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60 Defining Moments:
How states shaped up

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Just sixty years ago, in 1947, India was a fairly strife-torn country. It was a country which was grappling with a lot of negative issues, a country which was grappling with a lot of poverty and it chose to follow a policy of economic isolation. For forty years we followed that policy and it is just seventeen years ago that we chose to engage with the world and we chose to open our economy.

In seventeen years, we have the courage to debate a theme like will we be in the top three economies of the world? It is quite extraordinary that we have come so far in these 16-17 years, preceded by 40-50 years of economic isolation.

So, will India be a strong economy or a great economy? In that sense, it is pretty much a given, we will be a strong economy. But can we be a paradigm changing iconic economy, and what does one mean by that? Managing Editor, TV18 Network, Raghav Bahl told CNBC-TV18, “I think an iconic economy was the UK at the time of the industrial revolution; America through the 20th century was an iconic economy which set the parameters and benchmarks for the world; Japan to a certain extent in the 1970s and 1980s was an iconic economy; China certainly from 1980s onwards has been an iconic economy which has set the terms of trade of this world.”

The question is, what can stop India from being an iconic economy? Chairman & Group CEO, Bharti Enterprises, Sunil Mittal explains, “There are over 300 million people who are living in very difficult and poor conditions and if 320 million of our children who are between the ages of 6 and 16 today, will not go to school or get skilled education, I think that will create a tremendous pressure on our society in the next ten years.”

Chairman, Wipro, Azim Premji adds,I think it is very important that we do not keep patting ourselves on the back and build up a huge sense of complacency. The points which Sunil Mittal just made in terms of people below the poverty line, the visible disparity between the haves and the have-nots, is more accessible through TV and media, and the fact that we have still not got our primary education act right. 25% of our teachers never come to school or teach, one in three people cannot read or write in standard five, and 40% of our students dropout by standard eight. These are all very fundamental issues, which we have not tackled.”

Chairman & Managing Director, Reliance Industries, Mukesh Ambani feels that going forward, there should not be more of the same kind of development but an iconic new transformational model should be adopted that delivers to all people and not just a select few. Along with this, empowering people has to be a simultaneous goal.

Commerce & Industry Minister, Kamal Nath also agrees and says that India being a democracy, everyone should be included in the reform process and also “we have to sensitize industry and entrepreneurship that growth has to be all inclusive.”

So, while India needs the framework for transformational thinking, it also needs some very crystal clear policies.

Mittal says he’s had 32 years of experience walking the corridors of power for his business requirements and he thinks things have dramatically improved. But he does not think it will ever become perfect. He should know because he spent the last eight months trying to convince the government that Wal-mart is not coming in through the backdoor.

He says, “No, I think that debate is more in the media. There is a government policy that is being followed and you need to see how the energy is being now applied into the marketplace.

But are these just feel-good words or have there been transformational policy changes in the government? Ambani says, “What is required is purpose and I think that is collectively not only the government’s job - it is your job, my job, the civil society’s job to put purpose behind the economy, behind a country, behind a state and behind a company. “

“Sunil Mittal and I had a purpose of transforming this telecom industry in 2001 and we went through the same thing and the government at that time with Mr Arun Shourie married that purpose and said, “It is important that India has 500 million phones” and in five years, we have got 350 million phones and I think it is a great work that his company and all the other companies have done.”

He adds, “Today what is important is that we have got to recognize that in a democracy, there is space for vibrant debate and we have got to demonstrate even from the industry point of view that special economic zones are the next generation vehicles to create employment in the country. Look at agriculture; we have the state of Uttar Pradesh coming out with an agricultural policy, which is very good.”

Premji reiterates, “Ask yourself a question, how much transformation have you done in CNBC (TV18), how much transformation have I really done in Wipro? It is way below what we should be doing and way below what we are capable of doing. I think if you measured against certain standards, which are realistic, the government has put its fair share on the table on this one.”

Premji also feels that the media does make more of a big deal of some things and there is a public debate of issues that could have been quietly.

But Bahl says that there is need for debate on issues like infrastructure, which is driving away business and also proving to be hindrance to development. For instance, Bangalore’s infrastructure is badly in need of an overhaul and its international airport in Bangalore has been in the works for a decade. Premji says,We will get one in April-May, hopefully. We have a road, which connects to it which is a bigger controversy now.”

Bahl explains,That is exactly the point that I am trying to make, in1982 we got the first airport in Delhi, 25 years later, we still do not have a new airport. I know it is getting ready in 2010 but we should have had it in 1998, that is the point one is trying to make.”

Nath explains, “Democracy is not a buffet table that you pick what you want. Democracy comes in its entire package of lively debate, criticism, and transparency. In this great transformation, which we have had in the last fifteen years, there are so many things to which the government is new. We are grappling every day with things, which are new. We used to always think in terms of appreciating dollar and depreciating rupee. Now we are thinking and grappling with appreciating rupee; we are talking about public private partnerships. It took us one and a half years to make tender documents for privatization of this Delhi airport.”

Does this mean, we are supposed the government should be given the benefit of  doubt. Nath says, “No, you are not supposed to give benefit of doubt but you are supposed to be realistic and optimistic. I am saying that there are many things which are new for the government, which it has to grapple with and understand them. There are many trials which we have got to go through and at the end of the day, whatever policies come out, whatever processes we have adopted have worked.”

“India had no model and we cannot dismiss away the complexities of India - the paradox that is India. We have a Parliament which will say this is not acceptable, we have political parties - and the best thing which has happened is that, economic reforms has brought political consensus in the last sixteen years. We have had six governments, five prime ministers but one policy going in one direction, which is upwards.”

But a lot of people will say that the economy is doing well because of the sheer momentum of the country. Yet policy confusions exist. As Bahl point out, the administered price policy on oil which was dismantled in 1995 but then who is controlling oil prices - the government is. Is the oil deficit still shown on the budget of the government? It is still not shown on the budget of the government.

Ambani says, “Absolutely, I agree with you and one of my own beliefs is that one of the challenges for us to get on to that iconic path is really to think through subsidies in a sensible way. We have got to ask the question whether Raghav Bahl, Azim Premji and Mukesh Ambani need subsidy on LPG and how do we target subsidies to the vulnerable sections. This is the problem in the oil sector and it is a fact.”

But Nath says subsidies on LPG or power are going to be around for a while because the masses want it and unless there is a consensus arrived at, that subsidies are not required, then he promises that the government will act accordingly.

However Bahl says,I think the opinion exists in the country that subsidy should be targeted. If you give them good power, people will pay.”

But Nath reiterates,I really think that people are not ready to accept that subsidy in LPG should go. We – the urban elite - can say it but if you go a couple of miles out of Delhi, people are going to find that totally unacceptable because they are used to it. Like people are used to free water. If you go to rural India and tell them that they have to pay for water, are they going to accept the suggestion?”

He may have a point here and to wean the public off from expectations of such free services is going to take a while, and that may put a slight dampener on India becoming an iconic economy just yet…among other greater issues that the country needs to grapple with even after 60 years of Independence.  So there are certain things, which have been inbuilt which we need now. "I am not challenging the need for it but in India what government needs to do and what has to be acceptable has to happen by a larger acceptability of people" he points.

Raghav Bahl asks whether this often becomes an excuse for the government not to act. We are in a state where people will not accept it therefore we will have to go slow and therefore we know subsidies are misdirected, we know subsidies are not properly targeted but we have got an election to fight, so we cannot do anything about it?

To this Azim Premji replies, “If you ask me to do a job of a public sector chairman, I can tell you I cannot do it. It is just too challenging. So you are part of a system and you are asking for iconic transformation in the system, which I think is significant and I am not trying to say this because I am trying to butter the government but I think the transformation, which you have seen over the past sixteen-seventeen years, it is quite creditable and I do not think we should underrate that”

Raghav Bahl agrees and points out that even countries like Brazil have done that, “In 80s it was being topped off in the same breadth as we are talking about India today about being iconic and will transform the world but it descended into a welfare state and almost became a begging bowl state”. To this Premji adds that same thing is happening with Germany.

So are we willing to live with this argument that subsidies can be misdirected but there is a political cost. Will we have to go slowly which would mean five years-ten years or fifteen years?

Sunil Mittal feels that we need to recognize that when we had absolute power in the government. We did not have a mindset, which was long-term, it was always incremental. “Today there is no intellectual debate, there is a transformed mind but unfortunately there is no absolute power and we have recognized that and when you are in a situation where there are different pulls and pressures in the government and everybody’s constituency so to say is different, you are bound to have slower economic reforms and that is a fact of life.

We have calibrated or accepted that profession. Instead of doing twenty things in a term of a government, probably we will get five now, we would hope to have ten and we will keep pushing for ten but clearly we will never get to twenty unless you come back with a mandate and give Mr Kamal Nath or any other party an absolute majority to then deal with a transformed mindset. That unfortunately does not seem to be on the horizon”.