Rajya Sabha on 23rd August,06

Speech delivered by Rahul Bajaj in the Rajya Sabha on August 23, 2006 during the discussion on suicides by farmers, specially in Vidarbha.
Thank you, Mr. Vice-Chairman, for giving me this opportunity to make my maiden speech. My family comes from Wardha and Shri Janeshwar Mishraji, who is not here, mentioned about the Ashram of Gandhiji which is Seva Gram and that is where my late grandfather Jamnalalji invited Gandhiji in the early 1930s from Sabarmati near Ahmedabad. Mr. Vice-Chairman, Sir, a lot has been said about this subject. I would try not to repeat it and one of the ways, I will do it is by concentrating on my region which is Vidarbha and which is the cotton bowl of the country. So, I will talk about cotton, Vidarbha and then, later on, a little bit about the economy and the society.

We have heard that suicides primarily are by small and marginal farmers. It is very correct. We have also heard that like any commodity, Mr. Vice-Chairman, industrial commodity, in the services sector, IT or otherwise, only way one can be sustainable and one can survive is when the selling price exceeds the total cost of production. Keeping in mind States like Maharashtra and Vidarbha where less than five percent of the land is irrigated, the chances of crop failure are obviously very high. So, if you take the cost of production of cotton in Maharashtra and Vidarbha, it is much, much higher than other places including a State like Gujarat.

Wherever a human life is lost unnaturally, it is a tragedy. But when someone takes his own life, in my view, it is a catastrophe. And yet, in recent years, we have seen thousands of farmers taking their lives with numbing regularity. What should be done? Costs have to come down or selling prices have to go up. For the time being, I would not worry about the consumer and the customer; though on onion prices, Governments have changed. But let’s leave it aside because here, we are not talking of the production of an industrial commodity, we are talking of 65 per cent of the population of this country. They are consumers as well as producers. We have heard enough that if you don’t take care of the farmer, how will India move forward? I fully share that view because we are all inter-dependent.

The Minimum Support Price for cotton in some States, has been lower than the cost of production. As Shri Arjun Senguptaji was rightly saying, MSP is fixed to ensure that a farmer, at least, gets something more than his cost – cost-plus approach. Mr. Vice-Chairman, the 2004-05 report of the Commission for Agricultural Costs and Prices estimated the cost per quintal of cotton – I won’t give too many figures, only three figures at Rs.1643 in Gujarat, Rs.2229 in Karnataka and Rs.2216 in Maharashtra. But there was naturally only one Minimum Support Price and, in that year, that was Rs.1960. Cost being above MSP does seem to explain and, at least, it is one major reason for the distress in Maharashtra and Karnataka. In Gujarat, because the cost was lower than the MSP, we have not heard of that many or, if any, suicides from there.

So, the first point I am making, Mr. Vice-Chairman, is that you can take care of debt items—and I will come to that in a moment – but all those are temporary measures of help today, tomorrow. If you are to keep selling your product, in this case, cotton, or any other agricultural product, at a price lower than the cost of production, no amount of debt can take care because ultimately, the debt has to be repaid. Ek bar maf kar denge, do bar maf kar denge, interest ko bhi chod denge, lekin paise kahan se ayenge? Chahe budgetary support yeh kam kare, bank kare, ooper se to paise nahi ayenge kyon ki yeh to tax payers ka paise hein. So, ultimately, the farmer must make a profit. Yes, I will talk a little about the private moneylender, about whom much has not been said except some passing reference by a few speakers.

I may also mention, Sir, that in 2004-05, the Maharashtra Government offered prices of around Rs.2,500/- per quintal. Very good. But, then, it became unsustainable for their budget. Sir, in 2005-06, they reduced the price to Rs.1,980/-. I have already referred to the cost of production, in Maharashtra, of cotton, which was higher than Rs. 1,980/-. And the result is for all of us to see. Of course, Sir, I cannot say to my Agriculture Minister that he has been unfair to Vidarbha and partial to Western Maharashtra! That would be a very unfair comment, Sir, because I come from Vidarbha and he comes from Western Maharashtra! But that is a fact of life. Even when we have had a Chief Minister like Vasantrao Naik, who was from Vidarbha, probably not much was done because he did not have that strength.

Private moneylenders, Sir, when do they lend money? When the banks and the cooperative societies do not lend. The marginal farmer has not paid his loans. He cannot get loans elsewhere. Also, the moneylender is not only supplying inputs. He is also now buying the output. So, he has a stranglehold on the farmer. I understand that, nowadays, they are charging as much interest as 60 per cent per annum. Sir! I think, Manohar Joshiji or someone else mentioned 30 per cent. Sometimes, they charge 60 per cent. At 60 per cent, even the best-run industrial establishment will fold. Whether he charges two per cent, four per cent or six per cent, is not the point. The question is — I don’t understand it, Sir; maybe, the Agriculture Minister will tell me — that there is the Bombay Moneylenders’ Act. 1946. Our Agriculture Minister was, probably, four years old at that time, Sir, and I was a little older! Now, that Act says that if the moneylender is not licensed, he cannot recover his loan; he cannot go to courts, and if he is licensed, the total outstanding amount cannot be more than twice the loan. And it also specifies the rate of interest. I do not know why my State Government is not taking advantage of that Act. There must be some reason for that.

Rajnathji rightly referred to the WTO. I do not want to take too much time on that. I would only say this. When we talk of market prices, we talk of normal market prices. The international cotton prices are not normal. US$4 billion dollars, Rs.18,000 crores, is the subsidy provided by the US alone to just its cotton farmers. The total subsidy for farmers by the OECD countries is US$ 350 billion. Cotton farmers get Rs.18,000 crores there. My farmer, in Vidarbha also, maybe, can compete with the American farmer, but he cannot compete with the United States Treasury. Kamal Nathji, in some other context, rightly said that he can compete with the wheat imported, or any other commodity, in the agricultural area, but he cannot compete with the subsidies which a country like the United States provides. And because of this, I come to my recommendations, Sir.

In the short-term recommendations — Mr. Arjun Sengupta said about the import duty — first of all, Sir, I am referring to the import duty on cotton which is not produced in this country. If it is not produced, nobody gets hurt. And the textile mill people are very influential people. You know, industrialist, big industrialist, not people like me, small industrialists, Arjunji. So, fine.

But when cotton is produced in this country, if we import cotton from a country which subsidises its cotton farmers, then we must have an anti-dumping duty. I don’t understand why it is not there. It would be WTO compliant.

If there are no cotton imports from such countries, fine. I am just saying, if there is cotton import, which is a subsidised variety, then I must have a countervailing duty.

Sir, why don’t we hear about suicides from Gujarat? One reason is that, obviously, 40 per cent of the land is irrigated. In Vidarbha, it is four per cent. It is important that in Gujarat farmers normally also have some other income from dairying, vegetables, etc. which they supply to the nearby industrial centres. That does not exist in Vidarbha.

Sir, I believe that the relationship between agriculture and industry is symbiotic. A prosperous agriculture develops industry and a prosperous industry develops agriculture incomes. I strongly believe that India can’t move forward, unless its farmers move forward; and the growth is only of value, when it is inclusive.

Sir, the irony of the fact is that the cotton economy in our country has good growth in demand ahead of it. The domestic market is growing and with the end of Multi-Fibre Agreement, though China has benefited quite a bit, a very large market has opened abroad for us also. Our exports of cotton clothes are growing and we have further potential to grow.

Mr. Chairman, Sir, may I suggest six short-term measures and two medium-term measures? I am not referring to the long-term measure because John Maynard Keynes said,” In the long run, we are all dead”. My six short-term measures — some of them are being implemented or will be implemented or have been announced by the Government — are: One, a one year moratorium on repayment of dept owed to private money-lenders. This has been done for six months or so by the Andhra Pradesh Government. A two-year moratorium — I am saying only a moratorium because I don’t want to start a bad example of non-payment of loans — on repayment to cooperative institutions and banks, especially, by small farmers whose holdings are below two hectares and whose loan is below Rs. 1 lakh. But the banks must step in to help such farmers. Two, Immediate disbursal of, at least, Rs. 1 lakh to the families of each farmer who has committed suicide. I don’t want this to be misused. However, if you ask ten kinds of questions like whether he has committed suicide or whether he was murdered or whether he died in an accident, he will never get this money. Three, there should be a declaration that private money-lenders and the private sector man can’t charge interest above a certain rate, whatever the Government thinks fit, I would even say 20 per cent. Four, all land transfers that have been made in the last two or three years should be reviewed, and if the cause of such land transfers was exorbitant interest rate, then it should be considered, within the laws of the country, whether that transaction can be invalidated; and, of course, the lender should be repaid his loan. Five, a review of the Minimum Support Price of cotton and the appointment of the Maharashtra Cotton Procurement Federation, in addition to the Cotton Corporation of India, as an agent to procure cotton at the MSP. Six, anti-dumping duty—I referred to it already—should be levied on cotton, if cotton, which is subsidized, is imported.

Sir, the two medium term proposals are; One, to increase irrigation in the region through irrigation schemes and villager level initiatives to conserve rain run-off. Mr. Sitaram Yechury and Shrimati Brinda Karat are not here. Two, as I said, the relationship between agriculture and industry is symbiotic. So, we must encourage industrialization in these areas.

Sir, we have 60 per cent of the population living on agriculture. America has only two per cent of its population living on agriculture and it produces more than what it needs. Today, we are employing 60 percent in agriculture. But we can’t continue to absorb 60 per cent in agriculture. It may not be two per cent. It may come down to 40 per cent or 30 per cent or 20 per cent. Where will the surplus persons go? They have to go to industry and they have to go to the service sector which are complementary to each other. So, I would suggest that we must encourage industrialization in these backward areas by providing infrastructure. This is what is required. Industry does not want fiscal incentives. In fact, that distorts our decision-making.

In Himachal and Uttaranchal, I was against extending the benefits given by three years; that distorts the situation. Even I am going there. I didn’t want to, but there are such benefits that you cannot ignore them. Sir, in these backward areas, if we provide the right infrastructure, and, my friends may not like it, a flexible labour policy – don’t give them in areas where I am already there, but only in these backward areas – then, a lot of industries will come up in these areas, and both agriculture and industry would benefit.

What we need are a few, but effective measures. In our governance, we have come to be obsessed sometimes with the form, and we are unmindful of substance. There are, for example, 29 Government Resolutions of the Maharashtra Government on Cotton as of 24th May, this year. I don’t know whether they are only on paper. I may add that someone has to be responsible to implement all these plans. Right now, everyone from PMO downwards is responsible which means, perhaps, no one is responsible. I would suggest, especially for Maharashtra, that a Cabinet Minister level or a Deputy Chief Minister level person is appointed, and this position be created in Maharashtra with the sole responsibility of improving the state of agriculture in Vidarbha. A young and a dynamic person—he is not here; otherwise, he will shout at me – Shri Praful Patel, who is considered to be one of the best Ministers in the Centre, should be given this responsibility.

Sir, since this is my maiden speech, I seek your indulgence in saying a few words to outline my broad perspective on our economy and society. We pledged at our independence to take India forward. We have taken it forward, but nowhere near as much as it can be taken, or where it was capable. The glass is still only half filled. We still have unspeakable poverty, which was referred to by Dr. Arjun Kumar Sengupta, where 28 per cent of our people, that is, 300 million people, are living on less than one dollar a day , a poverty which crushes human dignity, stalking our land. Our poor governance, in my view, has, by and large, been a drag on our development. It is the tenacious spirit of India, alive in the hearts and minds of every Indian, whether he is a worker, farmer, businessmen, entrepreneur, or, I do not know whether I should say, politician, and their spirit, hard work and entrepreneurial ability which have taken and continue to take our country forward.

I believe that we stand at a propitious moment in the history of our nation. While we acknowledge the challenges, — there are many challenges – a world or opportunity also awaits us. As you know, in the world, India is not just a flavour of the week or the month or the year. We are the flavour of the times. Previously, it was only China. Now it is China and India.

Both in the services and manufacturing sector, we are poised to gain from the developments in the world economy. We are becoming internationally competitive despite the serious handicaps of lack of infrastructure, right from social infrastructure, health, education, drinking water, sanitation and of course, physical infrastructure. The key reason, however, for my optimism, as I said, Sir, is the quality and entrepreneurship of our people. Though low as a percentage of our population, we must strive to increase this. We have the world’ largest pool of smart, hardworking manpower, be it in IT, manufacturing or finance. And, this is very important and we are conscious of it that demographically, we will remain a country of the young even in 2025. We have to ensure that we encash this demographic dividend by investing in their education and their skills. With education and skill, India will become a great country; we shall capture the world in the next 25 years. But if our youth are not educated, are not skilled, instead of becoming a great asset, they will become a great liability. Sir, we need good governance to achieve these goals of inclusive economic growth. This will come from changes at the top and pressures from below

The pressure from below will increase, as economic and social development make our people more self-assured and more articulate. The reopening of the Jessica Lall and Mattoo cases, under intense public pressure, bodes well for our democracy. Democracy is not just elections. Democracy is active participation by every citizen in the affairs of the state, and the state exists essentially to provide public goods and services to its citizens.

In this connection, in passing, Mr. Chairman, Sir,–I have no time to go into details – I would like to add that to ensure that we can take hard decisions, the Lok Sabha and all the State Assemblies should go to elections simultaneously; co-terminuously, and only once in five years. We should also ensure that a vote of no-confidence in the Leader of the House, the Chief Minister or the Prime Minister should be, like Germany, which is a democratic country, accompanied by a vote-of-confidence in an alternate party and person.

Sir, quality of leadership is crucial in determining outcomes. Leadership is not just a matter of charisma or showmanship or public relations.

But it is of understanding today, it is of envisioning a better tomorrow and having the confidence in oneself and of one’s team to make our future happen. Leaders are those that deliver better outcomes. Occupying a chair does not make us a leader.

Sir, Gandhiji occupied no chair but led the country from subjugation to freedom, striding like a colossus in our hearts and minds. We will do well, may I say so, Sir, in all humility, to remember Gandhiji’s teachings of the seven social sins – wealth without work, pleasure without conscience, education without character, commerce without morality, science without humanity, worship without sacrifice and politics without principles.

In my view, precisely, because we have ignored these teachings that we have under-achieved

In this august House, I will endeavour in all humility to play the role that the Constitution envisaged each Member to play. That is, on behalf of the people of India, hold the Government accountable. No more, no less. We have enough good laws. What we lack is speed and justice in their implementation. I would like to consider myself as representing a large political spectrum. Three of the major parties in Maharashtra supported me as an independent; and my family is steeped in the Gandhian culture, and this gives me a lot of pride. So, I will try to be even handed as an independent, with right and wrong for the country being the sole yardstick for holding an opinion, though I may be mistaken at times.

In conclusion, Sir, coming into this august House, I am conscious of my responsibilities to the nation. Panditji’s ‘Tryst with Destiny” reverberates inside my mind. I have come here to try to help in all humility redeem the pledge that was taken by our founding fathers. So, may God give me the strength to make a difference! I get a strong feeling, Sir, that I can bank on the support of both sides of this august House.

Thank you, Sir.

January 10, 2006
Chairman's speech on Taking India forward, Lecture at Delhi

TAKING INDIA FORWARD – Rahul Bajaj
SHRI LAL BAHADUR SHASTRI MEMORIAL LECTURE – DELHI : JAN 10, 2006
At the outset please accept my greetings for the New Year.

It is an honour indeed to be associated with anything to do with Shastriji. I am thankful to Shri Anill Shastri for this privilege.

Most of us remember Shastriji for how much new direction he gave the country in the short time that he was at its helm. The seeds of the Green and White revolution were sown by him. He did what is the most important role of a leader. To identify the key issues, which need to be addressed, seek outstanding men to deal with them and then give them a free hand to deliver. His cajoling C. Subramaniam to be the Agriculture Minister and giving Dr Kurien the task of taking the Amul experiment national, was the start of a process whose fruits we enjoy to this day.

The Confucian description of a big man, ” is easygoing and kindly, respectful in manner, frugal and polite”, may well have been written for Shastriji.

The relations between the Bajaj family and Shastriji were very old. As a member of the AICC, he was a frequent visitor to my hometown, Wardha, in pre-independence days. When he died, my father, Kamalnayanji, who was then a member of the Lok Sabha, wrote an obituary entitled “Lal Bahadurji is unforgettable”. In it he rightly called Shastriji “Ajatshatru”, one who has no enemies.

We will continue to remember him, especially the idea of “samanvayvad”. His life expressed the idea, and the idea expresses his life. Samanvayvad is not a concept for the weak. It does not mean accepting mediocrity or the lowest common factor or papering over differences. It is a quiet search for truth and a position that is in the larger interest of society, which steadily becomes the consensus view. It is eminently suited to a society as heterogeneous as ours. If we choose to heighten our differences we risk destroying everything.

I have chosen to speak on the theme “Taking India Forward” because that is what all of us want to happen, and are engaged in.

What should be our vision of taking India forward? First, we need to have a strong and growing economy. This is essential for redressing poverty and for our prosperity and development. This will also mean greater employment and rising per capita incomes.

Also, every Indian, whatever is his income, should have an opportunity to realise his potential. This of course requires every Indian to have gainful employment and also access to good quality education and health care facilities.

Of course, progress should not be limited to economic development. We should also move forward in the fields of education, health, other human condition indicators, culture, sports and science.

We have to dream of progress, but deal with the challenge of our realities. Our public space is usually occupied by those who only see opportunities and are oblivious of realities, and others who only perceive threats and ignore the opportunities. I belong, like most of you, to the positive realism school, conscious and driven by opportunities but mindful of ground realities.

The issues of efficiency and equity are what a nation constantly grapples with. Their dynamic balance and trade off decide the direction and pace of its movement. In my view it is efficiency that we need most today, and in it also lies the key to ensuring equity. I am conscious of the fact that ignoring equity is not an acceptable option. Markets function in a social envelope. Russia is a good example. Under Communism they focussed on equity, which undermined efficiency and hence the whole system imploded. Then, they ignored equity and the result was for all to see.

A dilemma is being played between economic and social reform today. I believe that economic reform needs support and encouragement. Because, in the final analysis, it facilitates social reform.

In other words, we face a dilemma between focussing on facilitating the strong so that they pull everyone up or mainly taking care of the weak. History tells us that the former works and the latter does not, because it is not a financially self-sustaining model. Of course the strong need to have a sense of obligation towards the weak and there should be mechanisms to recycle funds from the strong to strengthen the weak. But the horse should be in front; else we’ll hobble everyone.

Let me complete my introductory remarks with spelling out my position on globalisation. I believe that on the whole globalisation presents an opportunity for India. However, I believe that we have to protect our interests as we engage with it. Mindless globalisation is not in our interest. The situation of our agriculture, industry and service sectors; and within them of sub-sectors, varies tremendously and we have to modulate our engagement sectorally.

We have certainly entered a phase of heady growth. During 2000-05 our economic growth was second only to China. We used to think 5% growth was good. Now we are achieving 7% without much effort and under continuing constraints to growth, like poor infrastructure, especially power, continuing corruption and red tape and inflexible labor markets.

This is largely happening now despite the government. The reforms of the early 90s have freed the spirits of entrepreneurs, in both manufacturing and service sectors. Our lower manpower costs, quality of our people, large domestic market and our demographic profile are facilitating this process. Global and domestic players are catering to global markets and developing domestic markets for an astounding variety of products and services. Domestic companies now have the scale, and more importantly the confidence to compete globally and they are buying units abroad to increase their share of global markets.

I believe that this momentum is likely to continue. The sensible thing would be to facilitate it. Even if that does not happen, we will grow at 6%+ per annum. If we have the necessary wisdom & will in the political and administrative system, it can be easily 8% and be even stretched to 10%. It is important however, that the growth is inclusive, i.e. spread geographically and across sectors and income groups.

As the economy and society are moving forward, our political system seems to be moving in reverse gear. In the 90s there was positive energy emanating, even if coming from a sense of crisis. A spirit of reform was in the air. But in the last 2 years especially certainly that spark is missing. The Congress, despite having a phalanx of economic reformers, is reverting to its 70s mindset of government control and redistributing poverty, which is another word for wasting public money. The BJP, though reformist, seems caught in a time warp and is pulling levers that are unlikely to work. They are thinking in terms of Ram, Lakshman and Hanuman, forgetting that what is going on in their Parivar is Mahabharat!

I do not subscribe to the view that economic reforms are anti-people and do not ensure re-election. What we need are reforms that facilitate economic and human development based on a good understanding of what is required; not some World Bank or IMF prescription. Even the voters of Bihar have recently voted for development. We need to reflect on the meaning of the 2004 election results at the centre and in Andhra and Karnataka. But let us also remember MP and Rajasthan. I believe voters punish non-performance, not reform per-se.

Casteism and vote bank politics are economic dead ends; howsoever effective they may appear to be for re-election for a while.

Some, maybe well intentioned, but incorrect, principles have come to be the corner stones of our public discourse. Essentially, they represent a belief that political expediency is more important than economic logic. Key amongst these are:

1. Merit is not important in deciding about people
2. There are free lunches available
3. Dogmas are more important than results and
4. One can have rights without responsibilities

One can see that these will lead to disaster because they are contrary to common sense. But they are the prevailing principles of our governance.

The task of overturning these principles is not easy. Large groups now have vested interest in keeping them going. But continuing an unsatisfactory arrangement is coming in the way of our nation’s progress.

To take India forward, both political and economic reforms are necessary. Let me sketch the outlines of some key reforms that I believe are essential. I will start with political reforms because that is usually not much talked about.

I believe that unless either of the two major political parties has at least 200 plus seats and the coalition government has a majority in the Lok Sabha, the political system will continue to neglect the economy. Short term political expediency and crisis management would absorb most of the energies of the government.

The funding of elections has been one of the causes and feeders of black money and corruption.

Hence, I believe the government should provide for state funding of elections to at least reduce the evil of election funding by black money which is one of the major causes of corruption of our political system. I am glad that finally Indrajit Gupta’s report of 1998 is being dusted off and considered for this purpose and that the Election Commission is holding a meeting of all political parties to discuss this next month.

It is also necessary to change the law (if required, the constitution) to ensure that the Parliament and the Assembly elections always take place simultaneously and only at 5 year intervals.

Also, like Germany, we should amend the law so that a no-confidence motion against a Prime Minister/Chief Minister is accompanied by a motion, which supports a new Prime Minister/Chief Minister.

These changes will ensure that elections to the Parliament and the Assemblies take place at the same time and only at 5-year intervals as used to be the case from 1952 for almost 20 years. This will also save money and permit the Central and the State governments to concentrate on governance rather than prepare to fight elections almost every second year. Resorting to political expediency, if at all, will take place only once in 5 years.

There is no alternative to probity in public life. I know that it is difficult, but we must not grow cynical about this. I don’t think any of us will grudge money and effort spent on making the political system cleaner. We must severely punish those that transgress. The exemplary punishment meted out recently to MPs in the cash for questions issue bodes well.

Before I move off the subject of politics I would like to touch upon the phenomenon of regional parties, because that is related to the issue of stability at the centre. I think they have come to stay. They have essentially arisen due to the Congress Party turning imperious after Shastriji’s time and not allowing natural regional leadership to flower. Pre-independence there were stalwarts from each state. People like Pant, Chavan, Kamraj, Atulya Ghosh, Biju Patnaik etc. What we are now seeing are pre-poll alliances between national and regional parties. This can deliver stability, provided the national party is strong enough on its own. I believe national parties would do well to allow natural, strong leadership at the state level if they want to stop their own decline. We need a strong centre and strong states. We can not progress with a strong centre and weak states or with strong states and a weak centre.

On economic reform I believe the critical ones are three:

1. Provision of infrastructure
2. Reduction of wasteful expenditure by governments
3. Labor laws reform

For industry, agriculture or service sectors to function efficiently, good infrastructure is essential. The physical infrastructure in terms of power, roads, ports etc. and social infrastructure in terms of an educated, healthy people.

Our physical infrastructure, especially power, is grossly inadequate. Essentially, because of policy paralysis and financial constraints created by the application of misguided principles that I mentioned earlier.

The state electricity boards are bankrupt because power to the agriculture sector is free or is heavily subsidised and is also being stolen on a very large scale, with the connivance of their staff. For the last 15 years we have been skirting the issue. As a consequence, in Maharashtra today we suffer 2-hour power cuts in urban areas and 8-hour power cuts in rural areas. Can there be any industrial activity in non-urban areas in such a scenario? Can industry plan expansion?

The least we need to do is to privatise distribution and provide the subsidy to farmers from the budget, so that profitable investment can be made in the sector by even NTPC, let alone the private sector. On paper the Electricity Act 2003 is supposed to do this, but we have yet to see movement on the ground. In Maharashtra the government is talking of adequate power by 2012. Till then what is everyone supposed to do?

We have to move quickly on the infrastructure front. Privatise, transparently, as much as possible, as far as it does not create monopolies, and make public investment where private sector investment is not forthcoming, but hand over operations of the facility to a private operator with a track record.

Secondly, the government has to reduce the fiscal deficit by disinvestment and privatisation, reducing non-merit subsidies and by downsizing of government. There are a large no. of government departments that add little value. The money so saved should be invested in physical and social infrastructure.

The third crucial economic reform required is of our labor policy.

In an uncertain and fast changing world, any business has to be flexible. If it is not and carries legacy costs, then it finds it hard, if not impossible to remain competitive. The global stampede to manufacture in China was facilitated by flexible labor laws in that communist country.

Water finds its own level. Our inflexible labor laws for the organised sector have only resulted in a disincentive to create relatively well paying jobs in good work environments and have created lower paying jobs in the unorganised sector.

In totality, our current labor laws are anti-employment generation and protect a small minority. Flexible labor laws would be pro-labor, with appropriate safeguards and reasonable compensation for retrenchment of course. Flexible labor policy is essential to create the much-needed employment. Else, our demographic dividend in the coming decades, can turn into a demographic nightmare!

There is drastic reform required in administration as well. Though generalists have their strengths, I am one of them, development administration requires far greater specialisation than exists today. When I watch Secretaries moving between Health, Finance,

Power or Agriculture, I am horrified. In no business organisation, despite job rotation, would such senior responsibility be entrusted to anyone who has no experience in that area. Are we then to conclude that no real responsibility is entailed in these positions? God forbid! Greater specialisation, inducting experts for specialised roles and secondment to the private sector & vice-versa are some of the steps I recommend to improve the quality of our administration.

Till 1991 Industry was not allowed to expand within 25 kms of a large city and there were financial incentives to locate in backward areas. With the removal of these incentives, industrial development is getting even more concentrated, with attendant urban issues. I also believe that the key to increase in rural incomes is nearby demand from industrial employees. I do not support financial incentives for backward areas, but what should be provided proactively to attract industry is good infrastructure, which includes power, road/air/rail links, education, housing, health care facilities etc.

Civil society has to support the above changes. This means that all of us should vote and, while we vote for the party of our choice, we must vote for the right candidate. Middle class apathy to the political process should end. The performing elite of a society has to engage with their societies.

All of us, every Indian, have to work for furthering the reform process and ensure that the fruits of reform benefit all sections of our society. Entrepreneurs and the civil society especially have to coax the government into doing what is necessary even though it may not appear politically expedient to do so.

To any change there is resistance. Those that lose from the change are, unfortunately, organised and articulate, though in a minority. Those that benefit are an amorphous group – the silent majority. We should do what is in the larger national interest and should have the courage of our convictions to move ahead. I believe that the process of growth itself will create compulsions and constituencies for change.

To conclude, taking India forward is a necessary, doable and an exciting, never-ending process. In our own sphere, we can give expression to it. If more and more individuals decide to do this, economic and social change will follow. Though we have to work as a team, the individual is the centre of all change. As Shri Pandurang Shastri has said so eloquently, “you alone are the sculptor of your life”. Or, as Gandhiji said ” You must be the change you wish to see in the world.”

To achieve our legitimate place of glory in the comity of nations, we need leaders, leaders of integrity. Not just a few but thousands of such leaders, in every field. And, we know that leadership is not just charisma, not public relations, not showmanship. Leadership is performance, consistent behaviour and trust-worthiness. Leadership means that there is no substitute for excellence, no tolerance of mediocrity and no compromise with integrity.

In one of his poems Gurudev Tagore lamented “Where is India?” I work and wait for the day when we can tell his spirit “Here is India”.

Jai Hind

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February 25, 2005
Chairman's speech at India Today Conclave

Is India relevant to the Asian Century? – Rahul Bajaj
India Today Conclave New Delhi Feb 25, 2005
Questions like this one are not my forte. But now, having essentially handed over the operations of Bajaj Auto to the next generation, I can afford to do things that I feel like doing.

Positive realism. This is what I believe in and try to practice. In business you can survive only if you are positive. Moreover, in business, unlike in politics, the marketplace quickly holds you accountable for your beliefs. This discipline is a good one. Businessmen prosper if they have a realistic vision of the future. It is in this spirit of positive realism, rather than wishful thinking, that I approach the question of the Asian Century.

It is self evident that due to both demographics and its rate of economic growth, Asia will have a larger economic and political role to play in the world. Today, in pure dollar comparisons, Japan ranks 2nd, China 7th and India 12th in the world by GDP. If we correct this for purchasing power parity, then China is the 2nd largest economy, Japan the 3rd largest and India the 4th largest. So, in the top 5 economies in the world, 3 are

from Asia. What more needs to be said ? With India & China set to grow much faster than the world, and their currencies likely to appreciate over a 10 year horizon, then even in dollar terms, China and India will be among the top three economies of the world by 2020 if not earlier.

But will the 21st century be the Asian century? In my opinion, while Asia will be increasingly important economically, it might be stretching it a bit to say that this will be the Asian Century.

The creation of a powerful bloc needs clear leadership. The world’s three major economic blocs are NAFTA, EU and Asia. In NAFTA US is the undisputed leader. In EU there is a German-French axis that provides joint leadership. In Asia there has been no clear leadership, nor do conditions seem propitious for its emergence.

Asia has not been nor is likely to be a monolithic entity. There are at least three, if not more, poles. China, Japan and India for sure. ASEAN and South Korea have a balancing role to play. We may well see a united Korea, sooner than later. And these poles are looking in different

directions. Then there is the not so invisible hand in Asia of the US.

Japan has traditionally not acted as an Asian country or a leader of Asia. It has been too concerned with gaining and maintaining its developed country status, secure under the United States umbrella. Its WWII record makes dealing with Asia difficult.

India’s self-image and acceptance of its leadership by other countries in the region are at variance. The only countries we have not had problems with in the neighbourhood are Bhutan & Maldives.

That leaves China to don the leadership mantle, which it well may. But India & Japan will not acquiesce to this easily. In this they would be ably supported by the US. For it is in US interest to keep Asia divided, as it was in US interest to unite Western Europe. Also, China is likely to continue to adopt aggressive economic and military postures in the region. It sees itself as the equivalent of the US in Asia.
Furthermore, besides the lack of political and social underpinnings, Asia lacks even economic underpinnings. The route to Asia’s stomach is via the US. The economic growth in Japan, ASEAN & China has been and is fuelled by exports to the US and investments by US companies. The US is also India’s largest trading partner and Indian IT and ITES industry are on a US umbilical cord.

Only 23% of ASEAN’s trade is among ASEAN countries. Contrast that with 62% of EU trade being intra-EU. Asean exports to the US still exceed their intra-ASEAN exports.

But the structure of trade within Asia is changing. China today imports more from Asia than does Japan. Thus, looking ahead it appears that China will become the economic hub of Asia. But, will it be a new kind of coloniser, importing raw materials and sending back finished goods?

A recent study by the National Bureau of Economic Research of the US concludes that China is on the whole likely to impact negatively the economies of all countries in Asia other than Japan & South Korea.
Thus, Asia is unlikely to challenge the US-EU duopoly in the political or economic spheres. There may be opportunistic, shifting alliances between US, China, Japan, India & Russia in various combinations on different issues.

May be you have heard this one, but it is worth retelling. A Japanese is boasting to an American about the coming Asian Century. The American begs to differ. Why? asks the Japanese. Because our Asians are better than your Asians, replies the American!

So, I would like to rephrase the proposition from ‘Is India relevant to the Asian century’ to ‘Is India relevant to developments in Asia’. And my response to this is yes; India will be very relevant to the future of Asia.

This could not have been said even 10 years ago. Then, discussions of Asia excluded India. It was East Asia they meant and that included ASEAN, China, Taiwan, S Korea and Japan. Now the focus is on China, Japan & India, in that order. ASEAN, S Korea & Taiwan are on the sidelines. This change has occurred because of

the growth of the Indian economy due to liberalisation. And, the resultant response of entrepreneurs, both domestic and foreign, and the growing competitiveness of Indian business. The ASEAN meltdown in 1997 has also contributed to this reassessment. There is also a realisation within ASEAN, spearheaded by the astute Singaporean leadership, that they need an economic and political foil to China.

There are two dimensions to the future of Asia. First is the economic development of Asia. Second is the geopolitical one of what China will do with its economic and therefore political & military power, and how will the US, Japan, India and ASEAN countries react to it. Obviously, the two aspects are inter-related.

Despite its continuing investments in China, the US appears to be changing its view of China, from being a strategic partner in the Clinton years to being a strategic competitor. The US-China Economic and Security Review Commission in its recent report to the US Congress states, and I quote,” a number of current trends in the US-China relations have

negative implications for our long-term economic and national security interests.” Unquote.

The US seems to want to build a coalition in Asia as a counter to China. This would include Japan, South Korea (the two countries with whom the US has security pacts), some ASEAN members and perhaps India.

In my view India would do well to stay out of this great power game. This will be more in our interests. But this calls for Bismarckian finesse – To play one’s hand beyond it’s potential and keep winning.

We seem to believe that we do not have a seat on the High table. But, we could be holding the balance in Asia, between US-Japan on the one side and China on the other.

We should be following a “friends with everyone” policy, even though strategically our interests may lie more with the US-Japan axis than with China.

The starting point has to be the realisation that East Asia needs us as much if not more than we need East Asia. That will result in a more confident approach to East Asia rather than the current one.

In the economic sphere, our self-doubt has led to unnecessary FTAs with ASEAN wherein we stand to gain little, but may create avoidable difficulties for Indian business. A FTA with China is on the cards, with a Joint Working Group already set up. I have reservations whether this will be in the interest of Indian industry & economy.

Both the US and China are likely to use the Pakistan card to keep us in check. This is why it is very important for us and Pakistan to move forward with the process of rapprochement, difficult though it may be.

If we want to be relevant in Asia we have to be a practitioner of sophisticated realpolitik. This means confident, aggressive and yet flexible response to developments. Not the hesitation and moral squeamishness we sometimes exhibit.

This does not mean unprincipled behavior; however, it does mean having the courage to keep principles aside for some time if they are a long-term impediment to the furtherance of our national interests.

Deepening economic relations are an important component of world relations today. A country is an ally if it sees economic benefits in the relationship. Economic benefits between countries largely happen through investments by companies and import of goods from a country. This is especially beneficial to a country when its domestic companies engage in it. When Tatas plan an investment in Bangladesh, India benefits in political terms also, not when Ford does it, even if it is through its Indian subsidiary. This is why strengthening domestic companies is important. Fortunately, many large companies in India are increasing their global orientation.

As long as we keep strengthening the domestic economy and companies and keep pursuing a policy of enlightened self-interest, our relevance in the world, let alone Asia, will keep increasing. We are one of the few countries in the World with

which people have affinity. Our soft power of civilisation, an inherent tolerance of diversity, democracy, even bollywood, have been around for some time. We have to marry them to the hard economic power that unfortunately the world today respects more than anything else. For this we need outstanding and astute political leadership, a supportive business environment and a very strong partnership between the government and business.

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December 29, 2004
Chairman's speech at Symbiosis Convocation

Symbiosis Convocation – Address by Rahul Bajaj
Symbiosis : Pune December 29, 2004

Dr.Mujumdar, General Tutakne, Shri Baswan & friends,

It is a pleasure to be here today. Symbiosis has been a pioneering educational institution, not only in Pune but in the country.

Sam Pitroda is a ‘can do’ man. He is a rare combination, who can not only conjure the big picture but execute it flawlessly. A great mix of technical and managerial ability and with a passion, a zest for making big changes real. He did it with C-DOT, and he did it most memorably at the Telecom Commission. He has been at it ever since.

Sam is an exemplar for all of us. He is even more of an exemplar to the NRI fraternity. Indians can seek their fortunes anywhere. But they must honor their obligation to their motherland and use their skills and resources to make a mark on it, in some way or the other. As you may have learnt, Sam, has recently agreed to head the CII initiative to harness the US NRI power for nation building.

He has also the rare distinction of not resting on his laurels but continuously applying himself to newer tasks. It is very tempting in our undemanding public life to achieve something and then rest on one’s oars. So, I congratulate Symbiosis for choosing to honor him. For he indeed is an honorable man.

I would like to take this opportunity to reflect on the state of higher education in our country. My relationship with education is not very deep. However, the Bajaj group has been involved with an institution called the Shiksha Mandal at my home town, Wardha since 1930s. Shiksha Mandal of which I am the President runs a number of higher educational institutions in Central India. Two years ago the Government appointed me the Chairman of the Board of Governors of IIT Bombay. I have also been involved with the setting up and running of the Indian School of Business at Hyderabad.

We all know that education is very important, especially in a developing country. For it is the way to social & economic mobility for the individual. And it is the way to leverage the inherent cost advantage of our industry. Let me explain.

In a developed country, good quality education, at least at school level, if not at the university level, is available to every one irrespective of the income of his or her parents or location, i.e. rural or urban. This is not the case in countries like ours. The average person in our country does not have the income to pay the true or the full cost of education. Neither does our state have the resources, financial and human, to provide quality education.

Since independence, India pursued a policy of making education, including higher education, more accessible to its citizens at reasonable cost. In fact, primary education and general purpose higher education, including at IITs, have been heavily subsidized. Concomitantly, a large expansion, especially of higher education has taken place. One can question & rightly so the quality, but it is undeniable that access to higher education has improved. That we now have a BPO boom is partly the result of there being so many educated people with at least the ability to speak English.

There are so many entrepreneurs, including Narayanmurthy of Infosys and even Dr. Pitroda who have benefited from our public education system.

Therefore, education has become the mechanism for social & economic mobility & this hope & reality of mobility upward mobility has been an important reason for social peace in our society. Where people see hope for betterment, peace & development ensue.

Industry is another name for value addition. Value addition comes ultimately out of the quality of our people. The quality of equipment matters, but we need trained, motivated people to run the equipment the machines. Moreover, today’s market place is extremely competitive & dynamic. Now it matters much more that we can continuously conceive of newer, better products, efficiently design & manufacture them & constantly improve their quality & productivity. So, the role and the importance of the quality of manpower has increased tremendously in the last 10-15 years & this can only increase further. Every industry is knowledge based. The newer industries like IT, Biotechnology, even more so.

Thus, there is a symbiotic relationship between education and industry. It is in the enlightened self- interest of industry to support educational institutions. Because the social capital that produces the intellectual capital for industry is created in these institutions.

We have to ensure that the quality of education improves in itself & also that there is a better match between industry’s requirements & outputs of the education sector. I must re-emphasize these twin objectives of education. As an end in itself & as a trainer of manpower. We all know of the famous Socratic retort of giving the man who wanted to know the benefit of education a penny. Also, as change accelerates, what we want from education is not only a fixed body of knowledge but the desire and ability to think and learn. But we all have to also earn our living & for that we need to be useful to someone. So, there is a need for a balance between these two objectives.

Our current education system is in a crisis. Other than at miniscule number of institutions, the quality of education being provided is pathetic. From schools to universities. Rote learning, tuition classes, poor quality of teachers due to poor remuneration, reservations & an anti-merit & pro-politicking culture in our educational institutions; spread of education as a business, the comatose state of the government education system, especially at the school level, and the incoherence between the needs of industry & the curriculum etc. I was happy to hear the views of Mr. Baswan & fully share the views he expressed.

Last week ranking of the top 500 universities in the world was released. We had only 3 universities, Indian Institute of Science, IIT- Kharagpur & University of Calcutta in this list. Tiny Israel had 6 universities figuring in this list. China had 8. This should make us sit up & do some soul searching. We must learn to look at the mirror & see ourselves as we are & not be seduced by our own make believe hype. This is the only sustainable way to make real progress. I am a proud Punekar but when people talk of Pune being the Oxford of the east, I don’t know whether to laugh or cry!

If we are still producing good manpower, it is almost in spite of the system and not because of it. Strong financial & emotional support within families for education is possibly the core reason, apart from the innate intelligence of us Indians.

In my view, there are at least five critical weaknesses in our education system. First, is the declining quality of our teachers. Second, we are allowing far too many-disinterested student into higher education. We should consider only admitting students with, say a first class to colleges & universities. Third, our education system lacks vocational focus & opportunities. Fourth, we have too little of practical work to internalize the overdose of theory & fifth, there is too little teamwork. All study & its evaluation is based on individual effort.

When the person enters industry his world is turned upside down. He is judged on the results that he can deliver rather than the theory he can spout. Also, most work & therefore its assessment is done as a team. Hence, there is a need to make appropriate changes in our educational system.

In this globalized world talent is in short supply & people & organization will find it from wherever they can. I believe we should look at this as an opportunity & improve our education system & standards so that our people can access opportunities worldwide, which they have been doing till now, as much by default as by design.

Now, thanks to the IT industry, the world has discovered Indian talent. The offshoring revolution has added a very welcome dimension by making available well paid jobs in India.

In the long run it does not matter all that much whether a person goes abroad or stays back. It is more important that he keeps adding value to himself. The historical experience is that as an economy develops, its diaspora start returning & creating higher technology jobs in the mother country. This is what happened to South Korea & has now begun to happen to India & China. It is not for nothing that Bangalore now competes with Silicon Valley for US Venture capital funding.

To the best of my knowledge, India has not yet offered to open up higher education under the General Agreement on Trade in Services, currently under negotiation at the WTO. We should welcome well known foreign universities setting up base in India. It will upgrade the quality of education in the country. It is also our experience that if the existing institutions are well managed then with global competition they improve further & stand their ground, simply because of significantly lower costs & excellent human resources. Thus, IIMs have not been dented by ISB. The quality of service at nationalized banks has improved, as has the competitiveness of our manufacturing sector, with the onset of competition. So is the case in the civil aviation & telecom sectors. So, we should welcome competition in the education sector also, as it will improve the quality of our education.

In the last 20 years we have seen a significant change in the higher education scenario in the country. The privately managed educational institution has become a reality. I am sure we will see equally rapid change hereafter. This time around quality of the education imparted will be hopefully the key area of change. I hope that Symbiosis will be a leader in this direction.

I am very positive about the future of India, Indian industry & Indians. But things don’t happen just out of destiny. They happen through vision, the will to make this vision a reality & an accurate understanding of reality especially if one wants to change it. To all students gathered here today my best wishes. An exciting journey lies ahead of you. Think big & don’t lose heart from the inevitable roadblocks. Each of you will be a leader of our country tomorrow – Please remember that LEADERSHIP means

There is No substitute for Excellence,
No tolerance of mediocrity
And No compromise with integrity

The future, my friends, is in our hands. Let us together make the future happen.

Once again I congratulate Sam Pitroda & Symbiosis and convey my best wishes to both for their future growth in the service of our great country.

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December 15, 2004
Chairman's speech at BMA Golden Jubilee Lecture

Competing with the best in the world – Rahul Bajaj
BMA Golden Jubilee Lecture : Mumbai December 15, 2004

Friends,

I am honored by BMA’s invitation to deliver the BMA Golden Jubilee Lecture. I still cannot fathom their choice. Especially, when they had got Peter Drucker for the Silver Jubilee lecture. I am no management guru, just a fighter in the trenches. I can only share with you some perspectives and insights gained in the course of fighting the perennial war in the market place.

Quality of management is the key variable in determining outcomes. Management has to be learnt and relearnt from the crucible of experience. The Bombay Management Association has done pioneering work in this sharing of experience to upgrade the managerial quality of its members.

But managerial quality is not a question merely of professional savvy but also of the strength of character and depth of commitment of those with management responsibilities. The capitalist system functions on self interest and even greed; but can only be sustained if its captains are not greedy, else we get an Enron.

Competing with the best in the world is the theme chosen for today. It is both a necessity and an enormous opportunity. For we live in the brave new world of open economies. There are aspects of this process that are within the realm of the company and those that concern its broader operating environment. Our focus as businessmen has to be on our micro world but we cannot be oblivious to the macro world. Inefficiencies of infrastructure, red tape and corruption and labor policy have a signal impact on our operations and competitiveness. So, I will towards the end of my talk briefly touch up on them.

My remarks are restricted to manufacturing, as this is what I understand and where I believe tremendous potential lies, in spite of Mr. Stephen Roach’s (of Morgan Stanley’s) reservations on the issue. Our friends in the services sector, especially in the Information Technology sector, are doing a wonderful job. Though I believe they will also have their share of challenges.

Most, if not all of us, are already competing with the best in the world, directly or indirectly. Directly when we make a product for the consumer. Indirectly, when we produce a product for someone who makes a product for the consumer.

The Indian market started opening up in the mid 80s, a process that accelerated after 1991. We opened up completely in 2001, when quantitative restrictions were lifted.

Of the top hundred companies in the country today, 83 companies were already in existence in 1980. This speaks of the essential strength, resilience and competitiveness of Indian companies.

There is no major product or brand that is not there in the Indian market. Therefore, we all are already competing with the best in the world. The real issue is how can we do better and win a larger market share?

Exports from Indian manufacturing companies have been rising significantly. A number of companies like Ranbaxy, Bharat Forge, Sundaram Fastners now have over 40% of sales from exports. That shows what is possible. We are beginning to see Indian companies setting up facilities or acquiring companies abroad. This is a sign of the seriousness of their intent and confidence and augurs well.

In the last decade, globalisation has increased in its scope and intensity. This process will accelerate. Today, any seller from any corner of the world, can hope to make his product or service available to any other corner of the world. Conversely, every buyer is seeking the lowest cost, best quality source in the world. Barriers of quotas, tariffs, transportation costs, channels etc. have fallen significantly and can only fall further. The WTO Doha Development round under negotiation, the Free Trade & Regional Trade Agreements and the unilateral liberalisation occurring in a large number of countries including India will ensure this.

To a country with lower manpower costs, for both skilled and unskilled manpower, like ours, this represents a huge opportunity. If our results have not been as dramatic as China’s, we have only ourselves to blame, both the entrepreneurs and the government , in not responding better to this situation.

During the last decade Indian industry has gone from exuberance at the opening up of the Indian economy, to being shocked by the fierceness of competition, to finding its feet. Not everyone survived and new entrepreneurs came in. I think in the last 2-3 years, the results of restructuring of Indian industry are becoming apparent. This is why despite everything , industry is growing, investing more, exporting more. Hence, I am very optimistic about the future.

What does it take to compete with the best ?

It is of-course a multifaceted process but I believe its core has to do with people and change. With leadership, culture, innovation and organisation development.

Foremost, we must believe in ourselves. As I said a few days ago, the MNCs that we compete with are run by mortals like us and not by supermen. Of course they have a lot going for them; size, reach, technology, brand. But, we too have things going for us; the large Indian market and our better understanding of it, a fundamentally lower cost structure, excellent human resources, and the natural pride of a free people.

The battle is first fought and won in the mind. As is said , “Jo dar gaya, woh mar gaya”. One may fight and still lose; but the very process of fighting creates its own opportunities. On the balance, I believe we have seen and will increasingly see many more winners than losers amongst Indian companies.

It is equally critical to have a global mindset. We may not enter all global markets immediately, but we must instinctively view our options and decisions in a global perspective. Are the product and process we are contemplating, globally competitive and appropriate? For, barring exceptions, the product and process that have worked in the developed world will lap our shores as well, may be with a time lag. Perhaps, not in exactly the same form but modified to suit our requirements and our income patterns.

In most Indian businesses we should ensure that our position in the domestic market is well defended. 88% of the output of Indian manufacturing sector goes to the domestic market. Its exports have risen sharply, from 7% in 1997 to 12% in 2003, but still constitute the tail. We must have an attacking intent, but should first make sure our defences are sound.

Having fortified our defences, we should aggressively seek markets abroad. For expanding our size; for facing the full blast of global competition, to be better prepared in our domestic market, and in taking our challenge to the turf of our competitors.

A corollary to this process of globalisation is the increasing speed of change. We successfully sold the Bajaj Chetak Scooter for 20 years. Now, if we sell a model unchanged for 3 years, its an exception. Change in markets is continuous. Any advantage one can wrest is only temporary.

Therefore, companies have to be proactive and ceaselessly reinvent themselves, their products and processes. For this they need scale and financial resources. But more importantly, they need an ambitious, can do leadership and world class talent. Capital can be got, so also most technology. What has to come from within the company, however, is leadership, a world-class core team and a motivated workforce.

In the world of industry certainly, but increasingly in most fields, there is only so much that an individual, however gifted, can do. But there is nothing that a team cannot achieve. An organisation which excels in teamwork is the darling of its customers and a terror to its competitors. When looking for people for his company, EDS, Ross Perrot explained his criteria for selection, ‘I want people who love to win. And if I can’t have them, then I want the ones who hate to lose’.

In business one has to simultaneously work on the present and the future. On current productivity as also on innovation. There are few if any given long term comparative advantages. One can only work towards competitive advantage; wherein one’s products and costs remain continually attractive and competitive.

The companies that are winning are those that are focussed. We are all competing with larger and more organised players. The R&D expenditure of Honda on Motorcycles of USD 670 Mn is almost 70% of the turnover of Bajaj Auto; and even by world standards, we are not a small company. So, we have to focus our limited resources on a few carefully chosen goals.

Though one has to guard against the vision thing becoming wishful thinking, in today’s world a positive dissatisfaction, which means a hunger to improve, is essential. We must not become smug or self satisfied. There are always higher mountains out there to challenge our will. Hence, we must be accurate self-critics as well. A paradox ? Solving paradoxes and squaring circles are essential tasks of management.

Those that are winning this race for the world seem to share some characteristics:
1.They are good judges of what are the key drivers of value for the company and focus on them. At the same time they sense and respond to environmental changes quickly.
2.They have a bias for action. They learn fast.
3. They are obsessive about the customer. They use customer insight to build winning products and then sell and service them flawlessly, to create highly satisfied customers.
4. There is something unique about them; and they leverage this uniqueness.

We have to manage more things, more precisely and with narrower margins for error.

Business has to gun for growth. In an open economy any business has to be globally competitive. And size is important for, in global terms, most of us are Davids fighting Goliaths. Any Indian company not growing by double digits per year is skating on thin ice. While our cost positions are intrinsically competitive, we have catching up to do on products, quality, productivity, speed, and, most importantly, the mindset and the capability to continually upgrade in line with market requirements.

As Semon Knudsen, who was President of Ford before Iacocca said ” In business, the competition will bite you if you keep running; if you stand still they will swallow you.”

Even at the risk of a digression I would narrate a Knudsen story. His father, an immigrant from Denmark, was the President of General Motors in the 1930s. When Semon was 14 his father presented him a disassembled car. Semon had to assemble it to drive it, and he did so. That’s what a car nut is like; I admire those who are nuts about what they produce and sell.

One must be nuts about the business one is in, not only to successfully compete with the best, but better still to enjoy himself thoroughly. Competing is no good if it is an anxiety driven process, but is fun if it is a ‘thrill of achievement’ driven process. The management’s role is to make it a thrilling process, while bringing some discipline into it.

There has to be a competitive urgency, a penchant for action, a fire in the belly & a hunger for success, in the organisation. And this comes when performance is rewarded not pedigree. When listening, especially to employees and the market, is emphasised more than talking.

High ethical standards are an end in themselves. But I believe they will increasingly also become critical ingredients of corporate success. No self-respecting individual likes to work for an unethical organisation. And the organisations that we are talking about; consumer centric, alert to outside forces and stretching to deliver, are created and sustained by self confident and self respecting individuals. Large organisations cannot be managed by command & control. They require values to lead and motivate each employee as he or she handles the daily dilemmas of business.

Each company is a unique entity as is each individual. Its physical and human assets have to be used and developed keeping this uniqueness in mind. The culture of the company has to be articulated to reflect its uniqueness. For, it is the culture, a mixture of facts and myths, that guides every individual in the company. Human systems depend on emotional capital. Cultures are mechanisms to create and sustain that capital.

In company after company, be it the Tatas or Honda, one notices the power of culture. Sustaining & reinvigorating its culture is the key task for a large organisation. Do our people enjoy coming to work ? Do they have affection and respect for the management? Is there a positive energy flowing in our organisation ? Is performance perceived to be the basis for advancement in the company ? Is the customer the centre of activity in our company? Do our stakeholders think we are fair, and are they satisfied with the relationship?

At Bajaj Auto we are proud of our Indianness and our legacy. We are comfortable in our simplicity. We are focussed on volumes and reliability. We try to be fair with whosoever we deal with. This is why “Hamara Bajaj” resonates with varied stakeholders; be they vendors, employees, shareholders, dealers or customers.

But a company has to change with the times, not really its essence, but its expression. There is a new leadership at Bajaj Auto and it is taking the company forward by building on this culture but also daring to be different. A faster, more youthful culture.

I am saying this essentially to illustrate the power of culture in relation with something I know well. At Bajaj Auto we are clear that we have a tough task ahead and many failings. But we cherish the challenge.

A word about family management. Of the 100 private sector companies in India with market capitalisation of over Rs. 1,000 Crores, in my assessment about 75 are family managed, 18 are subsidiaries of MNCs and 7 are managed by professionals. One can quibble about the numbers, but the overwhelming fact is of family management. Of course, the only relevant dimension is whether a company is well managed or not. But we will be deluding ourselves if we ignore the family dimension.

Internationally as well, family management has not vanished even in large companies. In the auto sector, Toyota, Ford, Fiat, Peugeot, BMW or almost half of the top 10 companies have significant family ownership and/or management involvement.

In the last decade, there has been a move away from the simplistic “professionals good, family managements bad ” cliché. This has been partly due to misconduct by professionals in Enron, Tyco etc. Even legends like Jack Welch have been found lacking discretion. It is also because family managements bring some valuable things to the company. First, a deep commitment to the company. They are not in a hurry to make money from the company. Secondly, they are able to take a long term view of the company, because quarterly results do not materially affect them. Their shareholding is for keeps and not for trading. Thirdly, there is much less jockeying within their companies. Relationships are stable.

At the same time, there are also higher chances of things going wrong in family companies. Errors of the owner CEO cannot be corrected easily. Also, over generations, the chances of failure increase since positions are not always hard earned, based on performance. The new generation sometimes tends to feel insecure about their capability and are thin skinned about criticism. Add to that differences within families, typically between brothers. I know from personal experience! This is possibly why the life cycle of a family firm is said to be three generations.

So, training of successors and the planning of succession is extremely important. Separating ownership from management where possible and a clear division of equity holding and management control of different companies, while the head of the family is around, seems to be the best way of avoiding messy squabbles later.

As companies get larger, and specially if there are not many capable family members, family controlled and not family managed may be the way forward, as is happening in some large companies. What is important for the management, whether family or professional, is to ensure that the principles of good corporate governance and interests of minority shareholders are kept in mind. Only family businesses that treat the interest of the company as distinct and higher than their family interests are likely to succeed.

Let me now come to what we expect from government.

Reform is not a favor that the Central and State governments do to the economy and business. It is largely the unraveling of a host of mistakes made by successive governments.

To increase the tempo of growth we need a reformist government. Reformist by conviction, not because of circumstances. The world today needs alert, ethical and responsive governance.

At the root, the notion of government as mai-baap has to go, because this is not true. It is taxpayer’s money they are handling, not their own. Government is there only to provide services and to regulate, not control, the market. If we accept this premise, which I believe most thinking citizens do, then the agenda for the government becomes obvious. A complete overhaul of the principles and practice of law & administration is required. We cannot be globally competitive if we suffer from poor governance.

Hence,

  1. We must speak frankly and clearly to the government about what needs to be done in the national interest. Fiscal balance, better infrastructure, less red tape & corruption, a flexible labor policy, companies that create wealth and employment, are in the national interest. It is the government’s role to provide a conducive and stable macro and political environment, and to create rules and incentives that encourage productivity growth and keep improving on these. We should never tire of telling the government these facts of life.
  2. We must oppose hare brained government ideas that distort markets and harm competitiveness. Be they reservation in the private sector or non-merit subsidies. We must fight such ideas with all our might, while being sensitive to the genuine concerns of the poor and the government.
  3. We must proactively provide to the government, information and substantial inputs, for policy making. I have found often that governments at the centre and the states are quite open to sensible proposals provided someone tells them! Often business wakes up after something inappropriate has been done. Then, correcting that is more difficult, because procedures and egos come into the picture.

All of us want the rampant poverty and human miseries that exist in our country to be removed through economic and social development. Productive, gainful employment is the foundation of economic and social progress. Indian industry, the manufacturing and service sectors, have played a yeoman’s role in the past and have an even bigger role to play in the future.

As Shaw put it in “Man & Superman”, all progress depends on the unreasonable man. Competing with the best in the world is a formidable, never ending task. But it is an opportunity and a challenge to the will, which unreasonable men will enjoy.

Friends, these are challenging times. Exciting times. The rewards for those who get it right will be enormous. But let us remember, when we go out and compete with the best, we not only bat for our companies, we bat for our country. We redefine what an Indian is, what India is. We set in motion a ripple of prosperity that travels far. We light a lamp, whose light and warmth light other lamps, starting an endless chain of joy. This is our privilege. This is our responsibility. The future, ladies and gentlemen, is in our hands ! Let us make it happen!

Click here to download Chairman’s Speech in pdf format.

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