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| Kanika Datta: The next Big Things | | The big issue confronting Indian business is less about how fast India will grow as about creating a durable basis for faster growth |
| Kanika Datta / New Delhi Jan 07, 2010, 00:45 IST |
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The end of the first decade of the 21st century has had many economic commentators predicting that India will grow faster than China and finally attain its destiny as a superpower in the next 10 years. These are great hopes to harbour and at least the first of them looks achievable given how far the country has come through the first decade. Going forward, though, the big issue confronting Indian business is less about how fast India will grow as about creating a durable basis for faster growth.
Looking back over the decade or, indeed, over 19 years since economic liberalisation began, it would be fair to say that India business has acquitted itself with a reasonable degree of flair in the world arena, that too against formidable odds against competing nations.
After some initial moaning over unfair competitive pressures, most companies got down to restructuring and streamlining their organisations and coming to terms with global competition. In the late 90s, such competitiveness was mostly defined in terms of cost.
By the 2000s, the focus had turned outwards. Though the Tatas and Birlas grabbed the headlines with their overseas buys, scores of mid-size companies have done the same under the radar, indicating the psychological distance India Inc has travelled since the protectionist 80s. It is worth noting that India slipped from the second place to the third in global FDI rankings last year and the US took that second spot owing to acquisitions of sick companies by Chinese and Indian firms.
All in all, it would be fair to say that if anything has worked for India in the past two decades, it is the role of corporate India. But the critical difference with, say, China, Japan or even the Asian Tigers, is that much of its achievement has been in spite of the political environment rather than because of it.
One of the curious aspects of Indian progress is that we seem to be able to do the “hard” things with ease — altering the paradigms for automobile manufacture, launching satellites for a third of global costs, becoming a global hub for increasingly high-end research and so on. It’s doing the “easy” things that seem to evade us — providing power, water, education, health services, building a network of serviceable roads, cleaning our cities and so on.
India Inc has functioned in an environment of acute shortage of physical and social infrastructure and an uncongenial policy environment at the local level. This pattern of corporate development may be open to admiration but it also adds an element of serendipity to the business of doing business. Inasmuch as rankings mean anything, India’s 2010 standing in the World Bank’s “Doing Business” index is a low 133 out of 183 countries, below all its BRIC competitors (Brazil is at 129, Russia at 120 and China at 89). In spite of this, India figures among the top three in terms of attracting FDI and the United Nations Conference on Trade and Development (UNCTAD) predicts that it will remain among the top five attractive destinations for international investors over the next two years.
Given the way it is now openly feted by politicians of all hues as conduits of job-creation, it is clear that India Inc is in a position to become a force of positive change within the political economy. Its achievements provide its many influential and powerful businessmen a unique opportunity to look beyond the restrictive role of lobbying for this or that policy change or focusing on rentiering from a shortage economy.
The cynical view is that businesses are driven by self interest, so this is unlikely to happen. Actually, it is in India Inc’s interest to lobby the government for more public investment in education, health and other forms of social welfare. The recent problems that have beleaguered almost every big company over land acquisition for large industrial projects are a potent indicator of what’s wrong with the system. Imagine: if Orissa, Bihar and West Bengal’s land-losers were educated and had access to a social safety net, several steel and automobile plants would have been up and running by now. Instead, companies are paying the costs of endless delays over what should, in these modern times, be a non-issue. Ultimately, though, it is these issues that will play a bigger role in determining India’s future in the next decade.
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