India is a developing country but a huge economic divide poses a major challenge to its growth. The gap between the have's and the have's not is widening continously but solution to the problem can't be seen in the near future. NDTV's
Prannoy Roy talked to Infosys founder
Narayana Murthy , Biocon CEO
Kiran Majumdar Shaw and Anu Aga to look for solution to this issue and throw light on others, which impede growth of the Indian economy. Here is the full transcript of the conversation.
Prannoy Roy: Hello and welcome. I tell you, it’s just a great, great pleasure to have the most wonderful panel of, I was going to say gentlemen, but only one gentleman fortunately, people who I really admire and we are, all of us here at IIM Bangalore, where the campus, and I can tell you, we’ll try and show some shots, one of the most beautiful campus I have seen from around the world, and I have been to many campuses in many countries in the world, and let me tell you this is world-class campus and, of course, students are world class or not?
Audience: Yes.
Prannoy Roy: Anybody willing to say no; Murthy, brighter than us?
Narayana Murthy: Oh, there is no doubt about that.
Prannoy Roy: That is a bit of a problem.
Narayana Murthy: I think this is the way it should be, because each generation should be smarter than the previous one.
Prannoy Roy: So, but you are going to have tough questions from them.
Narayana Murthy: Well I am quite prepared to be seen as stupid so …
Prannoy Roy: Okay, let’s get on with the broad topic that we are going to discuss, where is our country going? The economy, the Budget is just coming, what would you like to see in this Budget? But first I know I'd like to ask you and then take questions from all of you on the broad issue of, is this Budget only about the middle class and taxes and exemption rates and rich? Or is there more in our economy, in our growth that we should be focusing on?
Anu Aga: I do hope that we are not focusing on people like us here, and if we see there is a real two India’s. There is one with wealth and power and the other without opportunities, facing a blank wall and growing despair. And I think this is not sustainable if our economic growth does not touch the poor, social stability in the longer run will not be there. So I think this is unhealthy, so I hope we don’t. Or if we focus, it’s for tokenism or for votes. We do, do a lot of things for votes, wrong things, like subsidies which has not helped really, because after so many years, I’ll give you just a few examples, malnourishment has not gone down from 1996 to 2011, our hunger index has worsened if you see.
Prannoy Roy: But I'd just like to ask you on that particular point and bring Murthy also in and Kiran, on that particular point. Therefore are you saying Murthy we should not be focusing on growth and only focus on malnutrition?
Narayana Murthy: No, no I don’t think these two are zero-sum things. We have to focus on growth, we have to focus on social equity and justice and inclusivity, but these two primarily belong to two different plain arenas. Growth by and large comes from the private sector, by and large in most countries. On the other hand, equity, fairness and justice, they come from public governance systems. So while I agree with Anu one hundred percent that we have to make sure that the poorer section of the society also benefit from all of this, the task is the responsibility primarily of the public governance system, and therefore we have to do whatever is necessary to ensure that the efficiency and the effectiveness, the transparency, the fairness and accountability of the public government system.
Prannoy Roy: Right, before I come to the students, and raise your hands when you want to ask a question, Kiran, I wanted to ask you, we are talking about the government policy and a lot of it affects the middle classes, as in the upper classes and in a way, we have developed a society, which is socialism for the rich, rampant capitalism for the poor. It actually should be the other way around. So when we talk about government policy now, it’s geared to the upper classes. How do we make sure that when the government focuses on welfare, it’s efficiently done, there are no leakages and the money that everybody pays in taxes is properly spent?
Kiran Mazumdar Shaw: I think neither of these things, are mutually exclusive or mutually inclusive for that matter. And as Murthy just said I think each one has to be looked at in a very different way because both have to basically be aligned to deliver growth. But on the other hand, I think what we need to do is to take a holistic view of what works, in terms of say making sure that public governance is meted out in a very optimal way. You know I'd like to really use the health care eco-system as a good example. As a country, we don’t even have the semblance of a national health care system. You know I would just want to briefly refer to what China has done very recently. China has allocated $120 billion for health care, of which half of it has been utilised for bringing 800 million people under a micro health insurance system. This has seen people spend $38 per head on health care as compared to just $9 in 2007, so it has made a big difference. This has created a health care industry in China of $40 billion, which is supposed to go up to $100 billion in three years. Now in India, we have the semblance of micro health insurance schemes in a very sporadic way in various state governments.
Prannoy Roy: Now Anu we will come to you about education and other aspects. So if I can get questions on what Anu called The Two India’s, and I think I just took from that and said socialism for the rich and Capitalism for the poor. Any questions for the panel, what can be done to rectify this problem? Yes this young gentleman in the middle in the reddish t-shirt, bang in the middle there.
Audience 1: My question is mainly to all three of you. When we are talking about welfare schemes and as Mr Murthy pointed out, that it primarily is the responsibility of the public government system, lately, because of these inefficiencies in the public government system, we have been talking about, public-private partnership a lot and how that model can be brought into upliftment of the poorer sections of the society. So as business heads, I would like to understand what you think of this model, can that go a long way?
Prannoy Roy: Anu would you like to take that, how do we get these two Indias to converge?
Anu Aga: I agree with Narayana, that the basic responsibility to uplift the poor is with the government, and one of the ways we can facilitate this is by public-private partnership, which has been very successful in health, Kiran has done a few things, in education we have done a few things, but where I feel the individuals have to be responsible is being a little sensitive. I think we are completely unaware of the other India, or we pretend it does not exist, and the ostentatious living, the ostentatious weddings that we have and self-absorption, which we have, it’s gone beyond limits. So I feel, and we have to demand from the government that what they are doing for the poor, the poor are not capable of demanding this
Prannoy Roy: Murthy is this, I hate to say, but I mean this is an alternative point of view. Is this old-fashioned thinking? It’s like the ‘60s in India where you didn’t have parties, weddings with more than 20 people, and that led us to the Hindu rate of growth which is 3%. Where poverty was even more and so, or is this the way, you know we should have at least some boundaries in our ostentatious living?
Narayana Murthy: No I, I do understand that when the country is growing, when more and more people are moving into the middle class, when the population of youngsters is increasing rapidly, there is desire to have fun. I would not grouch them and I am sure even Anu wouldn't. But I think in a country like India, where there is so much of poverty, it behoves us, the leaders of capitalism, to conduct ourselves in a way that makes capitalism even more attractive to the youngsters; and that where I agree with Anu that we have to exercise some restraint, there is no need for all of us to go to Himalayas and become sanyasis. But even while having a good time I think we have to do that. Now I think on the issue of the public- private partnership, let me give you a good example, Akshaya Patra is probably the best example of public- private partnership in the country. Akshaya Patra has participation from various State governments and from corporate donors, individual donors etc, and they feed 1.3 million children hot lunch everyday. And it’s done so efficiently, technology has been used so well, engineering skills of the people have been used so well. So I wish people study how well Akshaya Patra is working and use it as an example to celebrate the success of public- private partnership. Of course Teach India is another one, the Micro Insurance Scheme is another example, but I do think Akshaya Patra is perhaps the largest most successful public- private partnership in the country.
Prannoy Roy: Okay, we have a question right here. Can you please pass the mike to her, and then I’ll come to you as well
Kiran Mazumdar Shaw: I would just like to comment, if I may, on this whole PPP model. I think what we are really talking about is the failure of the public governance system to deliver. So the delivery is very, very poor, the private sector actually has done its bit I think. The private sector has benefited far more number of people in this country than the public delivery system. So I think there is a lot of merit in a PPP model, where you actually define the roles, and responsibility of the Government as being a facilitator and enabler, and really focus on the private sector to deliver and implement. I think that's the role I find.
Prannoy Roy: If PPP, you know, a friend of mine, Dr Mahajan, has many private clinics as well as some PPP, and he finds it very frustrating, as the government interferes, says you cant take this person, you can’t take that person, you have to have your salaries at government levels. So PPP also needs to have more freedom ?
Kiran Mazumdar Shaw: Absolutely, I think that's what I meant, that the government has to play an enabling, facilitating role and you know not regulate the way it is regulating. You need regulations, but not the kind that they do.
Audience 2: I have a question to all business heads in general, because every time around the Budget, we read this, every body has prescriptions, we have this thing about "Two India’s". But if you look at what is happening in the US Republican elections right now, there is so much focus on the fact that Mitt Romney pays 14.5 % tax, where as Warren Buffet's secretary pays 31%, but I find in India we don't seem to have a similar search of debate, or no such voice which says, why is it for example, the rich and powerful India don't pay any personal tax on dividends, and yet we keep hearing there are "Two Indias" and that something should be done to bridge the gap? But I want to know that is one part of India willing to do, perhaps some may say unfairly, more than its share, but it’s perhaps still necessary?
Narayana Murthy: You know I feel so nice, it’s like my son has taken over the mantle from me, I have spoken about the need .
Audience 2: Sir let me just clarify, it’s my own, my own thought, before it is credited to anybody else.
Prannoy Roy: Yes, it’s Murthy’s version 2 and an improved version.
Narayana Murthy: No I entirely agree. No, but the thing is, as you know, I have been talking about this, the injustice of having zero tax on dividends where people have received crores, some people 100 crore, some people 1000 crore and there is no tax. It does not make sense.
Anu Aga: No I would not agree. I would not say there is not any debate, there are many, many articles, that should the dividends be taxed? Should short term capital gain, long term, wealth tax, estate duty and many, many? So I would not say there aren't any, but I don't have faith in government spending. I think they mismanage so terribly whatever they have, and right from Rajiv Gandhi's time, it has been said that in the social sector 80%-85% goes in mismanagement and corruption. Even if it has come down and gone to 50%.
Prannoy Roy: It has probably gone up to 90%.
Anu Aga: Maybe I am being a little charitable in saying, so I feel if you are genuine, I will spend my money on the social sector, better than being taxed. I honestly feel now, I don't know.
Prannoy Roy: No I think that's an important point that you should know that your money is being spent well.
Narayana Murthy: There is a very important point here, and that is how many of the corporate leaders have said that this is not fair. Us paying zero tax on dividends, while a secretary or some dealers paying full tax. I have not come across anybody, that's the point .
Anu Agha: Yes, but if I completely would pay 50% tax, if I knew it was spent well, genuinely.
Narayana Murthy: No Anu, there I very respectfully disagree with you. We have to first pay tax and then set the other system right. I don't think we can take this position, that just because the Government doesn't, in my opinion, doesn't use the money properly I am not in favour of paying tax.
Prannoy Roy: Actually to some extent the country, I think, kind of leans to what Anu is saying. Because say for example, when we ask for donations for certain things, lets say for like "Save the Tigers", for the Environment, people know that it is going to be correctly spent and they are so generous. Indians are tremendously generous when they know that their money is going to be spent properly. But when you know it’s going to go to some PM's fund, which is going to be dissipated somewhere and a leakage, and I don't mean just the PM fund, any fund of the government, you are little more hesitant.
Kiran Mazumdar Shaw: Well no, I just feel that, I would look at what Narayana Murthy is saying, and say what he is saying is absolutely correct, that we, as corporates, who are beneficiaries of large dividends do need to be realistic about paying tax. And people like me, obviously, I feel okay, this is dividend, which I need to use for what Anu talked about. So of course, I donate my dividends for CSR purposes, but that doesn't still correct the things. At the same time, I believe that if we focus on governance all the way, I think, this taxing of dividends will happen any way, that's part of the whole governance system.
Prannoy Roy: Rohan, just to get back to you, are you satisfied with the answer, there is one issue that the people say, taxing dividends will be double taxation, because the company has already paid tax and now you want the individual to.
Audience 2: No, but I used that just as an example. My point was not just this, but rather than relying on the goodwill or on the personal sort of endeavours of the individuals to give, who may or may not, why not the State just say that this the law, and everybody has to follow the law?
Prannoy Roy: But what if the State is not delivering honestly?
Audience 2: But the problem with taking that reasoning is, we can sort of extend it almost to every facet of life, and then say why follow any laws at all. Like there may be many criminals who are perhaps not yet brought to justice, that doesn’t mean we can flout those laws.
Kiran Mazumdar Shaw: But I think ultimately we go down to accountability, how do we hold the public governance system accountable? That really is the root cause of this discussion
Anu Aga: After so many years of independence, we haven't found a way. I think the right people to do this are associations like CII, ASSOCHAM, FICCI, but unfortunately they don't do it. They want to go and ask for favours from Government, so they don’t want to be unpopular with the Government by asking awkward questions. I will love the Government part to be put well and then tax me. I will be for it, really for it, but without that I would not want to do it.
Audience 3: When we are talking about "Two Indias", then there is opportunity within the other India too, in the form of CSR activities, and there is talk about making it mandatory, mandatory spending, so what is your opinion on that, as an industry, as industry has been seen hesitant on that aspect?
Audience 4: Very idealistic thoughts from the panel. What I would like to say is, let’s not tax dividends, I mean, I am also against taxing dividends, let’s keep the beauty of dividends on one side, they are pretty beautiful anyway. What I am trying to say is that the concept of "Two Indias" is here to stay. If there weren’t "Two Indias", where would we have had ready markets available? Like Indian pharma industry is pretty oriented towards generic drugs, so where would you find a market to sell your generic drugs at a low cost? That is where the other India comes in to play. For example, for Thermax, when rural electrification projects, when they pick up speed, we will find rural power plants coming up, that's where we will find Thermax boilers also being sold; for Infosys, selling soft wares at the rural level, at low cost. We don't want the first India to be a part of the second India; we want two markets available.
Prannoy Roy: Is that true, that the two Indias are here to stay and you don't want the second India?
Narayana Murthy: No. No. Not me. I would rather not have any business for Infosys than see some people poor. I think if every Indian has an access to the basic needs of education, health care, nutrition and shelter, that for me is a much higher priority than Infosys growing.
Anu Aga: But we are not even talking about the poor coming up to our level. That’s a dream Lord knows how many years will it take, if ever. As Narayana said, it’s just the basic facilities where they don’t have to starve and go hungry to bed, where they don’t have to incur huge expenses, on medical expenses, health reasons, where their children can have good education, so there is an opportunity to come out of the poverty trap, these are the basic things we are talking about.
Kiran Mazumdar Shaw: But to answer your question, when you look at rural markets, you can create rural markets, and which company does not want to create rural markets. The point is where is the infrastructure to support the rural markets? I think that's the question today and I think again we are going back to development, how do we grow these markets? You know, today 50% of the demand for automobiles comes from rural markets, but where are the roads?
Prannoy Roy: Okay, let me just take a poll here of all you youngsters. How many of you feel 25 years from now, no matter what is being said here, the two stark Indias will remain, there will be extreme poverty 25 years from now? That’s 95% saying there will be poverty 25 years from now, that's actually a very depressing, a pessimistic outlook. How many of you, honestly, will work towards making it one India, converge both the Indias? How many of you can say, no, I’ll only work for myself and the rest can take care of themselves? None of you are honest.
Anu Aga: We haven't answered his question of 3%. I think 3% is very much possible. I don't like compulsion because ultimately people will give it to their own charities and find ways to get it back. So I would rather, 3% is nothing, I would happily do it, our company is doing it, so that is not an issue for me. But unfortunately, if we don't carry the corporates with this idea and just impose it, there could be some misuse.
Narayana Murthy: You know everything has a certain percentage of misuse. I don’t, if we want to throw the baby in the bath water, if there can be indeed 10 or 20 very well respected projects, which Corporates can be encouraged to give as a part of the 3%, I personally feel that is not a bad thing. There will always be some people who will misuse but I don't want to take that as a, it could be 10%, 20% but 80% will do the right thing.
Prannoy Roy: Okay let’s just move to an entirely different issue altogether, that is about the current policy paralysis everybody is talking about. Are you happy with the way the government is working? Do we know which direction is the government going in? Kiran do you find a policy paralysis, we have a Prime Minister who is a great economist, great global reputation, is he losing his reputation right now?
Kiran Mazumdar Shaw: If you look at our country, the policy paralysis is not just at the Centre. Even if you look at Karnataka, there is policy paralysis. Unfortunately, we are in a situation where there is a political stand off in every possible way, which is extremely unhealthy. There is no alignment of political parties for development and growth. I think that's where the policy paralysis first emanates from. I think if you look at any of the economic reforms we are talking about, how come there is no buy in from everyone, after all it’s supposed to be for the better good of the country. So for me, this policy paralysis is more about building a consensus at every political level, because it’s not one-upmanship from one party to another, which is what is happening right now, and that is very worrisome, because I think there are a lot of political policies that are required, and economic reforms that are required, and we have to take decisions, because without that nothing is happening. I mean even if you look at Karnataka, I mean, I keep going back to my health care policy, there is no health care policy that talks about a national health care system. There is no policy about bringing people under some kind of health insurance coverage scheme, so there is a serious issue.
Audience 5: So my question comes from both, the poll that we took and the policy paralysis. So can the current way in which the country is governed, we have multi-regional political parties, so the motives are different; so the problem is that there are policies but the implementation becomes a big issue. So it comes from an instance that we had in our past organization. We were putting up a plant in Orissa. For 10 years, the government supported us, but we could never reach a level where we could put up a plant. And finally when the company decided to set it up, in that time of 5 years, the entire village of Raighada was completely changed. It now has become a sort of a semi-urban set up. So the thing is that the private sector players are doing their bit and much more than that, but is there an eco-system which can support them, help them, encourage them in fact, and how do we do that?
Prannoy Roy: Murthy, in fact taking this Orissa example, I was talking to somebody who constructs roads. He is building a road in Maharashtra and a road in Orissa. The Orissa road is under the World Bank. He said, I am building a beautiful road that will last 20 years, but in Maharashtra the road that I am building, I know, will last 10 months. Because I have so many people to pay in Maharashtra that I have nothing else left than to put sand in the road, and in Orissa, it’s going to be a glorious road that I am proud of. So this issue about the private sector trying, but leakages and bribery, how is it ever going to change, how these youngsters are, in the real sense, ever going to contribute?
Kiran Mazumdar Shaw: Again it comes back to holding your government accountable. It’s very difficult to do that, but unless we hold our governments and public procurement systems accountable, you are never going to see an end to these kinds of problems.
Prannoy Roy: But how do you make them accountable? Any ideas?
Narayana Murthy: Well, you see the way societies have progressed is through role models and institution building. We have tried to create, well at least Anna Hazare went on a strike and all of that to create a Lokpal, which will not solve all problems I agree with you, but it’s an attempt. We will have to create more institutions, which will have to bring down corruption, which will bring transparency, which will enhance accountability, so therefore that's the only sustainable way of making progress. All developed nations have built such institutions. So therefore I feel our youngsters must stand up for building more and more such institutions.
Kiran Mazumdar Shaw: Administrative services definitely should be given far more autonomy from political interference than they have today. I mean if today every bureaucrat has to rely on political favors, you are never going to get accountability.
Anu Aga: I just want to say, why should we wait for youngsters to ask for accountability, why can’t we do it? It’s a cop-out for us. I feel we should mobilize a few like-minded corporates, NGOs, whoever wants to join and even if the Government doesn't like it, too bad. It’s okay, something like a Bangalore task force you have, something like that, I don't know.
Prannoy Roy: But you know one area, where we are making them accountable is in a democratic system. For 40 years we used to vote people back into power, just 80% of governments were voted back. Now 20% are voted out and only those who deliver on roads, on bijli, on paani are voted back. So the vote is, one way now, pushing our politicians to actually deliver, otherwise they get thrown out and they are realising it. So in the last 4-5 years, it’s fifty-fifty. 50% of the governments are voted back.
Audience 6: Talking about making the Government accountable, we know we got the RTI in recently. My question is, it’s not like there are no provisions to get accountability, how many of us use it? How do you increase the usage of accountability? I know that it takes 10 rupees to file an RTI, but I know one or not even one person in this room would have filed one.
Prannoy Roy: How many of you have used a RTI, good question, how many of you have actually used the RTI, honestly? That’s about 5%. I think that’s your point.
Audience 6: It serves you a right, but how do you make more and more people use it? It’s the will to make your government accountable.
Prannoy Roy: How many of you now will make use of the RTI? 90%. I hope, yes, that’s a point.
Kiran Mazumdar Shaw: We need to come out with some kind of a report card, which is credible.
Narayana Murthy: I agree. But you need lots of good role models, no matter whatever system you build, if people will use it, not with the right caliber, the system will fail, they will all fail, they will find a way to create loopholes. Therefore the need of the country is great role models, with good behaviour in large numbers. Good behaviour should become a norm. What I find very strange in this country is that if you follow law, you become a great guy. I mean it’s supposed to be something extraordinary, seriously
Prannoy Roy: Okay from you youngsters now, let’s get some solutions. How do we make this Government, this country, our leaders, accountable? Anybody got ideas of how one, as this young lady said, RTI, anybody else?
Audience 7: One, we talked about the public doing badly and the private sector doing great. And one reason is that the private sector has people like people sitting on the stage. My question is, why don't people sitting on the stage, enter the Government and change stuff? I mean why don’t we have Miss Shaw as the Health Minister, Mr Murthy as the I-T Minister, Miss Aga as you know?
Prannoy Roy: They are too smart for that. It’s a good question actually. You say, why don’t you go and do something, we will vote for you, we will vote for you?
Kiran Mazumdar Shaw: Only you.
Prannoy Roy: Won’t you vote for her, there you go, 95%.
Narayana Murthy: No, no Prannoy, while I have tremendous admiration for the young man, I think that’s a wrong approach. You, as a society, will make sustainable progress when there is a critical mass of decent, honest, modern, pro-active people in every sphere. It can’t be that you play a zero-sum game. In other words you take good people from one arena and then put them in another. That’s not the way. We have to have good corporate leaders, good politicians, we have to have good journalists, good administrators, we need all of that.
Prannoy Roy: And there is a slight problem, many of the people in the IAS are extremely bright, but the system destroys them. So you think the systyem will destroy you?
Kiran Mazumdar Shaw: Absolutely.
Anu Aga: I don’t know if we would be effective in the system. You know you won’t be effective, people have tried, I am not taking that away, and I think that I would say is your responsibility. At 70, I have no energy to fight the system.
Prannoy Roy: No, no, 2014, you are going to stand for elections. How many of you would like to join the Government, raise your hands? Wow, that’s about 30%, that’s pretty good. We need IIM.
Narayana Murthy: No, ask as ministers, as bureaucrats or what is it?
Prannoy Roy: Yes, how many as politicians? That’s about 10% and I think that’s encouraging; and how many as bureaucrats or officials in Government? That’s another 10%, okay interesting; any more solutions?
Audience 8: Sir, my question is, we have an accountability system for the private sector in the form of listing agreements, clause 49, your financial statements. Why not something similar for the Government? If they come out with a quarter cash flow and balance sheets, it will become easier to prevent 2G scams and 3G scams, if evaluation becomes easier for all Government assets?
Prannoy Roy: It’s a narrower; but a broader point I'd like to ask you Murthy, can technology help reduce corruption? Like we have got UID coming in, various methods of checking people?
Prannoy Roy: It’s a narrower; but a broader point I'd like to ask you Murthy, can technology help reduce corruption? Like we have got UID coming in, various methods of checking people, E-procurement, E- options?
Narayana Murthy: Technology increases transparency, and transparency increases the quality of government, there is no doubt about that. Therefore technology has a great role in increasing transparency. Second, technology conquers distances therefore the poor and the disenfranchised people can indeed access basic services, thanks to technology.
Prannoy Roy: So can I ask you a personal question? Why is Infosys doing all its business abroad, why don't we improve our technology here?
Narayana Murthy: Well I think Infosys is doing lot of projects in India, in fact we have done the ...
Prannoy Roy: We would love to see you get rid of corruption with technology here.
Narayana Murthy: No, again unless there is a charter given by the government unless, there is we cannot.
Prannoy Roy: Unless they ask you to do it.
Narayana Murthy: Yes that's an issue, if they ask us, certainly we do it.
Prannoy Roy: Then we won't have outsourcing problems, we won't have currency fluctuation and you will do ...
Anu Aga: Receivables will be difficult.
Prannoy Roy: Okay, this young gentleman in the black Tshirt here, can you pass the mike here please?
Audience 9: Social audit is one of the ways where you can bring out the corrupt system and make the government more accountable through social audits. The recent example that is successful is Rajasthan Panchayati Raj system audit that happened, social audit and all, but the results that came out of that audit were never utilised effectively. Moreover the Panchayati Raj system is one of, I won't say successful, I would say corrupt. Because though the government claims it's a successful system, in reality when the social audit was conducted it was corrupt, rather than more effective as such. So in terms of that, can we do something for social audit system to give some power or some recognition or some authority?
Prannoy Roy: Heart of the expression is that the Panchayat Raj System devolving power, fine. Is it also devolving corruption?
Narayana Murthy: All those things are all fine. We can do n number of things. But at the end of the day, if we can come to a day when at the you know, at Delhi in the Union Cabinet; at Bangalore in state cabinet; in Bombay, in Mumbai etc etc, we have 95% of people who become role models for the country, I tell you the day that happens, I tell you all these problems will go
Prannoy Roy: Let me tell you we are very tough on the role models. We have Dhoni who wins the World Cup and now we want to sack him, because he has lost 3 matches. We are pretty harsh, fickle people
Narayana Murthy: I think, you know, that is the price we all have to pay for being put up on the pedestal. They will throw you; they will just push you. It is a right of the people that put you on the pedestal to also push you out of the pedestal.
Prannoy Roy: Okay, let's move on to another topic, a broad topic which I think all of you would be very concerned with, and all three of you here, the global slow down competition with China. How is India going to face the next couple of years in the turbulence they are seeing in the global economy, and a very efficient, organised Chinese people, who are delivering at much cheaper cost and are keeping their currency well under value, so that they can export much more? Are you worried about your jobs in the future? That's about 40%. 60% are confident I see, that's, so how many of you are not worried, you will get a job of your choice? That's probably about 60%. How many of you are worried about China as a competitor? That's about 70% are worried. And how many say India can thrash China, no problem, given our wonderful political leaders? That's about 20%.
Anu Aga: Inspite of our leaders.
Prannoy Roy: Inspite of our leaders. Actually that's true. So, any questions to the Panel about the slowdown in our economy? The global economy? Okay, right here.
Audience 10: On the slow down in the last decade we have seen two slow downs. One is in 2001 and 2002, and then in 2008 and 2009. We were able to weather the storm due to our booming story in the last 4-5 years prior to the slow down. If we see the similar kind of slow down say 5 years or 10 years down the line, do you think we will be able to maintain the same success story?
Prannoy Roy: Okay and the person next to you also had a question?
Audience11: When we talk about competitiveness with China, coming back to policy paralysis, when we have the best team at the centre, we have Chidambaram, we have Manmohan Singh this team is not able to deliver because of fraction minded, it's deeply rooted in our democracy that people will be divided they will always be divided. Howsoever this team is not able to deliver, not able to perform, then how are we going to be able to be competitive in this whole global scenario?
Prannoy Roy: If there is going to be another slowdown can India weather another storm again, another storm and like we did the last one?
Kiran Mazumdar Shaw: You know intrinsically I think we have all it takes to weather the storm. But again I go back to the point that we do need hard decisions to be taken. Let's look at, you just mentioned that you have a so called dream team at the center, but for various reasons they are just not functioning. Yes, I think lack of clear policy making is certainly going to deprive us of that opportunity to weather the storm. I know that in our own sector we have been facing regulatory hurdles in a big way you know, and the government has been dragging its feet on just appointing the regulator who has to approve certain things, and that has been in sort of cold storage for months together, and people don't seem to be in a hurry to fix these kind of issues. So yes, I think we do need to put pressure on the government to make sure that action is taken, policies are set, and we have to basically be very clear about the fact that there is an urgency in this kind of area.
Prannoy Roy: Murthy, let me ask you about whether you are worried about China? I was recently in China and I was asked a question on a panel like this. You have come from India to China, are you jealous? And frankly I had to defend, I am bloody jealous actually, but I had to say, well, if I am given a choice to live, I'd live in India, because of our democracy, our freedom and our creativity of our youth. But are you worried about China?
Narayana Murthy: First of all I am not worried about China, because China is going to progress rapidly. Frankly I don't think India is a competitor to China, India got left behind long ago. I mean the reality is simply they are 5.3 or 5.6 trillion dollars. We are probably 1.6, 1.7, 1.8, I don't know where we are. I mean we were at the same level, I think, in 1975, 70 around that time. So they have accelerated very well. They have built extraordinary infrastructures. In every field that I hear people talk about, they are, you know, becoming leaders. The other day I read an article that said that next year's economy, next year's world financial position, world's economic position, will be decided by China, not the US, for the simple reason if China were to grow at 8 or 9%, and it will add 500 billion dollars to the world economy, and US grows at 2.3% on a 15 trillion dollars it will only add. So they are that stage. Also let me give you another data point ...
Prannoy Roy: To be a little positive about India, we will spend a few minutes of being positive Think of good things. I know, you might find out
Anu Aga: I think individually we are very creative. We are extremely hard working as a nation. But there are some things that are pulling us down, one is infrastructure paralysis from the government, and our future generation, we haven't basic good education. Without that how can we develop a nation?
Prannoy Roy: Murthy you were going to give a second point before I ...
Narayana Murthy: I missed that. It was something very positive, but then I forgot.
Prannoy Roy: Okay, person at the back there.
Audience 12: I think we are too pessimistic about the India story. Because even though India is growing at a slower than China it is a much more inclusive growth. I mean the idea that a handful of farmers in a village can stop an industrial giant, even though we might think they are wrong, I think it's a big deal.
Narayana Murthy: I don't think it's a big deal
Audience 12: I think it's something that wouldn't happen in China.
Narayana Murthy: First of all let me say that, you said India has a more inclusive growth, that's not true. The number of jobs that have been created in China is far ahead of what we have done in India. The kind of infrastructure that they have built in Tibet, you know, I mean far off areas from Lhasa, the quality of roads that they have built, and I have been there, I am not talking through my hat, is so far ahead of any road that I have seen in India.
Prannoy Roy: But I think his point is, they don't need land acquisition and given the, they just say this is our road. They have the straightest roads in the world because they just say move.
Narayana Murthy: Let's be very, very clear about one thing. Democracy is something that is truly appreciated by the rich and famous sitting in their big drawing rooms, drinking imported wine, imported from abroad, all of that. But the reality is for a poor man, who does not have access to basic education, basic health care, basic nutrition basic shelter. This talk about democracy is there in India, therefore I am very happy, therefore India is great, I think that logic is not right
Audience 12: I think a lot of things have changed, like for example, if you take example of states like Bihar, where people suffered from these problems, they actually made a choice in the favor of development, and it was democracy that is actually leading them forward, and in doing this they have a choice. The government does not come to them and tell them that you have to do this. The government does not make all the choices for them. I think having that freedom actually inspires creativity.
Prannoy Roy: Actually I would say Infosys is a result of democracy, and creativity and questioning.
Narayana Murthy: That is fine.
Kiran Mazumdar Shaw: But under educated democracy is what we are talking about. Do we know how to use democracy?
Prannoy Roy: But I think the point he has made again is not just Bihar, actually you are right. A lot of voters are now pushing for development and perhaps that is the reason for 8% growth, and China has had 25 years of 8% growth. Give us twenty years and see us transform.
Audience 12: And we are not devaluing our currency to achieve that. I mean the RBI does not intervene in currency markets as aggressively. I mean we are on a path to sustainable growth.
Prannoy Roy: Any other questions?
Audience 13: Taking back the focus on India, I would like to take on Miss Shaw's comments that she said, that intrinsically we have enough to weather this economic storm. That is true of course, but there is another aspect to it. I remember reading in the Economic Times, that in the last 4 quarters the government has raised around 100 crore from public debt and taxes, and also our public debt has ballooned to 50% of GDP. So is there a catch 22 situation here? You need a financial stimulus, but at the same time you might be heading for an unprecedented financial crisis. So what would the Panelist say?
Kiran Mazumdar Shaw: You know, I think again we go back to how the government is utilizing its resources, delivering on what it's supposed to do and not misusing its resources, which is what is happening today. I think again we go back to this whole issue of governance, accountability, public delivery. You know it's a vicious cycle; it is very, very difficult to come out of it. So unless you really get the government to do what it is supposed to do in the public arena, it is very difficult to answer that question.
Anu Aga: Just one second, I think the fiscal deficit will be a problem in India, unless we squarely look at the subsidies that we are giving and I don't think we have the poor in mind. It's a vote catching reason why we are giving, and unless we really have the guts to stop some of the subsidies, which are helping the middle class and the rich.
Prannoy Roy: The kerosene and the diesel for the SUVs.
Anu Aga: Even the free electricity in the rural area is for everyone, the marginalized farmer and a rich farmer.
Kiran Mazumdar Shaw: Even if it's the rural employment guarantee scheme. Is it being done properly? Whether its the fertilizer subsidy, whether it's the rural guarantee scheme or whatever it is, I think what we really need to look at is, how are these delivering?
Narayana Murthy: I agree both with Anu and Kiran, frankly I won't be worried too much about deficit. I'll tell you why. In a perfect world, developing countries must be taking more and more and more loans, rather than all of us putting money in the US. It's a developed country, right. So what we need to is we have to ask a question, are we using our money properly to build an India which will be so much better for our children and grandchildren? I would not be too much worried about the fact that deficit is increasing, as long as it is being used properly.
Prannoy Roy: Okay, I am going to try and end the last few minutes of this show by asking you and our Panelists a wish list, one point you would like to see in this Budget or this government, a policy that you really put at the top of your priority. Just one. Anybody got an idea what they'd like to see? One point; top of your wish list.
Audience 14: I would like to have a National Health Insurance scheme for all the people of our country, so that no one is deprived of proper health care.
Prannoy Roy: National Health Insurance scheme. Good point. Yes, yes, back there on the right.
Audience 15: Sir, this not a policy matter I am talking about, this is something kind of a solution for corruption problem. I was thinking of a transaction cost. Reduce the maximum currency note we have to 50 Rupees and then impose transaction cost on the minimum threshold level. So this is the solution for accountability as such.
Prannoy Roy: Okay, anybody else? Go ahead ask your question.
Audience 16: Education policies. Like these days a high number of Indian youth are travelling abroad for higher education. Education should be given more importance in India, so that development can happen within India rather than going abroad.
Prannoy Roy: The gentleman there in the middle.
Audience 17: Maybe more emphasis on Research and Development say for energy sector, if we invest more in say R&D for Shell Gas rather than going onto subsidies into diesel or kerosene. Looking into R&D of undeveloped technology, which can lead us to even cheaper or better solutions, which can have a wholesome growth.
Prannoy Roy: What I like about that solution is that you are getting the money by reducing subsidies and putting it into something. Because remember, if you are going to increase expenditure in education or in health care, you have to reduce it somewhere else.
Audience 18: Encouraging local infrastructure industries like local power manufacturing industries and all.
Audience 19: I would like to emphasize clearing of the legal block jam that we have currently, because as the things stand, there is no real incentive for people to avoid corruption, even when they are caught they are still back in politics, they shall still do what they do and the legal process takes too long to convict them.
Prannoy Roy: It takes about 20 years to get anything solved now.
Audience 20: Sir, policies favoring agriculture, because we are growing at a very good rate, but the growth rate is not creating jobs and I feel most of the people are.
Prannoy Roy: You want to increase the growth rate in agriculture. Are you in favor of GM Food, genetically modified food?
Audience 20: No, growth rate in benefiting rural farmers.
Prannoy Roy: Okay, Anybody else? Top of your wishlist.
Audience 21: So in the past few years we had seen some good initiatives being implemented, or they were being tried, like GST or FDI in retail. But they didn't actually happen because of some political hurdles coming up, so I would like to see in this Budget these things being taken up, so that it gives a good signal to the outside world that things are happening good in India.
Prannoy Roy: Goods and Services tax and the Direct Tax Code and FDI in retail, alright, but you will have to speak to Mamata Banerjee on that. Okay, let's just end with your wishlist. One big thing you would like this Government to have in this Budget or as a economic policy, but something that will, that is practical can be announced and will make a big difference.
Anu Aga: It's not a budget related, but bridging the inequity gap in education.
Prannoy Roy: But how would they do that?
Anu Aga: PPP models, really focusing on primary education, secondary is too late, primary education I feel, very much. And accountability from parents, that we want our children to have a better education, give it in a language that makes sense to them, like English, if it is not ban English, as some of the states had done in the past.
Prannoy Roy: I think that's a very important point, because if you go deep into villages anywhere in the country, Government schools, primary schools are just not functioning, the teachers don't go, so the villagers are sending their kids to private schools and English teaching private schools, so I would say make it a private public partnership, so that at least the funds can be there.
Narayana Murthy: Again it is nothing to do with the Budget, I only wish that our Prime Minister looks at the problem of creating a bureaucratic model or a civil servant model, where the good people, everybody has incentive to be a good bureaucrat, focused on executing projects quickly, taking quick decisions if we can, and those guys who are not like that would be punished.
If we can get to that, I think it will be a good thing, because the election system will hopefully bring better and better quality politicians, but for bureaucracy we need a new model. Today, good people in the government are not encouraged, they don't, there is no incentive for them to take tough decisions; there is no focus on quick execution of projects. We need that.
Prannoy Roy: And If I may add to that, my wishlist on that particular point is that all our wonderful large software companies develop systems and use technology to improve government systems. Do your software abroad as well, but spend your time and efforts in India, in our governance and reduce corruption. If you could do that, I think you could use technology to transform our governance.
Kiran Mazumdar Shaw: Yes, I would like to say a very strong role play between public sector and the private sector, and I really think co-investing in our economic development is the way forward. I think we need to work together where a private sector, really is the implementer and where government is the enabler and I think that's where this country can really progress and move forward.
Prannoy Roy: Right. Let me actually get a last vote from all of you. How many of you have lost faith in the Public Sector and have faith in the Private Sector? That's about 50%. How many people still have faith in the Public Sector? Actually I would say 40% for the Private Sector and 60% for the Public Sector. Does that surprise you?
Narayana Murthy: They are all idealists, I am very happy.
Kiran Mazumdar Shaw: I am surprised, because I would imagine that Public Sector has not demonstrated the efficiency, and the kind of growth momentum that the Private sector has done in India. It is tremendous, whichever sector you look at, you look at the health care sector. 80% of the health care infrastructure has been created by the private sector.
Prannoy Roy: You see I think there is an issue here, what you or your generation, including me, have given these children, is democracy in their DNA, creativity in their DNA and little bit of socialism in their DNA, that's why you got 60%. Am I right?
Narayana Murthy: Well also I think all this 2G scam etc etc, that has reduced, that has dented their confidence in Private sector. Let's accept that too.
Prannoy Roy: I hate to harp on that point, but the 2G scam could have been solved by technology, an auction system.
Anu Aga: No I think exactly what he said, that corporates also have not been role models in anyway, so even when we go into Private Health sector, we have neglected the poor, we don't reach out to them.
Kiran Mazumdar Shaw: But we need to create an eco-system between the private and the public system, which really delivers.
Prannoy Roy: Okay, can we have a round of applause for these three wonderful people and a round of applause to all of you; good Luck to all of you. Thank you.
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