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Monday, October 4, 2010

Preparing for India's Future by Arun Shourie

Mr. Arun Shourie an eminent Indian journalist, author, intellectual and politician was one of the prominent speakers at Vista 2010-11, the premiere business festival of IIM Bangalore. He has been an economist with the World Bank, a consultant to the Planning Commission, India, editor of the Indian Express and Times of India and a minister in the government of India.

Here is a personal excerpt from the speech he delivered on "Preparing for India's Future: Challenges & Opportunities"

The session started of with the Director of IIMB, Prof. Pankaj Chandra reassuring that India is diverse not only in terms of culture or religion, but more in terms of the skills she posses. Indeed, we are doing well economically and socially.

Shourie started his talk by emphasizing that India is in a good position and continuously improving its hold on the world economy. The sad part is that we ourselves are underestimating the capabilities of India. Comparing India with China, he mentioned that the major differences are in the Gross Domestic Savings(China ~40% and India ~25% of GDP) and Gross Domestic Investment(China ~40% and India ~38%); India improving in the latter front. This is a good sign.

We are moving from a services base to a manufacturing base. We are reinventing manufacturing with the help from the bright Indian Entrepreneurs(Eg: Bharat Forge, Tatas) and Shourie expects soon India will be the center of manufacturing factories overtaking China. Within services sector also, we are improving in all the fronts. India is now becoming the hub for product design, tele medicine, legal services and you name it, we are!

Many view India as having so many problems, however in Shourie's opinion problems means equal number of opportunities too. Unless we grow deeply across lines and sustain the same, Indian economy will not prosper and become powerful. In Shourie's words, the two great challenges India is facing now are:

1) Creating a resilient society
2) Scaffolding of states in turmoil

and the important thing is the reforms needs to be designed and coming from the former ones. It has to come from the majority of the population - middle class and educated ones.
Mr. Shourie noted that technology plays an important role in leading our future and innovation. He cited examples like tele medicine(country's best doctors diagnosing patients even in the internals of villages) and education. He pointed out that no nation will now be easily ready to give India high technology for any cost since they see us as competitors. So what is the solution? - INNOVATION

Later, he discussed about how to achieve inclusive growth. He mocked that now this word has become a cliche with some examples. According to him, not all opportunities may be attractive to all; it differs from people to people, place to place. He quoted from a Morgan Stanley report that growth in wealth of a nation incurs from (a) Equity (b) Property ownership and (c) Gold price. In India, only 7% holds equity and only 47% live in pakka houses. Mr Shourie noted that initial endowment matters, but what matters more is a good governance.

In India, organization of the society is broad. Small proportion of labor is highly unionized, some have aristocracy, some do not even have access to designated minimum wages. What results is skewed outcomes! As an example Shourie pointed out that, there are no shortages in the schemes for poor in India, the problem lies in the fact that there are so many of them to handle. According to him, some of the suggestions for inclusive growth are:

1) Instead of schemes, go for direct cash transactions. He mentioned that UID is a very good initiative.
2) Individual must be the unit of state policy and must be done by objective secular culture; must be identified through parameters like income level or education level of parents.
3) Target those inequalities which are impeding access to opportunities like malnutrition and education.
4) Don't kill growth solve inequality. Lift the base.
5) Maximize and distribute growth
6) Attend to extreme adversities (Eg: Farmer suicides; the loan amounts of some of them are ridiculously low)

The key factor that we can make use of in improving the rural infrastructure is technology. He also noted that we its a demanding one to improve the skills of labor. Overall we need to improve the governance. According to him, the present format of constitution is not optimal for a population of more than a billion. We have to change this. Before recruiting even a peon in an organization, we take rounds of interviews, where as 60% of those who are ruling us are illiterate! People who are worthy never get a chance to dirty their hands. This is another difference of India from that in China. Changing this is our biggest challenge. And Mr.Shourie suggested some of his opinions on how we can go about with this:

1) Excel in our profession
2) Lobby for excellence in society
3) Do not compromise on our values and never rationalize our compromises
4) Apart from our profession, take one institution for social issue and be an expert on it
5) Change the nexus that business can manipulate Government and civil servants for its own vice

Mr. Arun Shourie was the first personality to see in person after coming to IIMB (Yeah, I saw already Mr. Harsh Manglik ;) but still...). Overall it was a nice talk, however didn't like some instances where he behaved like a typical politician :)

ps: This is a personal excerpt based on individual understanding of the speech delivered. The opinions mentioned in the post may or may not be the ones the speaker intended to.

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