What are India’s competitive advantages? In a world where many countries are grappling with the issue of democracy, the fact that India has been a democracy for 60 years is worth celebrating. We have a $1 trillion free-market economy growing at 8 to 9 percent, known for manufacturing, telecommunication and retail. And, we have the world’s largest young population. The India value propostion is becoming obvious to people now.
What about the notorious Indian bureaucracy? It varies from department to department, from central to state to city level. But a definite mind shift is taking place. This program got fantastic support, the government–the Ministry of Tourism–worked shoulder to shoulder with us. Its “Incredible India” campaign raised India’s rankings as one of the most attractive tourist destinations. The Confederation of Indian Industry has been doing a Brand India campaign, the two were fused to create “Incredible India@60.” Private companies promoting a country’s brand is a unique notion.
How do you deal with government corruption? The real challenge is at the local level of civic governance. Cities have become dysfunctional–daily, one encounters large populations, poor public services. A lot is changing but it can’t happen overnight. During the “license-permit raj,” business was about capturing licenses so others would not get them–a misdirection of entrepreneurship. Today, business is about winning in the marketplace and convincing customers. The government has acknowledged the increasing role of business in India. Many signals point to that: a new body, the Indo-US CEO Council, has been set up by President Bush and [Indian Prime Minister] Manmohan Singh–heads of state–to improve the relationship between the two countries through business. It’s public acknowledgment that the private sector has a big role to play in the country’s economic matters and global affairs. India’s highest civilian honors are now being conferred on businessmen. That did not happen 20 years ago–the state is recognizing entrepreneurs. It’s a change at the conceptual level.
What about infrastructure? Even Mumbai, the business capital, does not work. Local trains work! They take millions of people every day from one end of the city to the other. Decline of our cities is a complex problem that has to do with governance, state-center federalism. But infrastructure is on the move: Bangalore and Hyderabad airports will be ready in 2008, Mumbai and Delhi by 2010. For the first time, airports are being built by private operators, not by the government. This is a revolution.
There’s enough economic return to attract private capital–airports make money from flights and also from retail outlets. In 10 years, we’ll have tens of excellent airports. It’s the same with highways. Telecom has been a great success–mobile phones are growing like crazy–hotels are ramping up, ports are privatized, many new ports are coming up. Only power has not yet taken off. Railways are allowing private operators to move freight while the public sector continues to own the tracks and engines. So, the rail tracks get utilized more, the government gets more money, the economy benefits. Where private capital can get an economic value, we must encourage it to conserve government resources for building rural roads. It’s smart to use private money to provide a public good.
Many Indians feel globalization has exacerbated the rich-poor divide. India has long had crushing poverty. The current economic growth has actually reduced it. But when you take advantage of globalization, some people benefit more than others. That exacerbates income inequality. Earlier, a technology professional would not have made much money; now, because he works for a global environment, a disparity is created. There’s no quick fix, we have to work on creating opportunities, on education, on health care, on giving people access to infrastructure.
How soon do you see this trickling down? Infrastructure is already improving, spending on education is mounting, the value of education is being understood. Parents who are unhappy with public schools send their children to private schools. Business is better understood so there’s more freedom for young entrepreneurs to start. That creates jobs. Change cannot come overnight, but all indications and trend lines lead us to believe that these things are just a matter of time.
Still, 300 million people are living on less than a dollar a day. The way to look at it is: what was the level of poverty in 1991? Compare that to now and you see there’s been significant reduction in poverty. A country’s economy can’t be changed overnight–even China could not do that–but poverty will be seriously reduced in the next decade. For the first time, we have a robust economy because of India’s market-oriented reforms, because we have given the private sector a larger role. Our foreign-exchange reserves are now $200 billion so, even if oil prices go from $12 to $84, it won’t be crippling as in a previous era. Today, we have strength and resilience, we have taxes growing at $25 billion a year–growing because of buoyant economic growth. Those taxes can be invested in health and education. It’s a mistake to blame globalization. We need to be financially strong to afford social spending–on health, education, welfare. That is happening.
Is India’s huge population a liability? No, it’s seen as a reservoir of human capital now, it’s not considered a burden. We need to bring down the fertility rate to get a demographic dividend, but the trend is to see population as a source of strength–young people, working people.
What are the challenges now? Why focus on 2050? This is not a done deal. We have to continue to build infrastructure, invest more in health and education, improve the quality of public-service delivery, think of energy costs and the environment. It’s an unfinished work. The changes will not be automatic, but I’m optimistic. There are many political ramifications … the right policies have to happen, we can’t be complacent, there’s a lot of unfinished political reform that must happen: 2050 is a benchmark–it’s 100 years after India became a republic.
Since Infosys has been so successful and government is still viewed with suspicion, would you consider entering public service? I see myself doing public service but not necessarily being elected–there are many ways to give back. There’s enough room for anyone today who wants to contribute and make a difference in India–through ideas, through philanthropy, through leadership initiatives. That’s where I’d focus my efforts.
