Summit speakers say India needs a dramatic shift from stimulating aspirations to managing expectations.
The World Economic Forum has often been referred to as the “Wimbledon of gabfests”. The India leg of the Forum – the India Economic Summit – has so far more than lived up to its name, as hundreds of participants discussed themes as diverse as India’s future talent pool to “cultural economics”.
But the one central theme that lingered throughout the second day of the summit was the need for “21st century governance”. The tone was set by Ben J Verwaayen, chief executive officer, Alcatel-Lucent, France. Speaking at the opening plenary session in a packed auditorium, Verwaayen said India has institutions of the 20th century, but citizens in the 21st century. “We were a world in which we would stimulate aspirations. We have become a world where we now manage expectations. These are two different places,” he said.
Reliance Industries Chairman and Managing Director Mukesh Ambani was quick to take the cue and said this path from 20th century mindset and institutions to a 21st century delivery model to meet the expectations of each citizen requires a dramatic shift in terms of governance. “We need to align and move a lot faster,” he said.
Ambani’s frustration with a crisis in governance, so far publicly articulated by only a limited few in India Inc, was evident. “Just because we live in a democracy, doesn’t mean that we should feel paralysed. We need some common minimum programme to give people what they need, we need to bring in 21st century governance,” Ambani said.
He was, however, quick enough to point out the reality that India has brought 150 million out of poverty, and that the country is a land of a billion opportunities and not a billion problems.
The other common theme was the emergence of a “new India” that is “incredibly young” and therefore the need for 21st century governance is all the more important. The aspirations that have been created need to be met and there is no room for complacency, said Anand Sharma, minister of commerce and industry and textiles. The country has to generate jobs for the millions of young Indians joining the work force every year; it has to give skills to millions to make them employable; it has to curb inflation without dampening consumption; and it has to satisfy the hope for a better life.
“Fortunately, the fundamentals of our economy are strong. That is what is providing hope and stability,” Sharma said. “We are conscious of the fact that institutions must be regulated, and markets must be regulated in a manner that over-speculation and rash decisions do not hurt the overall growth story.”
Chanda Kochhar, MD & CEO of ICICI Bank, pointed out that to finance continued or faster growth, India needs access to capital — both equity and debt. But all these “problems,” such as access to capital, educating the young and controlling inflation, are all “problems related to growth, so in that sense they are good,” she said. Kochhar pointed out that domestic banks, both public and private sector, were catalysts to India’s economic growth in the past couple of decades.
“Banks are the heart of the economy and need to remain strong. Banks in India have been resilient and are still resilient to support the growth of the economy,” Kochhar said.
She dismissed worries that India may face the sort of sub-prime crisis that has rocked many western economies in the past couple of years. “The resilience in Indian banking comes from prudent lending...In India, nothing of that sort (sub-prime crisis) will happen,” she said.
Maharashtra Chief Minister Prithviraj Chavan expressed faith in the intrinsic resilience and strength of India’s democratic institutions, but sounded a note of concern on the events unfolding in the US and Europe. Can India play a stabilizing role in what is happening around us, or can the crisis get more serious and affect our aspirations for faster growth? I hope not,” said Chavan.
At the end of it all, there was a note of optimism. While Alcatel’s Verwaayen said India has the highest “per capita smile”, Klaus Schwab, Founder and Executive Chairman, World Economic Forum, said if he had been younger and had an entrepreneurial bent of mind, India would have been his “country of work”. The applause refused to die down.
| INDIA WARNS AGAINST PROTECTIONISM India has warned against protectionism as the world grapples with the sovereign debt crisis, portraying itself as a relative haven of stability in troubled economic times. Commerce Minister Anand Sharma said at the India Economic Summit on Sunday India was an influential emerging economy and that the country “will be part of the stabilisation process when it comes to what’s happening in Europe”. But he warned: “In difficult times, the tendency to look inwards, to have protective measures is something the G20 must reassure the world that we will not allow to happen. |
“We need it (the G20) to engage more, not going for protectionism, because that has happened since 2008-09,” he told delegates at the India Economic Summit in Mumbai. “We must first put in place a multilateral trading system by completing the ongoing World Trade Organisation negotiations and correct historical imbalances to make this order more equitable and more accessible,” Sharma said.
